§ 8.24 p.m.
§ Viscount Davidson
My Lords, I beg to move that the Bill be now read a second time.
I am pleased to be able to present to your Lordships' a short and straightforward Bill which contains only two clauses. However, its purpose is threefold. First, it increases the total amount that the Civil Aviation Authority is permitted to borrow from the current limit of £200 million to a new limit of £500 million. Secondly, it allows the Secretary of State to agree further increases in the borrowing limit up to a maximum of £750 million, subject to affirmative resolution. Thirdly, it allows the Civil Aviation Authority to borrow funds denominated in units of account such as European currency units in addition to conventional currencies.
I turn first to the £300 million increase in the borrowing limit. It is vital if the authority is to be able to raise the finance it needs for the large capital investment programme now under way which will cost about £600 million over the next 10 years. The authority's borrowing limit was last increased in 1980 when the current limit of £200 million was set and the CAA's borrowing projections indicate that the £200 million ceiling will be reached this year. Therefore, we need to agree a new limit now so that the authority can press on with its investment programme.
Many of the capital projects being implemented by the CAA are long term. The authority will not be able to start to recover the cost from the airlines through user charges until the new equipment is fully operational later in the 1990s. Therefore, the authority will have to borrow the necessary finance.
The authority's investment plans reflect the vigour with which it is going about its task; it covers a very wide range of equipment and systems which are 92 designed to increase the amount of traffic which can be handled, and, above all, handled safely, in the skies over Britain. I am sure that those of your Lordships who have experienced frustrating airport delays, particularly at holiday times, will agree that money spent on increasing airspace capacity—with no short cuts on safety—will indeed be well spent.
Perhaps I might quote a few examples of projects in the pipeline. The latest single project within the £600 million programme is the new en-route centre which will cost some £200 million. This will be a new control centre for all traffic which is en route over England and Wales. It is expected to increase capacity by about 40 per cent. when it becomes fully operational in 1996.
Another major project is the so-called central control function, also known as the tunnels in the sky concept. It involves a major restructuring of the airspace over South-East England and will increase capacity in the terminal manoeuvring area over the South-East by at least 30 per cent. when it is fully in place in 1995. It will cost about £30 million.
There are also other projects; for example, the new computer at the West Drayton Control Centre which will be operational this year, new radar installations in Scotland, new oceanic and Scottish en-route centres and many more. I mention these to give your Lordships an idea of the kind of projects which the CAA has in hand to increase capacity, to maintain safety and to help solve the problems of delays which have become all too familiar in recent years.
I believe that the present capital programme represents a full and proper response by the CAA to the growth in demand for flying. It will also—and I stress this again—enable the CAA to maintain the safety standards which are already at a very high level and which I am sure all your Lordshps will agree must stay that way. But, as I have already emphasised, the authority will be unable to keep up the momentum of these and other vital projects unless Parliament agrees to increase the limit on its borrowing from £200 million to £500 million.
I now turn to increases in the limit beyond £500 million. The Bill requires that when the £500 million limit is reached, which we anticipate will be towards the end of 1995, it can be increased only by affirmative resolution. Therefore, Parliament will have the opportunity to review the matter again at that time. The Bill also sets an upper limit of £750 million, beyond which further primary legislation will be required. This figure was set as being sufficiently high to give the authority the flexibility it would need to accommodate its projected borrowings without being so high as to postpone unduly the time when Parliament would have the opportunity to debate the CAA's borrowing limit again in a new Bill.
The third aspect of the Bill is to make it quite clear that the authority's existing power to borrow funds in currencies other than sterling includes the power to borrow units of account. Your Lordships might wonder why we have thought it necessary to include this apparently obscure measure in the Bill so I shall explain.
93 Some noble Lords may remember that towards the end of 1988 we introduced the Civil Aviation (Air Navigation Charges) Bill. Its purpose was to clarify that existing legislation—Section 73 of the Civil Aviation Act 1982—gave the Secretary of State the power to prescribe that charges for air navigation services levied on airlines by Eurocontrol could be denominated in units of account. We have a similar problem of interpretation with Section 10 of the 1982 Act (which this Bill is amending) as it gives the CAA the power to borrow in sterling and other currencies but it does not specifically mention units of account.
