Airports Bill

HL Deb 22 May 1986 vol 475 cc488-533

5.49 p.m.

House again in Committee on Clause 30.

[Amendments Nos. 57 and 58 not moved.]

Clause 30 agreed to.

Clause 31 agreed to.

The Earl of Kinnoull moved Amendment No. 59: After Clause 31, insert the following new clause:

("Provision of airport capacity.

—(1) The Secretary of State may, if he considers it appropriate to do so to ensure the timely provision of sufficient airport capacity invite organisations other than the airport owner to provide facilities.

(2) Before making any invitation to an organisation other than the airport owner to provide facilities at a particular airport the Secretary of State must first invite the airport owner to make arrangements for the timely provision of those facilities.

(3) Following an invitation to the airport owner under subsection (2), the Secretary of State shall decide whether the response of the airport owner appears likely to ensure the provision of those facilities that he considers appropriate. If the Secretary of State considers the response of the airport owner inadequate or unlikely to fulfil his requirements in meeting the need for additional airport facilities, he may then issue an invitation to other organisations in accordance with subsection (1).

(4) In the event that the Secretary of State issues an invitation to other organisations in accordance with subsection (1), he shall require the airport owner to ensure that access to essential airport facilities from those facilities provided as a result of that invitation, as the Secretary of State thinks fit.

(5) Airport developments applied for under this section shall be subject to the same planning regulations as apply to any airport development.").

The noble Earl said: I was hoping that my noble friend would make a powerful oration in moving this amendment, but I will do my best to describe to the Committee exactly why this amendment has arisen.

My noble friend Lord Boyd-Carpenter lighted up enthusiasm for civil aviation just before the Statement, when he recalled that civil aviation in Britain was, as I think he called it, the second power in the world.

Lord Boyd-Carpenter

In the free world.

The Earl of Kinnoull

"In the free world", and one of the biggest contributors to our balance of payments. I would add to that by saying that I think we are lucky with the general framework of civil aviation. I think the Civil Aviation Authority does an extremely good job, and my noble friend distinguished himself as the first chairman of that body. I recall that he introduced the first flight of the sky train service.

Another large part of our civil aviation is the British Airports Authority. Again, I would like to offer my congratulations to that body, ably led by Sir Norman Payne for many years, for the work they have done to provide facilities. They have had a number of frustrations in getting those facilities: difficulties in getting governments to decide on the third London airport, and difficulties in getting planning authorities to accept the second terminals, third terminals or fourth terminals at airports which were already established international airports.

The keynote to the future of any successful aviation policy is the word "capacity". One sees the increasing competition within Europe from the airports of Paris, of Schiphol and of Frankfurt. One sees the trends in these airports; how they aim to provide capacity, try to take away traffic directed into Britain and to encourage traffic from America to come to those airports. One sees the strong argument that we should have the word "capacity" largely before us.

The Committee will remember that capacity was a key duty placed on the British Airports Authority under Section 2 of the Act at the time when it first came into operation. It was with some astonishment, when this Bill was first published, that we saw that there was no duty of capacity laid down on the successor operators of airports, be it the British Airports Authority in its new form or any of the regional airports. What is perhaps more significant is that there were no reserve powers of the Secretary of State to call upon these operators of airports to require that capacity would be provided.

This argument about capacity is not new to the Government or to my noble friend. It was raised in another place in Committee, on Report and, I suspect, on Third Reading, but I have not reached that stage yet. It started with a request which one must recognise comes from the operators, particularly at Heathrow and Gatwick, that there should be a reserve power given to the Secretary of State, who could invite outside contractors without reference to existing owners of airports to provide facilities because an owner had not provided it. This was accepted during the stages as being far too fierce, and what we have before us today is an amendment which I would simply say is a reserve power to give to the Secretary of State. He already has two other reserve powers under the Bill: the reserve power on international relations and the reserve power on national security. What we are asking is that he should have a reserve power to provide for capacity if he deems it to be in the national interest.

That is the key to this amendment. We are seeking a reserve power to be used, I suspect, very rarely. It would give the Secretary of State that vital locus standi and responsibility to keep the civil aviation and the civil airport policy on an international level and capacity. I beg to move.

The Earl of Dundee

I apologise to your Lordships' Committee for not being present when this amendment began. In regard to the provision of airport capacity, while the Bill contains certain incentives and safeguards, there is at present no guarantee that supply will meet demand. The intention of this amendment is to provide such a guarantee without conflicting with other important considerations.

In what way do existing incentives and safeguards not go far enough? Since the BAA's major source of future profits derives from traffic growth, clearly a good economic incentive already exists to provide capacity corresponding to that growth. However, there is always a long lead time between commitment to an airport development and its completion. That can sometimes be about ten years. This. together with the unpredictable nature of demand, means that for the airport owner there will always be some risk that additional capacity could be provided too early. To reduce that risk, the airport owner might well then decide that shareholders' interests would be better served by not planning to provide additional capacity until demand would undoubtedly exceed existing facilities.

Although in a different context, the point was made in your Lordships' Committee on this Bill last week that in the short term it can often be more profitable not to expand and develop since new capital does not have to be raised as a result. But if an airport owner did proceed in this way it would not necessarily be acting at all irresponsibily, since under the Bill one's first duty is to the shareholders. In so far as commercial activity of airports may on occasion be more profitable than traffic activity, conceivably this could lead to airport related land being used for profitable but non-essential airport activities. Yet if we consider that economic incentives which follow from privatisation are inadequate in themselves to ensure the timely provision of capacity, these economic incentives are nevertheless backed up in the Bill by the powers of the CAA as economic regulator.

The CAA has a duty to perform its regulatory functions so as to encourage investment in new facilities in time to satisfy anticipated demand. But when we look at how these powers would be exercised under the Bill it is evident that they are insufficient to ensure that adequate capacity is provided. The BAA prices will be monitored to show a reasonable profit whether or not it provides additional capacity. It is therefore difficult to see what incentives it will be able to receive for providing capacity, or what penalties could be imposed if it did not.

If it could obtain a higher financial return by investing in projects not airport capacity related, it would be difficult for the airport management to recommend major capital investment in terminals if it could achieve a higher return elsewhere, such as by building supermarkets. On the other hand, the Bill does contain a further safeguard through the planning process, and any proposed change of use of airport land for non-airport purposes would need planning permission, and no doubt the likelihood of such land being needed for aviation purposes would always be taken into account.

However, regarding such protection as can ever be afforded by the planning process, there is no safeguard to guarantee the preferences of local planning authorities. These authorities may well prefer supermarkets to terminals if past experience in obtaining planning permission for terminals is anything to go by. Planning approvals might then be easier to obtain for non-airport activities.

6 p.m.

I come now to the contents of this amendment. It gives reserve powers to the Secretary of State to ensure that sufficient airport capacity is provided in time. If he exercises these powers the Secretary of State is required to give the airport owner first refusal to provide the capacity. Only when the airport owner does not take up this option or when the response is inadequate can the Secretary of State invite another organisation to provide the capacity. If that happens, then the Secretary of State will require the airport owner to ensure that access is given to essential airport facilities from these facilities provided by the other organisation. All developments applied for are of course subject to the usual planning regulations.

It should be asked, however, what risks and inconveniences, if any, might follow from this and similar amendments. First, it might be feared that the commercial value of an airport company would suffer if outside pressure can be put on the owner to provide capacity which otherwise would not have been judged by the company as desirable. This fear would certainly be justified if either the owner was pressurised into development against its will or else did not have first refusal. In the circumstances and conversely the value of the company surely could instead be expected to benefit. This is so because insofar as there might have been a conflict between attending to the interests of British aviation and attending to those of the shareholders the owner can be relieved by the amendment of obligations towards British aviation and hence relieved of the corresponding commercial investments.

Then there is the separate concern that more than one owner of different airport facilities would lead to inefficiency and poor co-ordination and management at the airport. But in all cases following from this amendment the second ownership would be confined to terminals and their facilities. It would not extend to the land and to the runways. That would always remain with the airport owner. Nevertheless, efficiency might still be assumed to suffer in spite of the way in which the second ownership was delimited. Indeed, if no examples already existed of the successful practice of airport facilities owned by more than one organisation, then certainly confidence in the proposition could not, at least initially, be expected to be very great. On the other hand, since such patterns of ownership have in fact already proved to be most successful in the United States airports, there are surely good grounds for believing that they would also be successful here in the United Kingdom.

Another concern could well be that this type of amendment puts too great a burden on the Secretary of State. Does he know better than the airport owner about capacity, and can he really be the best judge in this matter? And in spite of the nature of this amendment, which gives choice and which avoids a conflict with commercial considerations, it cannot be denied that, indirectly at least, the Secretary of State is enabled by it to be coercive. Against that, however, it should be observed that we would accept that this indirect measure of coercion is to be applied to a privatised monopoly as distinct from small businesses or individual interests. Equally, we would acknowledge that a Secretary of State from whichever department is well accustomed to his duty of exercising reserve powers, and in this Bill the Secretary of State has already been given reserve powers in other contexts. Indeed, it has been said that, regardless of what may be his politics or his department, it does not do to leave the Secretary of State too much out in the cold. This only encourages him to persuade his Cabinet colleagues to get things back to what they used to be and thus to reinstate our old friend—the status quo ante.

Regarding the probable impact of this and similar amendments, the impact would surely be not so much on the number of competitive terminals built, which number would always be fairly few, but far more to increase the initiative of the owner. Thus there would be a greater chance that the owner himself provides capacity in a timely manner, and the owner would be all the more encouraged to explore joint ventures with outside developers. Such ventures are of course beneficial to the airport owner who thereby reduces both the risk and the capital expenditure while still retaining a significant element of control.

My noble friend the Minister may well wish to consider a different amendment or amendments from that which is currently proposed in order to cover certain aspects which quite possibly have been overlooked. However, I hope my noble friend will agree that the existing draft of the Bill, while containing some safeguards and incentives to ensure the provision of capacity, does not go as far as it should; hence the need for some amendment along the lines proposed.

The Earl of Caithness

This new clause seeks to allow organisations independent of airport owners to provide extra terminal capacity. Such a provision is, I believe, most unlikely to be necessary, and I also believe that it would be counter-productive. My noble friends have made two claims on its behalf.

First, let me take the proposition that independent operation would encourage competition; Let us suppose that Heathrow's terminals were in competition with one another. How could Terminal One, which was designed to cater for domestic and short-haul European traffic, compete with Terminal Three, which was designed for intercontinental traffic? The facilities at one could not cope satisfactorily with the type of traffic handled by the other. So all new terminals would have to be designed as multi-purpose buildings. This would be an inefficient and impractical way to proceed. Specialised dedicated terminals can provide a better service to the consumer, at a better price.

When considering competition at airports, one must assess the effect on competition between airlines. It is essential for this reason that airports offer a non-discriminatory service to all who wish to use them. It is likely that the organisations who would wish to develop new terminals would be major airlines. If a terminal occupying the only vacant site at Heathrow was occupied exclusively by one airline only this could disadvantage all other airlines—either by ensuring that that airline had the capacity to expand, or by taking out so much traffic from other terminals that the remaining users would have to face increased charges.

Secondly, I turn to the question of the efficient provision of adequate capacity—a point majored on by my noble friend Lord Kinnoull. We have already recognised this need in the Bill. Clause 36(2) places a duty on the CAA to use its powers as economic regulator in order to encourage investment in new facilities in time to meet demand. Airport revenues, and therefore profitability, are strongly linked to passenger throughput and passengers do not make purchases, boosting commercial income, in heavily congested surroundings. Airport operators' future profitability will depend crucially on their investing in new facilities in good time. I cannot conceive that private sector airport operators will fail to meet demand.

I consider that inefficient provision of capacity would be more likely if we were to move to a system of independent terminals. If some airlines were to own their own terminals, they would not be asked to move to fill gaps in capacity in other terminals. Thus we could see overcrowding in one terminal, while another would be deserted for much of the day. There would be demands for the premature development of large lumps of terminal capacity for individual airlines irrespective of runway capacity, increasing the cost for all other airport users as a result. The solution which this amendment seeks to offer is to place on the Secretary of State the onus of deciding when and where the facilities should be provided.

Although it is not clear from the terms of the proposed new clause, I presume it is not intended that an independent terminal operator is to be given the right to construct a terminal on the operator's land against his will. This is presumably intended only to apply where there happens to be suitable land conveniently situated next to an airport where an independent operator could build a terminal. But here I come to what I believe is my crunch argument. The unavoidable fact remains that the nub of this amendment, the feature without which it would not work, takes away the normal rights of ownership. Its essential element gives the Secretary of State the power to interfere with an airport operator's use of his own property, possibly against the airport operator's own commercial and managerial judgment. I would suggest to both my noble friends Lord Kinnoull and Lord Dundee that that is a very dangerous path down which to go.

This interventionist role for the Secretary of State is entirely contrary to the whole concept of a private sector aviation industry freed as far as possible from government control. Of course the Bill in no way precludes joint ventures between airport operators and others to develop new terminals. I see such developments by mutual agreement as a promising way ahead for private sector airport operators, but the introduction of a system of independent terminal operators forcing airport operators against their will to allow terminal developers access to the runways and other key facilities which are the property of the airport operator, or rather its shareholders, would benefit only the largest one or two airlines. It would not promote effective competition within airports but would probably hinder airline competition.

My noble friend Lord Dundee mentioned the experience of the United States airports, but I have received very different reports. Where there was space in the past there is now no longer space, and they are finding that the system operated in our airports is a much more effective use of space.

In conclusion, I feel a little like my noble friend Lord Boyd-Carpenter felt earlier in our discussions. He felt that he was almost lulled into accepting the amendments put so ably by my noble friends Lord Kinnoull and Lord Dundee. Their persuasive arguments—and I must thank both my noble friends for coming to see me about this beforehand—very nearly lulled me into accepting them, but I find they are completely objectionable on the feature of interfering with the normal rights of land ownership. I hope that the Committee will reject the amendments.

The Earl of Kinnoull

I was hoping that my noble friend would intervene. I presume that he possibly agrees with the principle of the amendment but does not wish to discourage the Government from the course they are currently adopting. I noticed earlier that my noble friend was quite stringent in the decision of the Secretary of State over the helicopters. I share his view on that. I am sorry that I cannot get him to spring to his feet to give a view which I think the Committee would appreciate.

Lord Boyd-Carpenter

If my noble friend will allow me, most of my noble friends are only too anxious that I should not spring to my feet. My noble friend Lord Kinnoull is being very original in suggesting the contrary, but on this occasion I am afraid that even his advocacy will not succeed, because I do not happen to agree with his amendment.

The Earl of Kinnoull

In that case perhaps we should have an intervention fee. We are discussing a serious principle of the Bill and I am surprised that noble Lords opposite have not come in on this. The principle that I put forward to the Committee and which my noble friend put forward much more forcibly and with a much better prepared argument—

Lord Underhill

Neither I nor my noble friend intervened because we wanted to hear the Minister, and basically we were satisfied with what the Minister said.

Lord Tordoff

While this is going around, I did not intervene because when I came into the Chamber and looked at the annunciator I saw that I was moving the amendment, and so I felt I did not need to bother.

The Earl of Kinnoull

I therefore now have one supporter in the Committee.

I should like to thank my noble friend for saying that we moved previous amendments eloquently. In fact, this is the first amendment that I have moved. My noble friend is much more eloquent, and I shall allow him to decide and to advise the Committee which way he wishes to take this amendment. I should like to take up two points with my noble friend who replied. His final words were that the principle of the amendment was "completely objectionable". He used, first, the example which he had apparently received about the United States airports. The whole Committee will be interested to know about that, because I do not know and the information I have is completely different from that which he gave. I do not doubt that he has good evidence, but I think he should tell the Committe exactly what is the evidence, and where it came from, because it is material to this argument.

My noble friend also said it was objectionable because it would be against the principal policy of a private company having freedom. It is a private company which is a very strange party indeed. It has on the one hand compulsory purchase powers, which I am sure is right; but on the other hand its directors have a clear duty to shareholders. When my noble friend says that he could not envisage any time when the company could not perform what it should perform, then I should like to put to him an example of where I believe the company could do so.

One could take it that we might have the most terrible world recession in two years' time, that interest rates in Britain go up to 30 per cent., and that the City would lend hardly any money at all. One could take it that at that time, for some reason or another, it was felt that there should be more capacity on a long-lead investment. How would the directors of the company view that situation? They would on the one hand, rightly, have the national interests to consider; on the other hand, they would, rightly, have the interests of their shareholders to consider. The balance would have to come down in favour of the shareholders.

The Civil Aviation Authority would have the slightly blunt instrument of its economic regulator that it could use. But that regulator cannot be used more often than every five years; I believe that is the term. So the authority could flap its wings, and Members of Parliament could assail the Secretary of State, but he would simply say, "I have no locus standi". It is very material that in a recent statement when the Government announced the final package, so far as they were concerned, for invesment in Stansted, that it was specifically stated that it was the last occasion on which the Government would be standing at the Dispatch box to give the Ho use the information that they had approved and funded, I suppose, the long-term investment of Stansted. When this Bill goes through, British Airports as a private company will be responsible.

Stansted is a remarkable airport. I remember 25 years ago when it almost went through, and when Lord Dilhorne moved an amendment that did not allow the runway to be accepted. At that stage it was abandoned, as the Committee will remember, for many years, and then it came back again. When one looks at Stansted now and at the vital role that it needs to play in the future, in the full capacity of the London international airport, then I believe one could argue whether the private investor would have been able to withstand the period of lead time that was required for the slow development of Stansted.

Much more important is Heathrow. My noble friend particularly identified the terminal capacity aspect, and criticised the possible use of a fifth terminal and how it would work. Frankly, I do not imagine that British Airways would accept his argument, and after all they are experts in this operational field. When it comes to the question of Terminal 5, which could be a very vital decision in the foreseeable future, then although it is a matter of planning (I accept that entirely), it is also a matter of national interest and the vital capacity of Heathrow. It would be very sad, if that issue arose and there was no power whatsoever for the Secretary of State to examine and discuss with the new company the possibility and the national need for Terminal 5. I hope that my noble friend will reply to one or two of the points that I have just made.

The Earl of Dundee

I am grateful to all noble Lords for their remarks, and particularly to my noble friend Lord Kinnoull. Clearly, the aspects that have to be addressed in connection with this amendment have many relevant consequences for companies and customers, and have many management consequences arising from two owners rather than one. There are also the consequences of Government intervention if the Secretary of State were to have reserve powers. If it can be agreed to a greater extent what those consequences really will be, or will not be, then there could be corresponding progress with the revised wording of any similar amendments. In the spirit of optimism that such progress can be made, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 32 [Matters to be taken into account by CAA]:

Lord Carmichael of Kelvingrove moved Amendment No. 60:

Page 27, line 40, leave out paragraph (a) and insert— ("(a) the need to secure the sound development of the civil air transport industry in all parts of the United Kingdom;").

The noble Lord said: Despite the length of time that we have been sitting (because in normal circumstances it would now be about 10 o'clock), I hope that the Committee will indulge me. This amendment is one that we consider to be particularly important, and while I shall do my best not to use any unnecessary language or phraseology, it is an amendment that should be presented with a certain amount of clarity. Part III of the Bill empowers the Secretary of State first of all to make rules governing the distribution of air traffic between airports serving the same areas, to impose limits on the number of aircraft using airports and to introduce a scheme for the allocation of capacity at an airport affected by limits on aircraft movements.

The local authority airports understand and accept the objectives behind the Government's proposals. As the demand for scarce capacity at the London airports increases, the need for rationalisation becomes all the greater. But the local authorities consider that these issues should not be looked at solely from London's point of view. They believe that they are of considerable significance for the regional airports, particularly in the longer term. The present pattern of air services and the near absolute dominance of the whole British scene by the London airports does not really adequately reflect the true pattern of the origin and destination of passengers. There are many figures available, but I will quote only one set of figures to the Committee: 91 per cent. of UK residents travelled through the London system in 1984 to go abroad, yet only around 60 per cent. of these passengers actually originated in the south-east planning regions. Even the Government acknowledge that too many regional passengers are forced to use the London airports. This is in the White Paper, paragraph 12.11. It is therefore important that regional feeder services should not be looked as simply from the point of view of supporting Heathrow or Gatwick interlinking operations.

There is also the question of the importance of these air operations to the regional airports and the regional areas themselves. Regional interests are realistic. They fully understand that it would be wholly wrong to force passengers to use airports they do not want to use. The problem, however, is that it is happening now to thousands of regional passengers: they are being forced to use the London airports, which they may not need to use. In their view, there are objectives which can be pursued. One such objective relates to tourism. Over 33 per cent. of London's future demand is attributed to inward tourism. The available scope to encourage greater use of gateway airports like those in Scotland—and we are doing as much as we can in Scotland in this respect—and Manchester is considerable, particularly given the incidence of repeat visits to the country. This point is underlined by the recent House of Commons Select Committee report.

The CAA has pointed out in its latest report that such policies would run counter to the nation's international obligations. But if these obligations mean that London's airports must be stretched to breaking point, that London as a centre must continue to be over-full with tourists, some of whom in any event want to travel to other parts of the country, then these obligations must be reviewed.

It is in the interests of foreign as well as the United Kingdom Governments to do this; and, equally, if foreign Governments wish to see their airline interests protected at Heathrow they themselves must come to terms with the desirability of exploiting market opportunities in the regions. It is the duty of the Government to ensure that this long-term objective is pursued. The CAA chooses to interpret the existing duty in Clause 32(3)(a)f as though the existing state of affairs—that is, the regional airports being forced to use London airports in their feeder service and to bring all their passengers down there—is satisfactory. Of course, looking at the country as a whole, many do not believe that is the case. Only a better defined duty making clear the promotion of civil aviation in all parts of the country will ensure that the perspective is a national one and is not limited solely to London.

I tried to say at the beginning that the regional airports do not think it can be done overnight. They do not believe that it is something people can be ordered to do. They believe that the Civil Aviation Authority should recognise that a bursting point will come in London and that there is plenty of space and desire—and the evidence is there—for expansion over the years, and for taking the powers to expand over the years the role of the regional airports. I beg to move.

Viscount Davidson

I have to tell the noble Lord, Lord Carmichael of Kelvingrove, that I have found some difficulty in discerning the precise point of this amendment.

Clause 32(3)(a) requires the CAA, in undertaking its functions in Part III of the Bill, to have regard, among other things, to, the need to secure the sound development of civil aviation in the United Kindom". The amendment would substitute "civil air transport industry" for "civil aviation" and "all parts of the United Kingdom" for the words "United Kingdom".

The Bill specifically includes the words "civil aviation" in order to indicate that a wide range of civil aviation interests might be addressed in the CAA's exercise of its duties under Part III of the Bill. The words "civil aviation" cover both airlines and airports. The amendment is more restrictive. In much the same way the words "United Kingdom" are necessarily inclusive of "all parts of the United Kingdom".

The White Paper outlined our commitment to develop regional airports. We have done this in a number of ways. Since 1979 the Government have approved unprecedented levels of capital expenditure totalling about £222 million at local authority airports, and we expect to approve further capital expenditure for expansion and improvement where this is justified against the criteria of demand and return on capital. We have effectively deregulated domestic fares. We have been active within the EC in seeking to liberalise inter-regional air services, and in the wider international arena we have taken every opportunity to stress the importance of regional services.

To see the practical benefits your Lordships need look no further than Manchester, where we have approved a total of over £49 million for improvements. Manchester now offers scheduled services to over 35 foreign destinations, about half of which were introduced in 1985. A number of new routes have already started this spring, and we confidently expect this trend to continue. There is no doubt that this Government will continue to do all they can for regional airports. In view of what I have said, I hope the noble Lord will withdraw his amendment.

Lord Carmichael of Kelvingrove

It is my intention to withdraw the amendment—not that I think it is not an important amendment, but because it is an amendment I hope to bring back at a later stage and perhaps clear up some of the points that I felt the Minister misinterpreted.

One of the aspects that is perhaps not quite understood by those who are domiciled all the time in the South is this question of the "United Kingdom". It can be used by people in the South-East of England to mean the whole of Britain. This is the problem felt by people in Manchester, the North-East and Scotland. To insert "in all parts of the United Kingdom" may sound purely semantic, but it means just a little more than civil aviation "in the United Kingdom".

I shall look at the Minister's reply because I know that he took a great deal of care to point out where he disagreed with my submission, and I reserve the right to raise this matter again on Report if necessary. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 61 not moved.]

6.30 p.m.

Lord Underhill moved Amendment No. 62:

Page 27, line 42, at end insert— ("( ) the reasonable interests of persons resident near the airport; ( ) the need to minimise the environmental consequences, in particular the impact on the community of aircraft noise and surface transport;")

The noble Lord said: Although this is not on the grouping arrangements, I wonder whether it will be agreeable to the Committee if I not only move Amendment No. 62 but also speak to Amendment No. 68 under Clause 37, because the same principle of environmental considerations arises. In view of the fact that we have already been discussing this Bill for six hours, I shall make my remarks very brief. I really want to know whether the Government accept that the question of environmental consequences should be considered.

Amendment No. 62 deals with the question of matters to which the CAA "shall have regard" when they are dealing with traffic distribution rules and the allocation of capacity at airports. In Clause 32, two matters to which the CAA shall have regard are:

1. "(b) the reasonable interests of users of air transport services; and
2. (c) such policy considerations as the Secretary of State may notify to the CAA".

The purpose of my amendment is to include among the matters to which they shall have regard: the reasonable interests of persons resident near the airport; [and] the need to minimise the environmental consequences". The Committee will note that it is not concerned merely with the question of aircraft noise but also with the impact of surface transport.

Amendment No. 68 relates to Clause 37, and in that clause there are four matters (which I shall not trouble to read out to the Committee) that are to be considered by the CAA when carrying out its functions as set out in Part IV of the Bill. We think that again one of the considerations should be this question of environ mental consequences, and the amendment has much the same wording as Amendment No. 62.