As a result of the Civil Aviation (Air Navigation Charges) Act 1989, the CAA will soon start to receive the bulk of its revenue in European currency units instead of US dollars. Therefore, at some date in the future the authority may wish to borrow money in the form of ecus. For example, the CAA might wish to borrow ecus for working capital to match ecu debtors in the balance sheet. At the moment the authority has no plans to take out ecu-denominated loans, but we feel that this added flexibility should be made available in case it is needed.
I hope I have said enough to convince your Lordships of the need for this short but important, Bill. It reflects what the CAA is doing to improve services and maintain safety for us all as travellers. I commend the Bill to your Lordships.
§ Moved, That the Bill be now read a second time.—(Viscount Davidson.)
§ 8.30 p.m.
§ Lord Underhill
My Lords, the House will be grateful to the noble Viscount for outlining the purpose of this Bill and for doing that so quickly in the light of the debate which is to follow dealing with transport and the disabled. In reading the speeches from the other place I believe that there was only one critical speech. I do not intend to make a critical speech. I also noted that numerous other opportunities were taken in the other place to comment on the work of the CAA. I do not propose to do that except to refer to one or two items which I believe are relevant to this Bill.
Naturally, we appreciate the purposes of the Bill; that is, to alleviate aircraft delays, to give some easement of congestion and to assist air safety. I was very pleased to notice the emphasis of the Bill, to which the noble Viscount referred, that, should it be required to go beyond the £500 million limit up to a maximum of £750 million, then there must be an affirmative resolution. That will give a rare opportunity to the House to discuss the work of the CAA.
It has been made clear that the CAA's financial objective is to recover the whole of its costs—and this is in general—and to achieve a reasonable return on capital, which we are told is a target of 8 per cent. over the next three years to be met by charges levied on users of services such as airlines. An investment programme, to which reference has been made, is to be spread over 10 years. Is it therefore intended to levy charges on a variable basis year by year?
94 In connection with that, I understand that the CAA undertakes regular consultation with those who pay for its services. The CAA handbook states that it is done:so that frank discussion about the cost and quality of services can take place and the consequent level of charges can be reviewed".In the light of the definite projects for which the borrowing and investment programme is intended, I ask the noble Viscount whether such discussions have taken place.
The noble Viscount also referred to two particular projects: a £30 million project to increase capacity in the terminal manoeuvring area in South-East England, which he said will increase capacity by 30 per cent.; and the en route centre at an expenditure of £200 million, which will increase capacity by 40 per cent. On 5th May in your Lordships' House in reply to a Question on air space capacity, the noble Viscount reminded us that the CAA is to advise this summer on the adequacy of UK air space and airport capacity up to the year 2000. Until that advice is received—and I believe that that will be during the summer—how definite is the estimate of 30 and 40 per cent. to which the noble Viscount referred and to which I have just drawn attention?
I should refer here to a comment in the CAA's current annual report. I shall not give the actual wording but it states that air space is a finite resource. It cannot be extended but can only be used more intensely. For that purpose, it can only be dealt with by the use of sophisticated technology. That is one reason why we support the purposes for which the increased borrowing is required. However, it is perhaps pertinent to repeat the statement—and I am not permitted to quote it—of a Conservative Member in the debate on the money resolution. He said that while there may be provision for extra planes in the sky, the problem is having adequate controls to enable aircraft to take off and land.
In the light of that observation and the encouraging reply given by the noble Viscount to my Question on 5th February as to whether the CAA advice would include the role which regional airports will play, I was very pleased to note that Mr. Patrick McLougnlin, Minister for Aviation and Shipping, said in the money resolution debate on 17th January:The Government place great emphasis on the role of regional airports in serving their localities. It seems nonsense that people have to travel from Leeds, Bradford or Derbyshire to London to get the flight that they require. The Government would like to see regional airports take up as many opportunities as possible". [Official Report, House of Commons, 17/1/90; col. 369.]That may seem irrelevant to the discussion on the Bill but as that was an observation made by a Minister in the other place, I believe that it is good to have it on record in your Lordships' House. In fact, almost those precise words were repeated by Mr. McLoughlin in the Third Reading debate in the other place on 1st February, at col. 540.