The Association of County Councils supports both these amendments. I recall that only a short while ago the noble Lord, Lord Boyd-Carpenter, referred to the question of the Gatwick-Heathrow helicopter service. I have somewhat the same views as he has on the cancellation of that service. However, perhaps I may paraphrase what the Under-Secretary of State, Mr. Michael Spicer, said in Standing Committee in another place on 13th May. He said that his right honourable friend the Secretary of State had to weigh up environmental considerations along with economic benefits; in other words, the Secretary of State has to take these matters into consideration. It seems to me that the CAA also ought to take environmental considerations into account as in both the amendment to Clause 37, to which I have referred, and this amendment. I beg to move.

Lord Boyd-Carpenter

The noble Lord, Lord Underhill, has raised an interesting issue, but I am a little puzzled by the first part of his amendment. What, the reasonable interests of persons resident near the airport are likely to be raises very interesting questions.

On the one hand, the maximum development of the airport will mean the maximum of good employment and good business for those living near. On the other hand, of course, it will mean more noise. The expression is really ambiguous. It depends whether you are concerned with economic interests. I know that the noble Lord, Lord Tordoff, will say that one is going back to the early 19th century and to people working in appalling conditions, which he seems to think attracts me; but in all seriousness (and being a little more serious than the noble Lord, Lord Tordoff on this issue), the experience of those who have seen what has happened around Gatwick is that the development of an airport means that it becomes one of the most powerful economic benefactors of any area.

Only about 18 months ago I opened a housing development near Gatwick which had been necessitated solely by the fact that there were so many jobs that there had not been sufficient accommodation to house the people who had been sucked in to fill those jobs. If one looks closely at this amendment, it seems that "the reasonable interests of persons resident near the airport" could well be construed as referring to the maximum use of the airport. On the other hand, it may be looked at as an environmental question. I suggest that the first half of the amendment is ambiguous and should be rejected on those grounds.

With regard to the second part of the amendment— the need to minimise the environmental consequences, in particular the impact on the community of aircraft noise"— I can assure the noble Lord that the CAA is extremely concerned with these matters. He may recall that it was the CAA which insisted on a steady reduction in aircraft noise and eliminated the use at major airports of old-fashioned aircraft which, although economically still excellent, were somewhat noisy. The CAA has been grappling with that problem for years and does not need an amendment to remind it of it.

I should have thought that your Lordships would accept that when one notices, as I have noticed with great pleasure, that Mr. Christopher Tugendhat is taking over as the authority's chairman early next month. Some of your Lordships knew him in another place and others knew him as a European Commissioner. The idea that Mr. Tugendhat would not concern himself with the general impact of noise is preposterous. I appreciate the amendment's good intentions, but I think that the first part is ambiguous and the second unnecessary.

Lord Tordoff

I wholeheartedly endorse what the noble Lord, Lord Boyd-Carpenter, said about Mr. Christopher Tugendhat, having spent the early part of my working life working for his father—but that is another long story. The noble Lord has put his finger on things in relation to, the reasonable interests of persons resident near the airport". He pointed out, as I suggested earlier, that there are a variety of interests. It is the balancing of those interests which is necessary. That is why it is necessary to put that point in the Bill.

The point I wish to make—which has not been made here or to any great extent in another place—in relation to this amendment concerns the whole subject of night flying. I worry, as I know many people do, that pressure for night flying will come, especially at Heathrow, as the Government move towards the liberalisation of international air routes, which one greatly supports. As more bilateral agreements are made, the greater the pressure will become.

Similarly, the need to interline international airlines and still preserve the rights of regional services flying into London will put great pressure on Heathrow. One fears that the pressure will increase steadily for an extension of hours at Heathrow and for night flying. That is why when we move from a nationalised industry to a privatised industry—a privatised monopoly in this case—we must take extra care to ensure that the needs of the environment and the people living around the airport are preserved. That is why, in principle, I support the amendment.

Lord Monk Bretton

I am rather concerned about this matter because Clause 32 catalogues matters to be taken into account by the CAA with reference to its actions under Clauses 29, 30 and 31. It goes into some detail, but leaves out environmental matters. I am not sure what the noble Lord, Lord Underhill, will do with the amendment which is, of course, in his name. He may wish to revise it and bring it back. I attach more importance to those environmental matters—and I am sure the Committee understands what I mean—evidently than does my noble friend Lord Boyd-Carpenter. Clauses 29 and 31 are important from an environmental point of view and hence my support for the amendment.

If one is defining such matters in Clause 32, one must define them all. If one is not defining them, it may be that all is well and good, and that we go back to the provisions of Section 5 of the Civil Aviation Act 1982. I should, however, like to be sure about the situation because these environmental factors are of great importance and must be taken into account in airport policy. They involve a great deal of money. Having noted the rapid growth at one moment at Second Reading of a somewhat unholy alliance between my noble friend Lord Boyd-Carpenter and the noble Baroness, Lady Burton of Coventry, I was afraid that they would be building the second runway at Gatwick as soon as possible if we did not look out. For those reasons, I felt that it was important to speak to this amendment. I still believe that we should not lose sight of the principle that underlies it.

The Earl of Caithness

The amendment seeks to add to those matters to which the CAA must have regard in undertaking its functions under Part III of the Bill. The amendment would specifically write into the legislation the need for the CAA to look to the interests of people who live near airports. Indeed, my noble friend Lord Boyd-Carpenter has highlighted some of the wide range of interests that might have to be taken into account if this amendment were written into the Bill and the general environmental impact of airport operations.

The matters that the CAA must take into account in giving advice under Part III of the Bill are set out in Clause 32, which requires the CAA to have regard to, such policy considerations as the Secretary of State may notify to the CAA for the purposes of this section". That provides for the Secretary of State to set out for the CAA policy issues that he thinks are germane to its formulation of advice.

The Government's policy towards the environmental impact of airports is crystal clear. In the White Paper on airports policy, my right honourable friend the then Secretary of State stated at paragraph 3.1 that airports policy should be directed to a number of objectives, one of which was, to minimise the impact of airports on the environment generally; and to ensure that land use planning and conservation policies take fully into account both the development needs arising from airports and the environmental consequences". I need hardly add that the White Paper set out a number of other policy intentions that could also be reflected in a notification under Clause 32(3)(c). But to spell out on the face of the Bill those various issues as matters to which the CAA must have regard would be to overburden the legislation—an argument that we have heard previously this afternoon.

The Government have made clear that they regard aircraft noise as one of the most objectionable effects of airport development and are anxious that nuisance should be avoided so far as practicable and reasonable. We believe firmly that the most effective measure for reducing noise disturbance is, as I said earlier, to reduce aircraft noise at source in the aircraft itself. Clause 32(3)(c) provides the mechanism through which the Government can ensure that the CAA is given appropriate notice of policy relating to the impact of airports on the surrouding area for its advice under Part III of the Bill.

My noble friend Lord Monk Bretton said that we should not lose sight of the environmental issues. I hope that I have convinced him that we have not lost sight of them and do not intend to lose sight of them. I would, however, go back to my argument about spelling all this out on the face of the Bill. We are bound to leave out the very first issue that comes up after the Bill, as we hope, is enacted. The noble Lord, Lord Tordoff, will know that the provisions of this Bill have no connection with, nor is it intended that they should affect, current arrangements for, and controls on, night flying. I can tell the noble Lord and the Committee that all these matters are under review at present. I shall therefore pass on to my right honourable friend and to my honourable friend the Minister for Aviation the points that the noble Lord made on that specific issue.

6.45 p.m.

The Earl of Cork and Orrery

I do not know whether any Members of the Committee have had the experience of going shopping either on their own account or with their wives with a shopping list and finding that the list is incomplete. That is probably worse than having no list at all. To arrive home with some vital purchase missing because it was not put on the list can be disastrous. We have a kind of shopping list in Clause 32 of matters that shall be attended to on behalf of the public. The amendment proposes to put in two more. If noble Lords decline to put those two in we shall end up with an incomplete list with the implication that those matters are not required. I have in mind in particular the reference to aircraft noise and surface transport.

It is vitally important that these matters should be attended to by the Secretary of State and anyone else concerned. There is too little mention in our debates of these subjects of surface transport. My noble friend the Minister has been talking of the disturbance caused by aircraft noise. We are all familiar with that. We are less familiar with the idea—we may be familiar with the fact—of the disturbance that air traffic causes on the ground. By far the greater part of the pollution caused by an airport of the vaster size—and they are getting bigger all the time—is the generation of traffic, the construction of roads to carry that traffic and the damage done to buildings. It would be a great lacuna in the Bill if this amendent were omitted, and a great mistake. I support the amendment.

The Earl of Caithness

I am happy to tell my noble friend that I went shopping for my family last weekend. We had a fairly comprehensive list. When I staggered home rather tired on Friday evening I added one or two more items. Yet when I reached the shop I found something that was badly needed was not on the list. I return to my point that I do not think we can make a comprehensive list. I hope that I have covered the point sufficiently for my noble friend to realise that our right honourable friend the Secretary of State will take these matters into account—there is the necessary provision for him to give the instructions to the CAA—and that we shall not lose sight of these and many other matters.

Lord Underhill

I am very pleased that in the past few minutes reference has been made to surface transport, which is included in my amendment. For brevity's sake I made no reference to it, but it is a very important consideration. I am a little astounded that whenever we want to put in extra qualifications the noble Earl says that we are overburdening the legislation. I said that I would also cover Amendment No. 68. We already have four matters to which the CAA must pay attention. It appears that if the Government want to put in four matters, that is all right; but when I want to add two more to make four under Clause 32 that is all wrong: that is overburdening the legislation.

However, I have what I wanted: the view of the noble Earl on the environmental matters. That will enable us to take a very careful look at this for the Report stage. I agree with those noble Lords who have supported this amendment that we ought to make sure that environmental factors are considered. It is not sufficient to say that the Secretary of State will do this, because 24 hours ago the Secretary of State was changed. One never knows: the Secretary of State may change again. We therefore want to be certain that it is provided in the Bill and that we are not just relying on the assurance of the Secretary of State. We shall keep that in mind for the Report stage. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 32 agreed to.

Clause 33 agreed to.

Lord Underhill moved Amendment No. 63: After Clause 33, insert the following new clause:

("Limitation of air traffic control officers' hours of work.

—(1) The Secretary of State shall, after consultation with appropriate employer bodies and organisations, representing air traffic control officers, introduce regulations in respect of the hours of work of air traffic control officers and related conditions of service, the approval of the regulations to be by affirmative resolution of both Houses of Parliament.

(2) The regulations referred to in subsection (1) shall limit the number of operation hours air traffic control officers may work (in any 24 hour period) and define the periods for such related matters including—

1. (a) length of duty;
2. (b) fatigue relief;
3. (c) meal breaks;
4. (d) between duties;
5. (e) circumstances under which air traffic control officers will be permitted to undertake standby and emergency duties,

and shall provide that the Secretary of State shall revoke the licence of any airport authority who fails to observe the above limits.

(3) The Secretary of State, on receipt of information confirming that the hours of work of an air traffic control officer exceed the limit as specified by regulation or that the minimum periods referred to in subsection (2) are being exceeded, shall give notice to the Airport Authority to comply with regulations within a specified period.").

The noble Lord said: I shall be extremely brief, not because this amendment is unimportant but because of the time factor. This is a very important consideration. The amendment attempts to ensure that the Secretary of State, after consultation with the bodies concerned, will ensure that there are proper hours of work laid down for air traffic controllers. Other conditions also are laid down. I am informed that similar restrictions apply to air traffic controllers in many countries overseas. These people are fully qualified and are licensed by the CAA. This relates to the whole question of safety and security. I think everyone will agree that if air traffic controllers are working excessive hours, this can be a danger for civil air traffic. I have a set speech in front of me which I shall not give, because what I should really like to know is whether the Government appreciate, perhaps not the wording of my amendment, but that consideration should be given to laying down some limitation of air traffic controllers' hours. I beg to move.

Lord Tordoff

I should like to give my full support to the principle behind this amendment. It seems to me we go to a lot of trouble to regulate airline pilots' hours and we really ought to go to similar lengths for air traffic control officers. The fact is that they perform a vitally important task—and in some cases a more important task than airline pilots, if I may say so. There seems to be a gap in the legislation. I am sure the Minister will say that there are all sorts of regulations and controls over this and that the Civil Aviation Authority checks these things on a regular basis; but the information that I have is that the number of spot checks which take place are perhaps inadequate. When this was put to the CAA they said that several spot checks have been carried out during the past three years but that the exact number is not readily available; suffice to say that spot checks are made. Frankly, that does not convince me and I hope that it does not convince Members of the Committee. It is a serious matter.Inflight International magazine carries an interesting quote this morning by a Mr. Miller of the American National Safety Transportation Board. He is a former accident inspector of that Board and he says: If you need an accident to know you have a problem, then you are part of the problem". I ask the Government to take that quotation seriously in looking at this important part of civil aviation.

Lord Boyd-Carpenter

There is no doubt that air traffic controllers must not be made to work excessive hours. The safety aspects of this are too obvious to need stressing. Those of the Committee—and I think there are many of them—who have been in the control tower either at LATCC or at a major airport, have been deeply impressed by the way these people handle little dots on a screen, moving rapidly and apparently very close together at very high speeds, and carrying with them anything up to 500 people in the aircraft they represent. This is obviously a most important safety aspect.

As I think the Committee knows, the main air traffic control systems in this country are run by and controlled by the Civil Aviation Authority itself. National Air Traffic Control Service, which also handles RAF traffic control, is integrated with the Civil Aviation Authority and controlled by it, and therefore there is a very strict control indeed over the hours that can be worked by these controllers. The only ones who are really outside this are the local aerodrome controllers at some aerodromes, since aerodrome owners are free either to employ Civil Aviation NATCS controllers or their own controllers.

But equally, as the Civil Aviation Authority licenses airports (among other things on the ground of safety), pretty strict supervision is also kept on the hours of work put in by the controllers. Therefore, while there is undoubtedly a theoretical case for a statutory limit, I very much doubt whether there is any practical need for it because this does seem to me a matter which is very carefully looked after by the expert body, which is after all responsible generally for air safety. Indeed, it might well be argued—I do not know what my noble friend the Minister will say—that once you start laying down statutory hours, you introduce a rigidity and an inflexibility into the system which may not be very helpful or even conducive to safety.

The flexibility of the present system, properly supervised by NATCS, seems to be one of the more satisfactory parts of our system, and on the old basis that where it is not necessary to change, it is necessary not to change, I would express some doubts as to whether there is a need to do this. However, it is a perfectly respectable point to be raised and I shall be interested, as will noble Lords generally, to hear what the Minister says.

The Earl of Caithness

I should like to join with the three noble Lords who have spoken, and I agree with them that we are discussing very important considerations. At this stage I should like to pay a tribute to the air traffic controllers. I went specifically not only to West Drayton and Heathrow but to some of the regional airports to look at what they do, and I was very impressed by the work that they put in to keep our skies safe.

Turning to the amendment, although there are no statutory limits on controllers' hours, we believe that the present arrangements are sufficient to ensure that the high standards of air traffic control are maintained in this country. The privatisation of the BAA or any other airport will make no difference to this. The Civil Aviation Authority Inspectorate of Air Traffic Control Services checks every airport's air traffic controllers each year. It recommends the appropriate complement of controllers in the light of the volume and complexity of traffic handled. Although airports need not comply with the recommendations, they invariably do so. The inspectorate also carried out inspections between annual checks—the spot checks to which the noble Lord, Lord Tordoff, referred.

This new clause would provide my right honourable friend with the power to revoke an airport's licence where an airport authority fails to observe regulations setting out air traffic controllers' working hours. This clause leaves my right honourable friend with no choice but to revoke a licence in such circumstances, and we believe that that is a solution which is a trifle draconian.

The CAA already has adequate powers. If the CAA judged that an aerodrome was unsafe because air traffic control staff were working over-long hours, it would be able to suspend the aerodrome's licence and, if necessary, revoke it. Many airports and aerodromes in the UK see very little traffic, yet this clause would require controllers' hours to be regulated at every airport in the country, large and small. The hours a controller works reflect the volume of traffic at his airport. A controller at a busy international airport may work only 35 to 40 conditioned hours, whereas a controller on a North Sea oil rig may work 55 to 60 conditioned hours.

There is indeed no evidence to suggest that controller-fatigue has ever played a part in an accident in this country, and that testifies to the adequacy of the existing arrangements for ensuring the safety of the UK air traffic control services. We do not believe that to regulate the hours of air traffic control staff, the length of their meal breaks and such other matters will enhance safety. Indeed there is a danger of substituting an inflexible and mechanical regime for the present system of checks and inspections which can respond far more readily to changing patterns of demand at an airport—the very flexibility to which my noble friend Lord Boyd-Carpenter has just drawn our attention.

Nevertheless, as I said right at the beginning, I share noble Lords' concern for safety. The CAA understands the complexities of air traffic control systems and has sufficient powers to ensure that they are safe. We should not seek to supplant the authority with the regulations envisaged under this new clause. We believe that that would be a retrograde step.

7 p.m.

Lord Underhill

In trying to assist the Committee there is sometimes danger in being very brief in one's introduction of an amendment. I am very pleased that everyone who has spoken has praised the work of air traffic controllers, and I believe that that sentiment is echoed by all noble Lords in the Committee.

I should stress that I am advised in this matter—as I think are other noble Lords—by those who represent the air traffic controllers. They are the Institution of Professional Civil Servants, who represent over 90 per cent. of the air traffic control staff employed by the CAA, and also NALGO who represent the great majority of air traffic control staff at municipal airports. It is the people on the ground who do the job who have asked that we should press this on the Government, because they are worried that the operation of the Airports Bill may lead to certain things happening which may necessitate them experiencing a limitation on hours of work and matters of that kind.

I appreciate what the noble Earl has said. We shall seek further advice from the two bodies who have advised us on this matter. They believe it is desirable that such matters should be given attention, not so much in their interests as members of the staff, but in the interests of air safety. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 34 [Interpretation of Part IV]:

The Earl of Caithness moved Amendment No. 64:

Page 28, line 27, at end insert— (" "operational activities" has the same meaning as it has for the time being in section 28(2A);").

The noble Earl said: I beg to move Amendment No. 64, and with the leave of the Committee speak to Amendments Nos. 82 and 83. The definition of "operational activities" which was included in government Amendment No. 47 to Clause 28 expresses clearly the extent of the airport-related business. This definition is also relevant in the context of Clause 41, which deals with the scope of the MMC's five-yearly review of designated airport businesses.

The present wording— Activities … the revenues from which and the costs of which are taken into account in fixing airport charges"— attempts to get the same thought across, but does it less well. We will shortly be coming to another group of government amendments which seek to bring the airport-related parts of an associated company's business within the scope of economic regulation.

The proposed insertion of "operational activities" has several merits. It encapsulates the scope of the airport-related business and therefore what is being regulated under the Bill, and it is applicable whoever carries on those activities. It does not alter either the scope or the intention of what is in the Bill already but simply makes it clearer, and provides for consistency with what your Lordships have agreed to on Clause 28. I beg to move.

On Question, amendment agreed to.

Viscount Davidson moved Amendment No. 65: Page 28, line 30, leave out ("by the airport operator").

The noble Viscount said: For the convenience of the Committee I should like also to speak to Amendments Nos. 77, 78, 79, 80, 81 and 84. The purpose of this rather complex set of amendments is to facilitate the imposition of conditions regulating the conduct of an airport operator where airport activities are carried out by persons other than the airport operator under franchise.

As many noble Lords are aware, many activities at airports are carried out by franchisees, concessionaires, etc.—that is, persons granted rights to carry out such activities—rather than by the airport operator. Where this is the case, economic regulation works through conditions imposed on the airport operator if his actions have, in unreasonably limiting the number of franchisees, resulted in monopoly abuse.

We have become aware, however, that the Bill might not quite achieve this intention. It is possible that an airport operator—perhaps for good commercial reasons—might wish to hand over the granting of franchises for various activities at his airport to another company. This intermediate company might then grant franchises to other companies. The Bill does not cater for the above situation, because it is drafted in terms of the provision of services and facilities by the airport operator's franchisee, whereas in the scenario I have described the airport operator's franchisee would not himself be providing such services. In addition, where there is an intermediary company it would not be the course of conduct of the airport operator which unreasonably limited the number of franchisees; so again the Bill as drafted could not fully meet our objectives.

I will not go too closely into the detail of these amendments, but their effect is to ensure that regulatory conditions imposed on the airport operator can target on a monopoly abuse of his making no matter how many links there are in the chain of franchises. I hope, therefore, that the Committee will agree to this amendment, and I beg to move.

On Question, amendment agreed to.

Viscount Davidson moved Amendment No. 66: Page 29, leave out lines 1 to 4.

The noble Viscount said: With this amendment it will be for the convenience of the Committee if I speak at the same time to Amendment No. 98. These are purely technical amendments. The term "user" is presently defined in Part IV of the Bill because it occurs only in that part. Now that noble Lords have agreed to amendments to Clause 28, widening the powers of my right honourable friend the Secretary of State to give directions, the term "user" also arises in Part III of the Bill in the definition of "operational activities". It is therefore necessary to move the definition from Part IV to the general interpretation clause at the end of the Bill. The meaning of the definition is unchanged. I beg to move.

On Question, amendment agreed to.

Clause 34, as amended, agreed to.

Clause 35 [Airports subject to economic regulation: requirement for permission to levy airport charges]:

[Amendment No. 67 not moved.]

Clause 35 agreed to.

Clause 36 agreed to.

Clause 37 [Imposition of conditions by CAA]:

[Amendment No. 68 not moved.]

Clause 37 agreed to.

Clause 38 [Mandatory conditions in case of designated airports]:

Lord Carmichael of Kelvingrove moved Amendment No. 69: Page 33, line 41, leave out ("aggregate").

The noble Lord said: Perhaps it would be for the convenience of the Committee if Amendments Nos. 70 and 71 were taken with Amendment No. 69. The importance of Clause 38 cannot be overstated. It represents the core of the proposals contained in Part IV of the Bill, with particular reference to the identification and control of unfair pricing policies or inadequate accounting practices. Any inadequacies in Clause 38 only underline the ineffectiveness of Part IV. This is an important point considering the fact that the Committee at an earlier stage rejected amendments to Clause 1 which would have prevented the subsidy to Stansted airport.

The purpose of the amendment is to try to make clear that the costs of each of the airports in the London area are totally clear and open; in other words, that there are no hidden subsidies, intentional or unintentional. The removal of the word "aggregate" would mean that the accountancy practice would need to be considerably improved so that there was a clear indication of what the costs were.

Briefly I could say, for example, that at present among Heathrow, Gatwick and Stansted, it is difficult to find out exactly what the costs of air traffic control are for each of the airports. There appears to be some subsuming of the single costs in the costs of all of them and there is an inaccurate division, a not very scientific division, of the apportionment of the costs. The figures for centrally-based staff of the three London airports were given in various reports. The Monopolies and Mergers Commission dealt at some length with the whole question of centrally-based staff serving London airports. Out of a total of 292 full-time staff, 75 were centrally office based. Only nine full-time equivalents were employed at Stansted. Once again the extent to which these services are properly costed could be lost in the type of aggregate information to be provided.

The plea is that the information should be much more full. I am sure that the good airport operators would wish to know what their costs actually were. The purpose of the amendment in leaving out the word "aggregate" is so that there will be no dispute and no hidden costs and that we shall know exactly what the basic costs of the services are. I beg to move.

The Earl of Caithness

These amendments seek to expand upon the transparency provisions of Clause 38; yet clause 38(2)(a) already requires a much greater degree of transparency of accounts than is required by the Companies Act. Few private sector companies would provide such a detailed breakdown of income and expenditure. I believe that a requirement on an airport operator to publish the even more detailed information demanded by these amendments in its published accounts is an undue burden on a private sector company.

I am the more persuaded that these amendments would be inappropriate by the knowledge that the CAA, as regulator, will be able to require for its own use much more detailed information under Clause 64. This will ensure that the appropriate degree of information is available to those who need it to ensure, for example, that costs are controlled or that any other abuses are avoided. I hope that I have persuaded the noble Lord, Lord Carmichael, on this that already we have gone further than the Companies Act and that to go much further, bearing in mind the back-up power of the CAA, would palpably be wrong.

Lord Carmichael of Kelvingrove

I thank the Minister for his reply. It is a reply that I should like to look at and have expert advice on. I realise the incredible difficulty of trying to apportion the services about which I have spoken. I will take the issue as far as it goes in good faith and will make a point of investigating it with some people who are knowledgeable in the field. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 70 and 71 not moved.]

The Earl of Caithness moved Amendment No. 72: Page 34, line 10, leave out ("filed") and insert ("delivered to the registrar of companies").

The noble Earl said: I beg to move Amendment No. 72 and with the leave of the Committee I shall speak also to Amendments Nos. 73, 96 and 107. These are technical amendments designed to put beyond doubt that the requirements for accounting transparency set out in Clause 38 apply to the publicly available accounts of the airport operator. I beg to move.

On Question, amendment agreed to.

The Earl of Caithness moved Amendment No. 73: Page 34, line 14 leave out ("filed by him") and insert ("delivered to the registrar of companies").

On Question, amendment agreed to.

Lord Underhill moved Amendment No. 74: Page 34, line 19, after ("the") insert ("minimum and").

The noble Lord said: As the Bill is at the moment, Clause 38(3) enables the CAA to impose a maximum amount of airport charges to be levied at airports. It may well be, following the Government's logic on various matters, that a maximum ceiling in the case of regional airports will appear reasonable, particularly as the Government are concerned that any local monopolies enjoyed by any local airports are not exploited. It would appear that the provisions of Clause 38(3) would achieve this.

I would put the point that the position is not quite so simple when we come to the London airports. We find in that context that local authorities do not see much advantage in the CAA being able to stipulate only maximum charges at London. There is no question of minimum charges being referred to in this particular subsection. It would appear that there would be nothing to prevent the new British Airports Authority employing charges below the level imposed by the CAA and which bear little resemblance to the actual cost.

The existing charges structure employed at Stansted, for instance, compared with an assessment of what charges should be if costs were taken into account, clearly demonstrates the position. I have been given the following figures. If one takes a B-747, the existing charge at peak periods is £1,422. I am advised that on cost-based principles it should be no less than £5,533. One could take similar examples with other aircraft. It would appear that we should not have just a maximum charge laid down, but that there should be a minimum charge put in also. That is the purpose of the two amendments. I am speaking to Amendments Nos. 74 and 75.