I ask how much of the required borrowing will be needed for work in connection with recruitment and training of additional air traffic controllers. It is generally agreed that it is on such officers that the easing of aircraft congestion and the assurance of safety depends. Does not the noble Viscount agree that there has been some backwardness in the CAA 95 making such preparation for the future? Did the authority underestimate in the past few years the need to increase the number of air traffic controllers?
That leads to views expressed in debates in the other place regarding the efficiency of the CAA. We must keep in mind in that direction that the airlines paid some £200 million in air traffic charges alone to the CAA last year. We know that the effectiveness of the CAA was considered by the Monopolies and Mergers Commission in 1983, a report being presented in November of that year. And yet an announcement was made six years later, on 12th December, that there was to be another reference of the CAA ' to the Monopolies and Mergers Commission. It has been suggested in some quarters that that reference is intended only to look into the national air traffic services, which, for abbreviation purposes, I shall refer to as NATS. That provides the navigation services on which something like 80 per cent. of the CAA staff are engaged. I believe that we agree that inquiries into public undertakings are always desired but it seems strange that after only six years the CAA should again be referred to the MMC.
It has been suggested that the reference is confined only to NATS. Will the Minister confirm that position, because I have read carefully—or at least I hope I have—the Written Answer to Mr. Haselhurst given by Mr. Redwood, the Under-Secretary of State for Corporate Affairs at the DTI, from which it would appear that the reference is to investigate the efficiency of the Civil Aviation Authority and in particular the navigation and air traffic control services. If only those are to be investigated, then my reading of that reply is wrong. If my interpretation is wrong, I must ask why it is only the affairs of NATS which are to be referred to the Monopolies and Mergers Commission.
This is a very important matter because, during consideration of the Bill in another place, references were made to the possibility of NATS being separated from the CAA. The opposition spokesman, Mr. Peter Snape, made it quite clear that any such proposal would need to be examined with the utmost care. That would require the most careful investigation not only of NATS but of the work of the CAA.
I understand that it is proposed to transfer the West Drayton Air Traffic Control Centre to another site. Reference was made in the other place to the transfer being made to a 30-acre greenfield site in Hampshire. The Minister replied in the other place that that is only one of several sites under consideration, but he added that outline planning permission had been given. I should like to ask the noble Viscount whether planning permission has been obtained for the other sites under consideration and whether the transfer to the greenfield site in Hampshire is more definite than has been indicated? How much of the proposed borrowing would be involved in the transfer of the air traffic centre?
I hope that the Minister can answer those questions. I wish the Bill well. We fully agree with its purposes.
§ 8.42 p.m.
§ Lord Tordoff
My Lords, like the noble Lord, Lord Underhill, I should like to thank the Minister for introducing the Bill. I stated on an earlier occasion in your Lordships' House that at party conferences this year the CAA were good enough to bring a display which I found extremely impressive and totally confusing. It gave some conception of the kind of problems that an air traffic controller would experience in dealing with the area around London. Blips appeared on the screen to indicate the amount of traffic that they had to deal with during the cycle of a day's operations.
It is quite clear that there is a need for further sophistication of the systems underlying air traffic control in this country, because our airspace is becoming extremely congested. I wonder how long we can continue to increase the amount of air traffic coming into this part of the world. I know that there are those in your Lordships' House who would wish us to take any aircraft that cared to come into our area at any time in the future, lest it should go by mistake to Charles de Gaulle or to Amsterdam. I do not necessarily share that view.
There are three areas on which I should like to touch in regard to the CAA. The first concerns the question of Eurocontrol. The ultimate aim so far as Europe is concerned is to have a much more integrated control system than we have at the moment. How far will the plans being put forward by the CAA integrate or conflict with that kind of plan? What we do on our own little patch is insignificant compared with what happens in Europe as a whole.
The second item concerns regional airports, a subject which has been mentioned in another place. One constantly worries about the fact that regional airports, although they are doing better than they were a few years ago, still seem to be constrained by bilateral agreements with other countries. One hopes that the Government will continue in their liberalisation policy—if that is not a word to which they object too strongly—and that more international flights will fly into regional airports up and down the country.