Lord Boyd-Carpenter

I hope that the Committee will reject this amendment. My recollection of the level of charges, particularly at the London airports, is that they have very often been the subject matter of complaint by foreign as well as British airlines that they were too high. It could be very curious, I think, to come in and insert a minimum. In any event, in these days, when we are still only just succeeding in our battle against inflation, the imposition of minimum charges for almost anything seems to be a very questionable idea indeed. I hope my noble friend will reject it.

7.15 p.m.

The Earl of Caithness

These amendments are aimed at ensuring that the price formula at designated airports sets minimum charges as well as maximum charges, presumably with the intention of preventing predatory pricing. However, as the Committee knows, the Government support this very intention. The dangers of very low or below-cost charging have been recognised in the Bill, and, indeed, Clause 39 allows the CAA to impose conditions to deal with predatory pricing. We believe this is the best way to prevent or remedy such specific abuses—that is, to target on them when they occur.

On the other hand, I have to say that the method implied by these amendments by means of a price formula such as the RPI minus X variety would be an inappropriate tool for preventing predation. Specific abuses need specific remedies, and that is what the Bill provides. Indeed, your Lordships will have seen that the Bill's provisions against predatory pricing were considerably strengthened in another place as a result of what was said. Therefore, I hope the noble Lord will not seek to press these amendments.

Lord Underhill

At this late hour I would not seek to press them, but I still believe that the principle of our amendments is correct. I will look carefully at what the noble Earl has said and consider whether or not we should bring something similar forward again at a later stage. We believe that the provisions in the Bill are not adequate at present to meet the purpose we have in mind. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 75 not moved.]

Clause 38, as amended, agreed to,

Clause 39 [Discretionary conditions]:

[Amendment No. 76 not moved.]

Viscount Davidson moved Amendments Nos. 77 to 81:

Page 36, line 14, after ("activities") insert ("carried on by him").

Page 36, line 20, leave out from ("rights") to ("of") in line 23 and insert ("by virtue of which relevant activities may be carried on at the airport by any other person or persons,").

Page 36, line 32, leave out ("by the airport operator").

Page 36, line 33, at end insert—("or which has resulted in the adoption by any other person of a practice that does any of those things;").

Page 36, line 36, after ("activities") insert ("carried on by him").

The noble Viscount said: I have already spoken to Amendments Nos. 77 to 81, which are consequential. I now beg to move them en bloc.

On Question, amendments agreed to.

Clause 39, as amended, agreed to.

Clause 40 agreed to.

Clause 41 [References to Commission in relation to imposition or modification of conditions]:

Viscount Davidson moved Amendments Nos. 82 to 84:

Page 39, line 9, after ("any") insert ("operational").

Page 39, line 10, leave out from beginning to ("or") in line 12 and insert ("and relating to the airport,").

Page 39, line 13, leave out from ("right") to end of line 17 and insert ("by virtue of which any operational activities relating to the airport may be carried on by any other person or persons,").

The noble Viscount said: These amendments are also consequential, and I beg to move them en bloc.

On Question, amendments agreed to.

The Earl of Caithness moved Amendment No. 85: Page 40, line 9, after ("Commission") insert—(" (a) ").

The noble Earl said: With the leave of the Committee, I should like to move Amendment No. 85 and speak to Amendment No. 86 at the same time. These amendments fulfil a Government commitment made on Report stage in another place. They provide that where the Monopolies and Mergers Commission is called upon to investigate any matter relating to the granting of franchises or concessions for airport-related activities, it must have regard to the reasonable interests of those franchisees or concessionaires. This is in addition to the CAA's objectives in Clause 37, to which the MMC is already obliged to have regard. I beg to move.

On Question, amendment agreed to.

The Earl of Caithness moved Amendment No. 86:

Page 40, line 11, at end insert ("and (b) in the case of a matter relating to the granting of a right by virtue of which any operational activities relating to an airport may be carried on by any person or persons, shall in addition have regard to the following objective, namely the furtherance of the reasonable interests of persons granted such rights.").

The noble Earl said: I have just spoken to this amendment. I beg to move it formally.

On Question, amendment agreed to.

Clause 41, as amended, agreed to.

Clause 42 agreed to.

Clause 43 [Reports on references]:

Lord Carmichael of Kelvingrove moved Amendment No. 87: Page 43, line 12, leave out from beginning to ("and") and insert (", the operator concerned and the appropriate trade unions, and shall publish the report;").

The noble Lord said: The request I am making in this amendment is, I think, a very brief and simple one. It is merely asking that a copy of any report sent to the CAA be sent to the Secretary of State and to the airport operator concerned and to the appropriate trade unions; and also—perhaps most important of all—that the report should be published. I think it is self-explanatory, and I hope the Minister will consider it is a simple enough request to grant. I beg to move.

The Earl of Caithness

I was not clear what was desired to be achieved by the amendment, with due respect to the noble Lord, Lord Carmichael of Kelvingrove. As drafted, Clause 43 requires publication of an MMC report but first gives the opportunity to the Secretary of State to require excisions from the report on grounds of public interest or commercial confidentiality. This is a standard procedure for all MMC reports.

This amendment would remove that possibility. It would result in the publication of commercially confidential information not only about airport operators but about airlines and airport franchisees as well. I do not believe that such indiscriminate disclosure would make for effective regulation. It would merely create an atmosphere of suspicion and non-cooperation between the regulator and regulated which would not be in anyone's best interests. I fear that we should be heading into tricky ground if we accepted that amendment.

Lord Carmichael of Kelvingrove

I am most grateful to the Minister for that explanation because it does seem to have cleared up a point which concerned me, that it seemed on the surface that a report should be sent to the operator, to the trade unions concerned, and published. I certainly can see the point that there may very well be information given in the report which should only really be seen by the Secretary of State and by the operator concerned so that each of them can make their observations before full publication. I think that is fair enough, and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 43 agreed to.

Clauses 44 and 45 agreed to.

Clause 46 [Breach of conditions: investigation of complaints and making of compliance orders]:

The Earl of Caithness moved Amendment No. 88: Page 46, line 14, at end insert ("in the United Kingdom")

The noble Earl said: This is largely a technical amendment, which claims to bring Clause 46 into line with Clause 39, which deals with this question of conditions imposed by the CAA. I beg to move.

On Question, amendment agreed to.

Clause 46, as amended, agreed to.

Clauses 47 to 50 agreed to.

The Earl of Caithness moved Amendment No. 89: After Clause 50, insert the following new clause:

("Application of Part IV to associated companies of airport operators.

Schedule (Application of Part IV to associated companies of airport operators) shall have effect with respect to the application of the preceding provisions of this Part to associated companies of airport operators.")

The noble Earl said: I beg to move Amendment No. 89 and, at the same time and with the leave of the Committee, to speak to Amendments No. 103 and 105. Your Lordships will recall that, in moving the Government Amendment No. 47 to Clause 28, I described the problems that might arise if an airport business was restructured so that an associated company of the airport operator carried out the commercial activities while the airport operator himself remained responsible for airside activities—runways and landing charges. The same problem arises in Part IV of the Bill.

Economic regulation of airports, as provided for in Part IV, works by requiring an airport operator to hold a permission to levy airport charges: monopoly abuses can then be prevented and remedied by the imposition of conditions on that permission. This works when the airport operator carries out all the airport-related activities himself, or where he grants a right—a franchise or concession—to some other person to conduct those activities.

However, if an associated company carried on the commercial activities, this link—the granting of a right—might not necessarily exist. For example, a holding company might restructure the business with two separate subsidiaries. In such cases, monopoly abuses by the associate could not be remedied by the imposition of conditions on the airport operator, since he would have no direct way of complying with them and not necessarily any means of securing compliance by the associate. This means that the activities of the associated company would effectively fall outside economic regulation, while the airport group continued to receive the benefits of the profits from the commercial side of the business—itself a substantial monopoly.

I hope that it will be evident to the Committee that this is a gap that needs to be plugged. I will not take up your Lordships' time by going through the new schedule in detail. It looks fairly substantial, but I can assure the Committee that it is necessary to plug the gap which I have mentioned. I beg to move.

On Question, amendment agreed to.

Clauses 51 to 54 agreed to.

The Earl of Dundee moved Amendment No. 89A: After Clause 54, insert the following new clause:

("Disposal of compulsorily acquired land.

—(1) This section applies to the disposal of any land—

1. (a) which was acquired compulsorily by a relevant airport operator or any predecessor in title of his under section 54(1) or any other enactment; and
2. (b) which, at the time of the disposal, forms part of an airport or is attached to an airport and administered with it as a single unit or has, at any time since the date of its acquisition, formed part of an airport or been so attached and administered.

(2) A relevant airport operator shall not dispose of any land to which this section applies, or any interest or right in or over such land, within the period of 25 years beginning with the date of its acquisition as mentioned in subsection (1), unless—

1. (a) the disposal is for the purposes of the provision of any of the services and facilities associated with the operation of an airport; or
2. (b) the disposal is of a leasehold interest in the land for a term of less than 7 years; or
3. (c) the Secretary of State consents to the disposal.

(3) Any consent of the Secretary of State under this section may be given subject to such conditions as he thinks fit.").

The noble Earl said: As the Committee will be aware, Clause 54 of the Airports Bill empowers the Secretary of State to authorise relevant airport operators to acquire land compulsorily for purposes connected with the performance of their functions. This will ensure that present powers of compulsory purchase for operators of such airports will continue.

The new clause which I am proposing would secure that where a relevant airport operator had acquired land in this way and subsequently decided to dispose of it, he would need the consent of the Secretary of State. The purpose of that would be to enable the Secretary of State to apply the Crichel Down rules. Those are the rules which govern the disposal of compulsorily acquired land by government departments. Their most important requirement is that first refusal on purchase would go to the person from whom the land was originally acquired. The draft amendment would apply to the disposal of any land compulsorily acquired within the previous 25 years, regardless of whether it had been acquired under this Bill or under any other enactment.

Two exemptions would seem to be appropriate from the requirement for the consent of the Secretary of State: first, where the disposal is for the purpose of another airport-related use—for example, the sale of land to airlines for the purpose of aircraft maintenance—where the original case for compulsory purchase would still apply and the land could not be regarded as surplus to requirements; and, secondly, where the disposal is of a leasehold interest of less than seven years. Such leases are often granted for airport-related purposes but there may also be circumstances in which the airport operator has acquired land compulsorily but some of the land is not needed immediately for the proposed development. Pending completion of the development, the airport operator may allow the land to continue to be used for non-airport purposes; for example, as farmland. In such cases the land would still ultimately be needed by the airport operator and it would be unnecessarily bureaucratic to require the consent of the Secretary of State to each lease.

The Committee may be aware that this provision is broadly precedented in telecommunications and is proposed for the gas supply industry, though in those cases the consent of the regulator rather than of the Secretary of State is required to any disposal. It could be argued that the consenting authority should be the CAA, but this seems to fit ill with its other functions under the Bill in respect of economic regulation in wider aviation matters. It therefore seems right that responsibility for planning and related matters should remain with the Secretary of State.

I hope that the Committee will be able to support this amendment. The application of the Crichel Down rules will ensure that where compulsorily acquired land becomes surplus to requirements the former owners will be able to purchase it at the current market value as determined by the district valuer. It is also an essential safeguard on the exercise of compulsory purchase powers by private companies. I beg to move.

The Earl of Caithness

I can be very brief on this amendment. I am most grateful to my noble friend Lord Dundee. I have pleasure in accepting the amendment on behalf of the Government and I commend it to the Committee.

On Question, amendment agreed to.

Clauses 55 to 61 agreed to.

7.30 p.m.

Lord Mountevans moved Amendment No. 89B: After Clause 61, insert the following new clause:

("Extension of Shops (Airports) Act 1972.

. Section 1 of the Shops (Airports) Act 1962 (exemption of traders at certain airports from restrictions under Part I of the Shops Act 1950 on hours of closing) shall have effect in relation to the provisions of Part IV of the Shops Act 1950 (Sunday trading) as well as in relation to the provisions of Part I of that Act; and accordingly, in subsection (1) of that section, after "hours of closing)" there shall be inserted "and of Part IV of that Act (which relates to Sunday trading)".").

The noble Lord said: The Shops (Airports) Act 1962 exempts shops at designated airports, which must be airports with substantial international traffic, from the restrictions on opening hours in the Shops Act 1950. This amendment extends that exemption to include the 1950 Act restrictions on Sunday trading. This will mean that shops within airport terminals will be able to trade normally on a Sunday. I hasten to say that I am not seeking to reopen the Shops Bill debate. I am putting forward a limited amendment to deal with the anomalies which could be faced by the air traveller at a United Kingdom airport on a Sunday.

At present the law on this subject is unsatisfactory. It can cause great inconvenience to air travellers. Perhaps I may instance some of the anomalies. At duty-free and tax-free shops, of the three items usually bought by passengers intoxicating liquor and tobacco may be bought on Sundays but the sale of perfumes is prohibited. Other popular luxury goods such as electrical goods, cameras and fountain pens may not be bought; nor may jewellery; but a cigarette lighter or a cigarette case is exempt from the present prohibition. No clothing may be sold.

The other main retail shops at airports are bookstalls and gift shops, which are usually found both in the departure lounges and on main concourses. The main range of goods sold in these shops are souvenirs, gifts and toys, all of which are prohibited items. Under the present law, items often forgotten in the packing and bought at the last minute by departing passengers are, for example, razors, toothbrushes, toothpaste, suntan lotion, sunglasses and film for the camera, which I have already explained may not be bought though the picture for the forgotten passport may be. Other distress products such as aspirins, travel sickness pills or plaster, which are usually stocked in these shops, may not be sold, but should there be a specialist dispensing chemist those products may be bought together with prescription medicines.

The other products usually stocked by chemists, such as soaps, make-up and shampoos, may not be sold. Newspapers, periodicals and magazines may be freely bought on a Sunday. But books may only be sold at bookstalls at airports approved by the Secretary of State. Stationery may also be bought at these bookstalls but the sale of the biro or pen necessary to write on the stationery is prohibited. There are a number of other anomalies.

There are also a number of services supplied at airports which are of benefit to the incoming passenger as well as to the departing passenger. These include banks, bureaux de change, car-hire desks and hotel booking desks. Those may also be prohibited from trading on Sundays. The legal position is far from clear. Thus though the post office, which is exempted from the Sunday trading prohibition, may remain open, it seems likely that the banks may have to close. In that case, only those passengers with a post office Giro account would be able to withdraw money on a Sunday.

The air traveller is not at the moment inconvenienced because local authorities have not been enforcing the existing law. But in the light of the demise of the Shops Bill I think one can reasonably expect that enforcement to be tightened up. That will produce a somewhat ridiculous situation. In my own context of the tourism business, what impression of Britain would be gained by the airborne foreign tourist, whose first and last view of Britain is of an airport, if he found the anomalies that I have already described? It seems to me that some amendment is necessary.

During our debates on the Sunday trading Bill the opposition was based on the slogan "Keep Sundays special". I do not really believe that anything within this amendment affects the special nature of Sunday, not least because if you have gone through the hassle of going out to an international airport with a view to enjoying the hassle of going on an international flight, your Sunday has already been, if I may say so, despecialised. Under this amendment only shops ordinarily used by air travellers at the designated airports would be affected. In effect, this would mean shops within terminals. An airport terminal is already a hive of economic activity on a Sunday. In fact, in many instances Sunday is the busiest day of the week. This amendment, which will allow shops to sell their full range of goods, will not cause any extra disturbance.

I do not believe either that this would create any opportunities for shops on the airport perimeter, because those will after all be intended for customers and not airline passengers. Employees of airport shops already frequently work on Sundays. though in many instances they may be conspiring to break the law. This amendment will not materially change their position. It would in fact make it easier for them to generate the very considerable revenues which those shops contribute, not least to our balance of payments.

I think it has become clear to all of us during the days we have spent on this Bill that airports are seven-day-a-week businesses that operate in a unique and geographically distinct market. The amendment tries to make sense of the present confused legislation, and I ask the Committee to support it.

Lord Carmichael of Kelvingrove

I can see the problem that the noble Lord, Lord Mountevans, has, We do not have quite the same problem in Scotland. I remind the Committee that when Sunday opening was debated, this side of the Chamber made a totally free vote, except in terms of those who were employed on the premises that would be open on a Sunday. I myself very much take the view that airport shops should be open but that there should be protection for the shop assistants and others who have to work in them for perhaps rather long hours. In general, I support Amendment No. 89B, with the proviso that if it is carried, we could introduce at a later stage some protection for the employees.

The Earl of Caithness

This amendment relates to a small part of the laws on Sunday trading. The idea that a right reverend Prelate might head off to some enchanted isle without his suntan lotion or aspirin fills me with horror. Seriously, I do not consider that the amendment conflicts in any way with the decision taken in another place on the question of Sunday trading as a whole. The short speech of the noble Lord, Lord Carmichael of Kelvingrove, in which he raised the point concerning protection for employees, would possibly turn this into a debate on Sunday shopping, which it certainly is not and which we would seek to avoid.

There was widespread recognition in the debate in another place on the Shops Bill that some aspects of the law were in need of reform. I believe that this is one such aspect. I welcome the amendment of the noble Lord, Lord Mountevans. I am happy to accept it on behalf of the Government and recommend it to the Committee.

On Question, amendment agreed to.

Clause 62 agreed to.

Lord Kings Norton had given notice of his intention to move Amendment No. 90: After Clause 62, insert the following new clause:

("Services and facilities at airports.

—(1) It shall be the duty of the airport operator to provide at each airport of which he is the operator such services and facilities (not being air navigation services) as are necessary or desirable for its operation having regard to the development of air transport, and to efficiency, safety and economy of operation.

(2) The services and facilities generally to be considered necessary and desirable shall include—

1. (a) terminal buildings (including passenger handling, baggage, check-in, toilet, security and immigration facilities);
2. (b) aircraft parking and manoeuvring areas (including runways, turn-offs, taxiways, aprons and stands);
3. (c) maintenance facilites (including hangars, engine run-up bays and compass swinging locations);
4. (d) cargo handling facilities;
5. (e) car parks;
6. (f) restaurants; and
7. (g) roads and accessways to all services and facilities.

(3) In making provision for such services and facilities as are necessary and desirable, the airport operator shall take account of the reasonable requirements of users, shall give users reasonable notice of such services and facilities as he provides or intends to provide and shall afford users a reasonable opportunity to express their views on such services and facilities.

(4) The Secretary of State may, on receiving representation in writing from a user of an airport on the services and facilities provided or to be provided by the airport operator or the lack of any such services or facilities, uphold or dismiss the representation, or require additional services or facilities to be provided, or require the amendment of such services or such facilities as are provided.").

The Earl of Kinnoull

On behalf of my noble friend Lord Kings Norton, I should like to move his Amendment No. 90 and speak also to my Amendment No. 91. The Committee is getting a little thin at this early hour but I am sure that enthusiasm has not waned at all and that we will have a very good discussion on the point that I wish to raise.

The amendment basically seeks to impose on the new company a duty to provide facilities. We had a valuable discussion under a previous amendment on whether or not the Government would seek to reserve a power under this Bill in cases of what they deemed to be the national interest. One could say that this is another opportunity for the Government to ensure that under the Bill companies will have a responsibility to the users of airports, and particularly to the operators of airports, to make certain that an airport has not only the capacity but also the facilities to meet their needs.

In another place a bold picture was painted by an honourable friend of mine, who stated that if the British Airports Authority, in its new role as a private commercial company, took a wholly commercial view of making as much money as it could for its shareholders, then one could have the situation where, subject to planning, the company could apply for a hypermarket within the airport. Perhaps that is an extreme case, when one thinks of the good record of the British Airports Authority to date. Nevertheless they do not have a duty to provide services under this Bill and there is no action of reserved power for the Minister to intervene if it is felt that in the national interest services are not coming on as quickly as they should for the benefit of aviation.

I personally take the view that to have neither of these safeguards is indeed a dangerous course because one is dealing with monopoly companies. Monopoly companies are not ordinary commercial companies, they are very special companies that Parliament is bringing into force. I suspect my noble friend may argue that it is impossible to lay down a duty on a private commercial company coming into force which might damage its commercial interests. I must say I find that an unacceptable argument, because we have already seen, when other companies have been privatised, notably British Telecom, that powers have been laid down, duties have been laid down on those companies, in particular British Telecom, that in that instance they had to provide, whether they wished to or not, their machinery for another commercial company called Mercury. I cannot believe that that is in their best commercial interests, but nevertheless they undertook that duty, as they quite rightly should, in the interests of the consumer. That was a quite proper duty which was not in any way in the commercial interests of British Telecom.

I hope my noble friend will therefore remember this and that he will also remember that, although we have not seen the Bill yet, we had a good discussion yesterday on water. Although I did not take part I think the noble Baroness took part in it very effectively. At the wind-up I listened and it struck me that, very rightly, the Government were going to impose many duties on the new bodies, for example, Thames Water, to make certain that the consumer got the correct services to which he was entitled. There is a second example of this monopoly situation where the Government are rightly seeing that a duty should be imposed. So what I am suggesting tonight is not without precedent; it is not without sense and I think it is very important.

Sir Peter Masefield recently wrote a letter to The Times, and I should like to quote a very short extract from it to my noble friend. It was on 15th April this year. He said: … as a former chairman of the British Airports Authority … there is one, serious, omission from its requirement of the new body in the private sector. No objectives are set and no duties required of the projected company. Then he went on to say that his board—and he was one of the instigators, since he was the first chairman of the British Airports Authority—actually set objectives which they announced in their first annual report. Their objectives were:

1. 1. To provide at the airports under its control adequate capacity to meet the requirements of civil air traffic.
2. 2. To achieve and to monitor a balance between profitability and good service consonant with the obligation of the board to pay its way".

I think those were very fine objectives, which the British Airports Authority has carried out extremely well. I would only hope that objectives and a duty could be laid upon the successor company because I think it is extremely important to do so. I beg to move.

7.45 p.m.

Lord Tordoff

I have considerable sympathy for the ideas that lie behind both these amendments, and I am not quite sure which I prefer, to be honest. There is a genuine problem, I think, when the Government are transferring a public monopoly to a private monopoly, to see that the consumer gets a fair deal.

I think the difficulty of these amendments lies not so much in British airports authorities but in terms of the other airports where it may be difficult to fulfil the details of the amendments. I have a feeling that there might be better ways of approaching the problem. Nevertheless, I think there is a problem and it is one to which the Government should bend their mind.

If people have a monopoly franchise on offer it is not necessarily in the interests of the ultimate consumer that they should exercise it to the full. I should have thought that the Government did believe in competition (and, I must remind the Government, we on these Benches also believe in competition) as part of the protection for consumers, but there is likely to be little or no competition at the larger airports. Although one may say that the public sector company has maintained a reasonable level of pricing, I know that the public at large feel that in the duty free shops, for example, they are being regularly ripped off. That may or may not he true but that is an image which persists. It is because there is little or no competition in those areas. Such competition as exists is for tenders which is inclined to push up the price almost to the ultimate. So there is a real danger that the Government must consider in dealing with these amendments. As I said, I do not necessarily subscribe to the wording of the amendments, but there is an important principle behind them.

Lord Carmichael of Kelvingrove

May I briefly add to the words of the noble Lord, Lord Tordoff. I too have great sympathy for the amendment, and particularly appreciate the explicit way it was moved by the noble Earl, Lord Kinnoull. It is a long and demanding amendment and the Government will want time to look at it with some care. I am sure they will want to give an opinion on the amendment, and until we hear that opinion and perhaps the view that the Government will bring it back slightly amended after discussions with the noble Lord, Lord Kings Norton, and the noble Earl, Lord Kinnoull, I give general agreement and support to the amendment. It is so complicated that I am sure the Minister being what he is with the people he has behind him, will find one or two reasons for not accepting the amendment in total. However, I hope he is willing to accept it in principle.

Lord Brougham and Vaux

I arrived in the Chamber just after my noble friend moved the amendment, but I have great sympathy with it and I reserve judgment until we have heard the reply of my noble friend the Minister.

The Earl of Caithness

It is always pleasant to welcome a new voice into the Committee's proceedings, even though at a late hour in our discussions. It is good to have my noble friend on board joining in the Committee's proceedings, but I hope I can convince him to get off board in his support for the amendment.

These new clauses bravely attempt to impose a duty on airports to provide sufficient airport capacity and associated services and facilities. I have some sympathy with my noble friend's concern in tabling such amendments, but I have to tell him that I do not consider such a duty to be either necessary or, even more important, perhaps, practicable. I shall try to explain why.

Looking first at the practicability of the duty, its fulfilment may well not be within an airport operator's power. He may be unable to obtain planning permission for a development which is necessary or desirable. Indeed, if my noble friend Lord Boyd-Carpenter were here he would say that a second runway at Gatwick is necessary and desirable but that there is no chance of getting planning permission at the moment. Or the operator may be unable to attract sufficient investment capital to finance such a facility. How is a breach of this duty to be judged? It is not clear who is to judge what is "necessary and desirable". It would be impossible to ask a court to make an objective judgment on these tests.

Subsection (4) of Amendment No. 90 and subsection (3) of Amendment No. 91 seek to involve the Secretary of State as arbiter, but this is entirely contrary to the spirit of the Bill, which seeks to reduce government control over the airport industry rather than to retain a direct interventionist role in the commercial affairs of an airport company and its relations with its customers.

Fortunately, I do not believe that there is any need for such an unenforceable duty. This is because I believe that airport operators will have a commercial incentive to provide the necessary facilities. Revenue at airports, and hence profitability, is directly linked to the throughput of passengers and these economic incentives—and there are others which I could mention if I had more time and the Committee would permit me—are further reinforced by the powers of the CAA as economic regulator.

The CAA has a duty to perform its regulatory functions so as to encourage investment in new facilities in time to satisfy expected demand. This would be a key factor, for example, when setting the price regulation formula at designated airports. The interests of users and the efficient, economic and profitable operation of airports are its other main objectives as specified in Clause 37 of the Bill.