The noble Viscount, Lord Davidson, will not be surprised if I raise the question of the amount of airspace used by our defences. It has been suggested on many occasions that that space could be handed over to civil flying, in particular the east coast routes. I hope that the noble Lord has something to say to us on that subject tonight. There is no doubt that if the east coast routes were made available, it would ease the position of aircraft exiting from the London traffic control area and would eliminate the congestion which now occurs somewhere over the Midlands.
I support the Bill. There is no doubt that the Civil Aviation Authority has a very important task to perform on behalf of everybody involved in flying. I wish it well and I hope that the money will be as wisely spent as it has been in the past.
§ 8.45 p.m.
§ Lord Mountevans
My Lords, for good or ill, we find ourselves under the most intensively used piece 97 of airspace in Europe. On the one hand there are purely domestic flights from London to the North, flying at a low level. However most Air Force bases are in eastern England and many training areas are over Wales, and therefore one has a conflict approximately over Daventry. Apart from the conflict between domestic aviation and defence requirements there is the fact that a great number of transatlantic flights from the Continent go out over Britain. They fly from south to north. Therefore we find ourselves with a very substantial air traffic control problem which is not entirely of our own making.
I have welcomed this Bill certainly once and possibly twice during discussions on other issues in this House. The Bill authorises a very competent capital expenditure programme which gives us, for want of a better expression, a Rolls-Royce in terms of air traffic control, not only in terms of what it is seeking to do in London and Manchester but what it is seeking to do with all the airspace above us.
The CAA must be congratulated. They have pushed on to produce an air traffic control system which will be valid in 20 years' time. The noble Viscount is to be strongly supported for introducing this Bill. However, I can see two problems which have not been touched on more than remotely this evening. One is the problem of the provincial airports. The noble Lord, Lord Underhill, mentioned them in his speech. I part company with him in that I feel that he mentioned them for the wrong reason. If people do not wish to fly from provincial airports, then I do not think that we should use investment, or in this case an air traffic control system, to force them to do so. That is an issue over which we have crossed swords in this House on a number of occasions over the years. I stick to my commitment. An air traffic control system must reflect the requirements of the consumer, not the disciplines set upon the consumer. It should also, quite rightly, make the consumer pay—and that is what we are discussing tonight.
I mentioned that we are getting a Rolls-Royce of an air traffic control system. However, one problem that occurs to me is that the road ends at Dover. This programme may never be complete because it will develop to take account of consumer needs and we shall have a very good air traffic control system for the UK. What will happen, however, when a plane crosses the Channel and sets off to continental Europe? We know that flow control has been discussed. We, with our colleagues on the Continent, are looking, if not at an integrated system, at an interface system that makes the process as simple as possible. If it is simple, whilst preserving security it will also be cost effective.
Flow control—the noble Viscount mentioned tunnels in the sky—puts a plane down nearly every 10 minutes. The railways ran on that basis in the 1840s. It was called train separation. Is that the way ahead? I do not believe it is, and so will the noble Viscount tell me how we are getting on with our European colleagues? We know that the noble Lord, Lord Brabazon of Tara, fought hard for a better system, not just for Britain, which is what we are discussing tonight, but for Europe as a whole. It 98 is no good shipping an aeroplane out of Gatwick, Heathrow, Manchester or Glasgow if, as I say, when it reaches the barrier, somewhere over the Channel, between the CAA's area of control and the rest of Europe, the aeroplane has to turn back, hang about or go round in circles. In fact the aeroplane does none of those things, because it is not dispatched from a British airport until it has a slot.
Will the noble Viscount tell us what our European colleagues are doing? Will any of the money that we are "authorising" tonight be devoted to obtaining a better deal for the British air traveller when he goes into continental Europe?
The last question I should like to ask, which I have touched upon briefly, is: does the expenditure plan, which we are in a sense agreeing at arm's length, take account of the outcome of the Lowlands Airport Review for Scotland? If it does, why are we being kept waiting to hear the outcome of that review?
§ 8.52 p.m.
§ Viscount Davidson
My Lords, I am extremely grateful for the general welcome given by your Lordships to the Bill. I appreciate that whenever the chance to debate civil aviation arises your Lordships make the most of the opportunity to raise related subjects which are felt to be important. Some of the subjects that have been raised tonight may be outside the Bill's purview. Nevertheless, I shall try briefly to answer all the questions which have been put to me. If I fail to do so, I shall write to noble Lords.