Yet a further safeguard is provided by the planning process. Any proposed change of use of airport land for non-airport purposes would require planning permission, ensuring that the likelihood of such land being needed for aviation purposes would be taken into account.

The new clauses also refer to safety. Safety will continue to be regulated through the aerodrome licensing system adminstered by the CAA, but in any case it is clearly in the interests of the airport operators to demonstrate to airlines and to their customers that safety facilities are impeccable. We have seen the need for that in the recent past.

In summary we believe that a statutory duty to provide airport facilities is unnecessary and that if such a duty were imposed it would be unworkable. Economic incentives reinforced by the role of the CAA will have the effect which my noble friend is seeking. I support his move but the situation that he seeks is, we believe, already catered for in the Bill and I hope that my noble friend will be persuaded by my arguments.

The Earl of Kinnoull

I should first like to thank all members of the Committee who have spoken on this amendment and indeed all those who spoke in favour of it in principle—and one is talking about principle and not about the wording of the amendment. I started by being hopeful at my noble friend's reply when he talked about having sympathy, but as he went on I felt that he was less and less sympathetic until eventually he seemed to take the view that he had knocked the arguments on the head. To be quite honest I do not think that he did—and I am not being rude to my noble friend, who is a very able spokesman and Minister of the Government. But I really think he should not say that it is not practicable. It is very practicable.

It would in fact mean that if, for some reason, there were a body or a company—and I believe there are 40 companies that could be set up under this Bill—which for some reason was not providing the services, there is nothing that the Government or Members of Parliament could do. There is no reserve power at all and no duty laid down. Frankly, I think that it is a monstrous situation and perhaps it is impracticable on that account. But one cannot say that the principle is not practicable. In fact it is. Probably what would happen would be that an operator at the airport would seek the court's advice, and test whether or not the company, the management or the board, was carrying out its duty or whether there was a gross dereliction of duty. There is no safeguard at all at the moment. If there is a gross dereliction of duty, what is wrong with going to the courts? We do so in regard to other legislation. It is a protection possessed by every individual. So, to be quite frank with my noble friend, I do not think it is an impracticable suggestion.

My noble friend said that basically we must rely on the commercial incentive. I am not knocking these companies, because I think that they will do a wonderful job and with a free range they will do a superb job. Nevertheless one has a cautious Scottish spirit—and my noble friend is a good Scot and I am surprised that he does not have this cautious Scottish spirit as well.

One other comment made by my noble friend was that if my noble friend Lord Boyd-Carpenter had been present he would have cited the case of the second runway. That is easy to accomplish. All one needs to say is "duty subject to planning". There is no problem about that, and so it is not really an argument.

I hope the Committee will bear with me, because I feel strongly about this matter. It is not the time to test the will of the Committee; I probably would not even obtain a quorum. I shall reserve my position. My noble friend has many friends. They are not visible, but they are probably here in spirit. I reserve my position on capacity and duty. I am mindful of Sir Peter Masefield's letter. I hope that my noble friend is prepared to discuss the principles of the amendment before the Bill's next stage. I shall be grateful if he will say that he will do that, before I withdraw the amendment.

The Earl of Caithness

I am happy to see any noble Lord to discuss the Bill, and I should certainly welcome seeing my noble friend again.

The Earl of Kinnoull

With that kind assurance I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 91 not moved.]

The Earl of Kinnoull moved Amendment No. 91 A: After Clause 62, insert the following new clause:

("Service contracts.

. All public airport companies owned and run by a local authority and all airports owned and run by the Civil Aviation Authority shall have a duty to contract to purchase services on terms which secure maximum benefit for the airport, its users and the taxpayer.").

The noble Earl, said: I believe that this amendment will commend itself to my noble friend; I think that he is nodding his head. The amendment relates to local authority and CAA airports which provide shops, transport, food or other facilities. I am badly briefed, because I should be able to quote examples, but there are cases of where local authority airports do not put services out to tender. They merely say that the local authority can supply the food or whatever it may be.

I have tabled the amendment because it has been put to me that users would obtain a better deal if there were fair competition in the provision of services. It seems sensible—and I do not think it too harsh—that airport services should be subject to proper competitive tendering. With that brief introduction I beg to move.

Lord Tordoff

This proposal again touches on what I was saying previously about obtaining value for money for the consumer, which is something which I should like to see. I worry slightly about the words: maximum benefit for the airport, its users and the taxpayer". Those points may be in conflict because it is difficult to maximise all three at the same time. The use of the word "optimum" may make the amendment rather better. Having made that slightly quibbling suggestion, I support the principle of the amendment.

Lord Carmichael of Kelvingrove

I do not like to doubt the sagacity or intentions of the noble Earl, Lord Kinnoull. If he were concerned about service contracts with regard to the letting of premises and franchises, I should see the point of the amendment. As I said during the debate on Sunday trading, I am keen to try to defend the employees of such organisations. Unfortunately, many service contracts have a bad reputation with regard to wages, hours of work, the provision for sickness, pensions and such matters. If the noble Earl had included "maximum benefit," or, as the noble Lord, Lord Tordoff, suggested, "optimum benefit", for the airport, its users and the taxpayer and its employees", I would have been only too pleased to agree with the amendment. I cannot, however, agree with its terms. My knowledge of many contract services is that this is part-time work frequently involving people doing two jobs who are willing to accept conditions that should not be acceptable in a civilised society. I am sorry, but I cannot support the words used in the amendment.

8 p.m.

The Earl of Caithness

One of our main reasons for restructuring local authority airports is that we believe that under the present regime airports often pay too much for the services that they obtain from local authorities. One of the consequences of making the airports into Companies Act companies is that the directors will be bound to act in the best interests of the company. I emphasise "in the best interests of the company," not the shareholders. This is a point about which my noble friend Lord Boyd-Carpenter spoke at some length earlier.

When the airport company decides that it wishes to secure services from an external source, then I would expect it normally to go out to tender so that it could be certain that it was getting the best terms available.

As regards local authority airports, if we had not included Clause 22 in the Bill, parent authorities would not have been able to provide any services to public airport companies. That is because of the Local Authorities (Goods and Services) Act 1970 which would prevent local authorities providing any services to public airport companies unless we included specific provision in this Bill.

We included Clause 22 because we thought that there might be some services such as managing the payroll, which will be on the local authority's computer, and legal services where it might—not necessarily, but might—be more cost-effective for the airport company to continue to obtain services from the local authorities who will be its shareholders.

I sympathise entirely with my noble friend. I believe that we are on the same track. But, for the reasons that I have given relating to the necessary parts of the Bill which we have had to include in order to pursue our policy, I hope that he will see fit to withdraw the amendment.

The Earl of Kinnoull

I am grateful to my noble friend for his reply and for the qualified support that I have received. If it was a question of seeing the amendment agreed to, I would of course accept "optimum" instead of "maximum". That improves the amendment. My noble friend is I think saying that the principle of the amendment is covered in the Bill. I wonder whether I am right in saying that.

The Earl of Caithness

Yes.

The Earl of Kinnoull

I am right in saying that. I should like to examine the matter in more detail between now and the next stage of the Bill and perhaps, if necessary, have a word with my noble friend. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 63 agreed to.

Clause 64 [Furnishing of information etc. to CAA]:

The Earl of Caithness moved Amendment No. 92: Page 64, line 10, leave out ("an airport operator") and insert ("any person").

The noble Earl said: With the leave of the Committee, I should also like to speak to Amendment No. 93. As the Bill stands, the CAA is empowered to obtain information only from airport operators. The safeguard is that the CAA must reasonably require that information for the performance of its functions under the Bill. However, given that there is the possibility of persons other than the airport operator carrying out operational activities at an airport—the associated companies' point that we have already discussed in the context of other Government amendments—it is clear that the CAA might well need information from others in order to carry out its functions. Since there is no way of knowing how airport operations might be structured in the future, it would be inappropriate to define too closely the classes of persons from whom the CAA might need to require information. The amendment therefore allows it to obtain information from any person. I beg to move.

On Question, amendment agreed to.

The Earl of Caithness moved Amendment No. 93:

Page 64, line 22, at end insert— ("(1A) A person shall not by virtue of subsection (1) be compelled—

1. (a) to produce any documents which he could not be compelled to produce in civil proceedings before the High Court or (in Scotland) the Court of Session, or
2. (b) in complying with any requirement for the furnishing of information, to give any information which he could not be compelled to give in evidence in such proceedings.")

On Question, amendment agreed to.

Clause 64, as amended, agreed to.

Clauses 65 to 70 agreed to.

Clause 71 [Directions etc.]:

The Earl of Caithness moved Amendment No. 94:

Page 69, line 30, at end insert— ("(2A) Any determination made by the Secretary of State under this Act shall be notified by him to such persons appearing to him to be likely to be affected by it as he considers appropriate.")

The noble Earl said: This amendment ensures that the Secretary of State must notify all appropriate persons before exercising his powers under the Bill to make determinations. I hope that this will be acceptable to the Committee. I beg to move.

On Question, amendment agreed to.

Lord Tordoff moved Amendment No. 95:

Page 69, line 32, at end insert— ("(4) The Secretary of State may make grants to any airport operator for the purpose of defraying or contributing towards any losses or expenses they may sustain by reason of compliance with any directions given under sections 28 and 61 of this Act. (5) There shall be paid out of monies provided by Parliament any sums required by the Secretary of State for making grants under this section.")

The noble Lord said: I can be quite brief on this because I am sure that it is such a matter of natural justice that the Government will accept it on the nod. I remind the Committee that in Clauses 28 and 61 the Bill gives the Secretary of State the power to demand certain things of the airport authorities in the interests of national security and foreign relations and to direct them to provide facilities and accommodation exclusively for use of persons designated by the Secretary of State. But it does not say who will pay for this. Since it clearly should not be a matter for the normal airport user through his airport charges, and since the only other people who have any input into it are the government, compensation has clearly to be paid by the government. It is unreasonable that airport operators, and indirectly the airlines and their passengers, should be burdened with the additional costs. Certainly investments at airports should not be put at risk by the government giving directions which are expected to be financed by airport operators when any such directions could result in a loss of income to the shareholders. This is perhaps the most self-evident amendment in the whole of the day's proceedings. I beg to move.

The Earl of Caithness

I hope that the Committee will bear with me if I take a little longer than one would hope at this stage because this is an important point that the noble Lord, Lord Tordoff, has raised. If the Committee were at an earlier hour in its discussions, I know that other noble Lords would wish to join in the debate.

The power of direction under Clause 28 is heavily circumscribed by the circumstances in which a direction can be given. Directions cannot be given entirely at the Secretary of State's discretion; on the contrary, a direction can be given only in pursuance of three specific interests: national security, international relations and our international obligations to other countries. I can assure the Committee that the Government will not take these powers of direction lightly; they will be used responsibly and, I envisage, sparingly. The Government are not, after all, in the business of handing out directions unnecessarily—quite the opposite. Directions will be given only when they are judged to be "necessary or expedient" in accord with the national interests which I have already mentioned.

I naturally accept that circumstances could arise in which compliance with a direction places a burden of cost on the airport operator concerned. This is something which the Government would naturally want to bear in mind when considering giving a direction; and the airport operator who, under Clause 28 must be consulted before any direction is given, would have ample opportunity to make his views known to the Secretary of State. However, I think that airport operators themselves accept that one cannot sensibly divorce the operation of an airport from its national security and international relations dimensions. I do not think it is unreasonable that an airport operator should bear the cost of complying with a direction given on those kinds of grounds as part of the wider responsibilities which go with running an airport.

Turning to Clause 61, the purpose here is to place the present informal arrangements for handling VIPs on a statutory basis. Clause 61 will enable the Government to ensure that separate and secure facilities are available at the nation's major international airports for the use of members of the Royal Family and the reception of visiting heads of state, foreign dignitaries and other distinguished persons.

At present there are over 13,000 VIP movements each year, mainly through Heathrow Airport. The facilities at Heathrow and Gatwick airports are, in the main, expected to be adequate to meet the need for the foreseeable future. But, as air travel increases and these airports reach their capacity, additional facilities may be necessary elsewhere. It is important that these facilities are maintained at the standard appropriate to the status of the persons using them.

Amendment No. 95, moved by the noble Lord, Lord Tordoff, would give the Secretary of State powers to compensate airport operators for the cost of complying with a direction given under Clause 61. I can tell the Committee that the Government intend to continue to meet the additional operating costs which an airport operator incurs in running VIP facilities on behalf of the Government.

I hope therefore that the noble Lord, having listened to my argument, which I know he has, will withdraw his amendment.

Lord Tordoff

I am astonished! I am really astonished! Here are the Government demanding facilities that should be placed at the Government's disposal and not prepared to pay for them. It strikes me as being so simple. To say that the Government have the intention of paying for these things out of the goodness of their heart is one thing. If that is the case, why are they not prepared to have it on the face of the Bill? It is a terrible temptation to divide the Committee on such a simple premise, and I wonder whether the noble Lord cannot give some second thoughts to what he has just said.

The Earl of Caithness

I think that, as we are going to be without the very able services of the noble Lord, Lord Tordoff, at a later stage—at Report stage—I would hope we might find time to discuss this before he leaves for other parliamentary business, and I should certainly like to consider this matter with him.