Perhaps I may start by reminding the House, in view of what has been said, what the CAA is looking at in its review. It is considering the adequacy of United Kingdom airport capacity in the longer term. That involves producing forecasts of airport and air space capacity, considering the role of the regional airports, seeking to assess the case for deferring the construction of additional runway capacity in the South-East until capacity elsewhere is taken up, examining alternative methods of managing demand, including the use of price mechanisms, and considering air traffic control implications of locating additional runway capacity at different sites in and near the South-East, and the results of all that work are, as noble Lords are aware, due this summer in the form of advice to the Secretary of State.
I shall enlarge on the regional airport situation which the noble Lord, Lord Mountevans, mentioned. It would be wrong of me to try to predict the findings at this stage, but I emphasise and repeat that the Government of course encourage regional airports to cater for as much local demand as possible.
The noble Lord, Lord Underhill, asked whether it is intended to raise charges on a variable basis and whether discussions on charges with users have taken place. The CAA reviews its charges annually and they are varied as necessary after consultations with users of its services. The noble Lord also asked about the MMC reference. The MMC reference recently announced by my right honourable friend the Secretary of State for Trade and Industry is essentially concerned with navigation and air traffic control services, but it will look in particular at the 99 management of the CAA's investment programme and the CAA's system for improving efficiency, and so it is in line with the Bill's objectives to facilitate efficient investment for the benefit of air users.
The noble Lord also asked whether some of the CAA's increased borrowing is to be spent on more training of air traffic control staff and on their employment. The increase in borrowing powers under the Bill is to allow the CAA to raise the finance for capital projects and not for running costs such as staff salaries. However, the CAA is increasing the recruitment of air traffic controllers. It is up from 80 in 1988 to 200 this year and will be 240 annually from 1991.
The noble Lord also asked about planning permission being granted for a new en-route centre in Hampshire. The CAA has identified a number of possible sites for the new en-route air traffic control centre. Two possible sites near Fareham in Hampshire have been announced but no decision has yet been taken. Planning conditions for both sites are being discussed with the local council.
The noble Lord, Lord Tordoff, mentioned air traffic congestion. Delays in 1989 were no worse than those of 1988, although traffic was up by 7 per cent. The average air traffic control delay from United Kingdom airports last summer was about 14 minutes. Admittedly, there were delays of about three hours at weekends and that was of course worse during the French air traffic engineers' strikes, but the CAA is making capital investment to deal with that position and hence the Bill. European air traffic control authorities, including the CAA, are co-ordinating well to keep delays to a minimum.
The noble Lord also, surprisingly, asked about releasing military air space for civil use to relieve air space congestion. I must apologise to him because I misheard him the other day. I now have an answer which I believe will satisfy him better than the one which I gave him on that occasion. Air space along the east coast is kept continually under review by the National Air Traffic Services. One of the two east coast military training areas was permanently closed last year and part of the remaining one will be removed this year for the planned extension of upper air routes over the North Sea. A trial will start in March in which a limited number of scheduled services betweeen Heathrow and Aberdeen, Teesside and Newcastle Airports will fly through east coast air space outside the existing regulated route structure. Air traffic services will be provided jointly by the civil and military agencies.
Civil aircraft are allowed to fly over firing ranges and other danger areas along the east coast when they are not being used. The size and operational hours of those areas are kept under review. Elsewhere in the country aircraft from the north heading to Spain, Portugal and beyond now have permanent access to military air space over Wales and the West Country.
The noble Lord, Lord Mountevans, asked about the current review of Scottish Lowland airports policy. All I can tell him at this stage is that it would be wrong to view the outcome of the review as a 100 foregone conclusion. The review is intended to bring out arguments on both sides and the Government will be announcing a decision when all responses have been fully considered, which will be in the near future.
The noble Lord also asked what our European colleagues are doing and whether any of the money would be spent in Europe. The United Kingdom and its European colleagues are planning to harmonise and, probably in the next century, integrate air traffic control in Europe. Flow management is being integrated and none of the money will be spent in Europe.
If I have not answered all the questions I shall of course read Hansard and I undertake to write to noble Lords. I hope that I have answered most of the questions. I therefore ask your Lordships to give the Bill a Second Reading.
§ On Question, Bill read a second time, and committed to a Committee of the Whole House.