Lord Williams of Elvel

I certainly hope that the noble Lord does not think that this is a personal crusade of the noble Lord, Lord Tordoff, and that others of us, as he said, would be interested in joining the debate were it not so late. Certainly it is not simply Lord Tordoff's personal crusade but something we are all interested in.

The Earl of Caithness

I brought the noble Lord, Lord Williams, to his feet; I hoped I might. I should very much like to discuss this with all those interested in this amendment. That was hidden within what I said to the noble Lord, Lord Tordoff, but I would certainly welcome discussion with the noble Lords opposite as well.

Lord Carmichael of Kelvingrove

As a point of information, are there any charges made for the VIP lounges, for instance? I understand that in certain circumstances there is a charge made and I wonder if, having gone that far, we could not get a bit more information from the Minister. If it is true, the Minister could give us a bit more information concerning, for instance, how much he thinks it costs at different airports.

The Earl of Caithness

I do not have that information readily to hand but I can repeat what I said earlier, which is that the Government will continue to meet the additional operating costs of running VIP facilities on behalf of the Government.

The Earl of Dundee

I should simply like to support this amendment. It certainly seems right that compensation should occur as proposed. For there to be no compensation may not be wrong as a matter of principle, but surely it also puts an unfair burden on airport operators, passengers and shareholders.

Lord Tordoff

I am grateful to both the noble Lord, Lord Williams, and the noble Earl, Lord Dundee, for joining in at this stage. I realise that they held back before because of the time situation and, like me, they presumably expected a straightforward and favourable reply from the Government.

I do hope that the noble Earl can find some way of assisting the Committee at a later stage on this matter because, as I say, it is perfectly straightforward. The Government make a demand: they ought to pay for it. On the strength of his offer to discuss this with me and others, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 71, as amended, agreed to.

Clause 72 agreed to.

Clause 73 [General interpretation]:

8.15 p.m.

The Earl of Caithness moved Amendment No. 96:

Page 70, line 30, at end insert— (" "the registrar of companies" has the same meaning as in the Companies Act 1985;").

The noble Earl said: This is a consequential amendment. I beg to move.

On Question, amendment agreed to.

Lord Williams of Elvel moved Amendment No. 97: Page 70, leave out lines 36 and 37.

The noble Lord said: I beg to move Amendment No. 97. This amendment brings forward a very important point that appears in Part II of the Bill. In the Bill as drafted the Government have produced what is certainly a novel animal in terms of corporate structure, which is a public limited company controlled by a local authority. The Government wish to call this a subsidiary under the Companies Act definition. Yet the Government also wish to impose restrictions on the composition of the board and, much more importantly, as we have been discussing this afternoon, capital expenditure controls under the Local Government, Planning and Land Act 1980.

Following the definition of a subsidiary in the Companies Act, it is normally referred to as a company being part of a group and a company where more than 50 per cent. of the voting shares are owned by another company, or where that other company controls the composition of the board of directors. It is a very odd concept to have a local authority in the position of a holding company. I think that the Government have tried very hard to fit company law concepts round what they are attempting to do, and I think they ought to be aware that in my view the attempt has not been entirely successful.

The object of this amendment is to remove the company law definition of "subsidiary". It would not have a wrecking effect on the Bill. It would simply mean that, where the term "subsidiary" was used in Part II, and principally in Clause 15, the ordinary legal criteria would be employed to judge whether the particular airport company was in fact controlled by the local authority rather than under the Companies Act definition. It is obviously equitable, in the light of the restrictions that the Government are attempting to impose on these so-called subsidiaries, that the factual test should be applied rather than an arbitrary one borrowed from the companies legislation, which is not really adapted to this form of hybrid animal. I beg to move.

The Earl of Caithness

If the definition of "subsidiary" in Clause 73 was deleted from the Bill, it would create doubt as to what was or was not a subsidiary. So the matter might well go to the courts, which might come to much the same conclusion; and, if so, the amendment would thus be of little effect. However, we think that the definition puts the matter beyond doubt.

As the noble Lord, Lord Williams of Elvel, said, the most significant references to "subsidiary" in the Bill are in Part II, which we wish to apply to any airports run by subsidiaries of local authorities, even if not formed under Clause 12. As was made clear in another place, the Government wish to ensure that the provisions of Part II of the Bill apply to any airport company—such as Manchester Airport plc—established by local authorities before Part II of the Bill comes into force. For that reason we believe that it is necessary to have "subsidiary" in the list of definitions in the place in the Bill in which it is now.

Lord Williams of Elvel

I am grateful to the noble Earl for his reponse. I accept that for avoidance of doubt there has to be some definition of "subsidiary". What I say is that this whole question of what the status of public airport companies really is, and what impositions the Government are entitled to exert on them, are matters to which we shall return on Report because they are fundamental to Part II of the Bill. In the light of this discussion, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Viscount Davidson moved Amendment No. 98:

Page 70, line 39, at end insert— (" "user", in relation to an airport, means—

1. (a) a person for whom any services or facilities falling within the definition of "relevant activities" in section 34(1) are provided at the airport, or
2. (b) a person using any of the air transport services operating from the airport.").

The noble Viscount said: This amendment is consequential. I beg to move.

On Question, amendment agreed to.

The Earl of Caithness moved Amendment No. 99:

Page 71, line 2, after ("whole") insert ("or any part"). The noble Earl said: I beg to move Amendment No. 99, and with the leave of the Committee I shall speak also to Amendment No. 100. Both are technical amendments. I can go into detail should any noble Lord require me to do so. I beg to move.

On Question, amendment agreed to.

The Earl of Caithness moved Amendment No. 100: Page 71, line 5, after ("for") insert ("the whole or").

On Question, amendment agreed to.

The Earl of Caithness moved Amendment No. 101:

Page 71, line 6, at end insert— ("(4) For the purposes of this Act a body corporate shall be treated as an associated company of an airport operator if either that body or the airport operator is a body corporate of which the other is a subsidiary or if both of them are subsidiaries of one and the same body corporate.").

The noble Earl said: This amendment is consequential. I spoke to it with Amendment No. 47. I beg to move.

On Question, amendment agreed to.

Clause 73, as amended, agreed to.

[Amendment No. 102 not moved.]

Clause 74 agreed to.

Clause 75 [Short title, commencement and extent]:

The Earl of Caithness moved Amendment No. 103: Page 72, line 19, at end insert ("(including Schedule (Application of Part IV to associated companies of airport operators))").

The noble Earl said: I spoke to this amendment with Amendment No. 89. I beg to move.

On Question, amendment agreed to.

The Earl of Caithness moved Amendment No. 104: Page 72, line 24, after ("1 to 4") insert ("and 6").

The noble Earl said: I beg to move Amendment No. 104, and with the leave of the Committee I shall speak also to Amendment No. 106. These are purely technical amendments and I hope that noble Lords will support them. I beg to move

On Question, amendment agreed to.

Clause 75, as amended, agreed to.

The Earl of Caithness moved Amendment No. 105: Before Schedule 1, insert the following new schedule:

("APPLICATION OF PART IV TO ASSOCIATED COMPANIES OF AIRPORT OPERATORS

Preliminary

1. This Schedule has effect for the purpose of authorising or requiring the imposition by the CAA in relation to an airport of conditions under section 39(2) or 44(2) in respect of a course of conduct pursued by an associated company of the airport operator; and in this Schedule any such conditions are referred to as "subsidiary conditions".

Section 37

2. Section 37(1) and (4) shall apply to any subsidiary conditions for the time being in force in relation to an airport as if—

1. (a) references to the airport operator were references to the associated company of the airport operator that pursued the course of conduct in respect of which the conditions were imposed, and
2. (b) references to any such conditions as are mentioned in section 37(1) were references to any such conditions as are mentioned above.

Section 39

3. In section 39—

1. (a) in subsections (2), (3)(a) and (b) and (6), references to the airport operator shall be construed as including references to an associated company of the airport operator, and
2. (b) in relation to such a company—
1. (i) the reference in subsection (2) to subsection (3) shall be construed as a reference to subsection (3)(a) and (b) (as modified by paragraph (a) above), and
2. (ii) the reference in subsection (6) to subsection (3)(a), (b) or (c) shall be construed as a reference to subsection (3)(a) or (b) (as so modified).

Section 40

4. In section 40(2) and (3)—

1. (a) references to an airport operator shall be construed as including references to an associated company of an airport operator, and
2. (b) in relation to such a company, references to any provision of section 39 shall be construed as references to that provision as modified by paragraph 3 above.

Section 41

5.—(1) Where an associated company of the airport operator in the case of any airport either carries on operational activities relating to the airport or is entitled to grant rights by virtue of which any such activities may be carried on by other persons, section 41(2) shall have effect in relation to any reference under section 41(1) with respect to the airport with the insertion after paragraph (a) of the following paragraph— (aa) whether any associated company of the airport operator has, at any time during the relevant period pursued—

1. (i) in relation to any operational activities carried on by the company and relating to the airport, or
2. (ii) in relation to the granting of a right by virtue of which any operational activities relating to the airport may be carried on by any other person or persons,

a course of conduct which has operated or might be expected to operate against the public interest; and".

(2) In section 41(3), as it applies in relation to an associated company of an airport operator in accordance with paragraph 3 above, the reference to the airport operator shall be construed as a reference to the associated company in question.

Section 42

6.—(1) In relation to any reference to which paragraph 5(1) above applies, section 42(1)(a) shall have effect with the insertion at the end of sub-paragraph (ii) of "and any course of conduct which, in its opinion, has been pursued by an associated company of the airport operator in relation to any of the matters specified in subsection (2)(aa) of that section and has operated, or might be expected to operate, against the public interest,".

(2) In section 42(4) the reference to the airport operator concerned shall—

1. (a) in the case of a reference or variation under section 41 relating only to a course of conduct pursued by an associated company of an airport operator, be construed as a reference to that company, and
2. (b) in the case of a reference or variation under that section relating to courses of conduct pursued by an airport operator and such a company respectively, be construed as a reference to both the airport operator and the company.

Section 43

7.—(1) In section 43(3) the reference to an airport operator shall, in the case of a reference under section 41 relating wholly or in part to a course of conduct pursued by an associated company of an airport operator, be construed as, or as including, a reference to any such company (as the case may require).

(2) In section 43(6) the reference to the airport operator concerned shall be construed as mentioned in paragraph 6(2) above according to the nature of the reference under section 41.

Section 46

8.—(1) In section 46(1)(a) the reference to the airport operator in relation to an airport shall be construed as including a reference to an associated company of the airport operator.

(2) Section 46(3), (5), (6) and (7) shall have effect in relation to any complaint against an associated company of an airport operator made by virtue of sub-paragraph (1) above as if any reference to an airport operator or to the airport operator concerned were a reference to any such company or to the company against which the complaint is made (as the case may require).

Section 47

9.—(1) In section 47(1) and (9) any reference to an airport operator shall be construed as including a reference to an associated company of an airport operator.

(2) Where the permission for the time being in force in respect of an airport is revoked under section 47(9) (as it applies in accordance with sub-paragraph (1) above) by reason of an associated company's contravention of a compliance order, then (notwithstanding section 36(4)) a permission shall not again be granted under this Part in respect of that airport unless it appears to the CAA that, if the CAA were to impose in relation to the airport any condition corresponding to the one whose breach gave rise to the making of the compliance order, that condition would be complied with by the person (whether the airport operator or an associated company of the airport operator) to whose activities any such condition would relate.

(3) In this paragraph "compliance order" and "contravention" shall be construed in accordance with section 47(11).

Section 48

10.—(1) Section 48(5) shall apply in relation to any subsidiary conditions as if—

1. (a) references to the airport operator concerned were references to the associated company of the airport operator that pursued the course of conduct in respect of which the conditions were imposed; and
2. (b) the reference to section 39(3)(a), (b) or (c) were a reference to section 39(3)(a) or (b) (as modified by paragraph 3(a) above).

(2) Section 48(7) shall apply in relation to any subsidiary conditions as if the reference to the airport operator were a reference to the associated company mentioned in sub-paragraph (1)(a) above.").

The noble Earl said: I spoke to Amendment No. 105 with Amendment No. 89. It is consequential. I beg to move.

On Question, amendment agreed to.

Schedules 1 and 2 agreed to.

Schedule 3 [Consequential amendments]:

The Earl of Caithness moved Amendment No. 106: Page 76, line 24, at end insert—

("LOCAL GOVERNMENT ACT 1985

6. In section 40(3) (airports), for "to 33, 35, 37(3), (4) and (5), 60(3)(0)" substitute ", 31, 35".").

The noble Earl said: This is consequential to Amendment No. 104 which has already been agreed by the Committee. I beg to move.

On Question, amendment agreed to.

Schedule 3, as amended, agreed to.

Schedule 4 [Transitional provisions]:

The Earl of Caithness moved Amendment No. 107: Page 78, line 40, leave out ("filed") and insert ("delivered to the registrar of companies")

The noble Earl said: This is consequential on Amendment No. 72. I beg to move.

On Question, amendment agreed to.

Schedule 4, as amended, agreed to.

Remaining schedule agreed to.

House resumed: Bill reported with the amendments.