HL Deb 08 March 1990 vol 516 cc1266-74

3.40 p.m.

Viscount Davidson

My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.

Moved, That the House do now resolve itself into Committee.—(Viscount Davidson.)

On Question, Motion agreed to.

House in Committee accordingly.

[The CHAIRMAN OF COMMITTEES in the Chair.]

Clause 1 [Borrowing powers of Civil Aviation Authority]:

The Earl of Kinnoull moved Amendment No. 1: Page 1, line 16, at end insert: ("(4) The Authority, as a condition of exercise of the powers given in subsection (2) above, shall provide an annual report to the Secretary of State, to aircraft operators and to representatives of consumers to cover, inter alia—

  1. (i) the basis of computation of all charges on aircraft operators,
  2. (ii) efficiency indices, as defined by the Secretary of State in consultation with aircraft operators and representatives of passengers.").

The noble Earl said: I understand that the noble Lord, Lord Underhill, and my noble friend Lord Davidson are happy that the three amendments on the Marshalled List should be taken at the same time. They are directed very much to the same point of accountability.

My amendment is a probing amendment. Its purpose is to give my noble friend a chance to answer perhaps more fully the points raised at Second Reading. The amendment seeks to impose on the Civil Aviation Authority what I would term proper accountability, which in many people's eyes is not at present satisfactory. I refer to accountability to the Minister responsible to the Government, to accountability to Parliament and not least to accountability to the users who pay for the authority's services.

I think I am correct in saying that in the Civil Aviation Acts of 1971 and 1982 no mandatory accountability was laid down as a duty on the Civil Aviation Authority other than reporting once a year, as it does, on the services for which it is responsible. In practice I believe that the Civil Aviation Authority consults users—the authority says that it does in its book—about both the quality of its service and the costs of it. How effective and satifactory that consultation is is open to criticism but we know that in the case of airlines the charges made come to more than £200 million per annum. It is a very large budget, but there is little knowledge about how exactly the money is spent or how efficiently it is spent.

It would seem at the moment that only one body, the Monopolies and Mergers Commission, can challenge matters. The commission investigated certain of the services of the Civil Aviation Authority in 1983 and matters were again referred to it in December of last year. The specific reference—perhaps my noble friend can confirm this—covers the responsibility of the National Air Traffic Services and in general the efficiency of the CAA. That report will be read with great interest by users and those interested in the Civil Aviation Authority.

One has to recall that in 1983 the Monopolies and Mergers Commission was very strong in its criticism of the National Air Traffic Services. It commented that at the time there was weak management and poor long-term planning resulting in manifest inconvenience to many air travellers. Those were pretty strong words. It has been suggested, not just recently but for some time, that NATS should be hived off from the CAA, or even perhaps privatised, to make it more efficient, to provide competition and to show it in its true and I hope proper and good colours. What I am trying to say in my amendment is that there should be proper accountability.

My noble friend said at Second Reading that the Civil Aviation Authority is shortly to present to the Government a review of its operations—I believe in about June of this year—with advice on action that should be taken. This will be an important and helpful document when it is published. Can my noble friend say when it is likely to be published? Does he consider that the Civil Aviation Authority should be asked to look into accountability at this stage of its review so that more information can be given to the users who pay for the services? I beg to move.

Lord Underhill

I am perfectly happy that my amendments should be considered along with Amendment No. 1. It may be recalled that at Second Reading on 19th February I mentioned that in the debates in another place there had been a number of complaints and criticisms of the work and functioning of the Civil Aviation Authority. It was not my intention then, nor is it my intention today, to follow that path. I know that some airlines and others, although appreciating much of the work of the Civil Aviation Authority, particularly in the realm of safety regulations, nevertheless are very concerned about the way that the CAA does its work and determines its charges.

The first reason for the amendments in my name is to seek accountability. That appears to be the same reason put forward by the noble Earl. A substantial sum, as much as £750 million, is involved. We are told that the new en-route centre will account for some £200 million of the £600 million investment of the CAA to improve United Kingdom air traffic control. The centre will accommodate some 600 staff. As the noble Earl said, there must surely be some accountability as to how this borrowing is handled and whether the desired improvements are being achieved. My amendments seek to provide that accountability, as does the amendment of the noble Earl.

Secondly, the noble Earl referred to the reference to the Monopolies and Mergers Commission. It may be recalled that I raised that matter at Second Reading. I questioned why it appeared that only the work of NATS, the National Air Traffic Services, was to be the subject of the reference. I expressed concern about suggestions made in another place concerning the possible separation of NATS from the CAA. I stressed then, and I repeat it now, that I support the view of the opposition spokesman that any such proposal would require the most careful consideration not only of NATS but of the work of the CAA. That is another reason why accountability is so important.

In his reply at Second Reading the noble Viscount, Lord Davidson, stated that the reference to the Monopolies and Mergers Commission, is essentially concerned with navigation and air traffic control services, but it will look in particular at the management of the CAA's investment programme and the CAA's system for improving efficiency".—[Official Report, 19/2/90; cols. 98–99.] Since that Second Reading debate I have looked carefully at the actual reference by the Secretary of State to the Monopolies and Mergers Commission. I find that it goes a little further than the noble Viscount indicated. I shall read the first part of the reference: The Secretary of State hereby refers to the Monopolies and Mergers Commission the questions set out below relating to the efficiency and costs of and the service provided by the Civil Aviation Authority in supplying navigation and air traffic control services to civil aircraft". It goes on to refer to three questions which must be considered.

When I look at those three questions they seem to relate in the main to the navigation and air traffic control services. It may well be that the general position of the CAA will also come into question. However, the reference seems mainly to be concerned with the work of the CAA in air control services. That being so, I believe that it is vital that we look carefully at these two amendments and listen with care to what the Minister says in reply.

I think that everyone will agree that the responsibilities of the CAA are essential and vital to the development of our aviation industry, our airports and safety regulations. As the MMC reference will not do this in the way that I believe it should be done, Parliament should adopt either the proposal contained in the noble Earl's amendment or the one contained in mine so that we can have this complete accountability and a complete review of the work of the CAA before other matters are considered.

The nature of the efficiency audit is set out in Amendment No. 3. I hope that in reply the noble Viscount will be able to give us the Government's general view on the matter, although I appreciate, as did the noble Earl when he moved his amendment, that we may not be able to get a clear decision this afternoon. We merely wish to know exactly where the Government stand on the points which have been raised.

Lord Boyd-Carpenter

I suppose I should begin by declaring an interest, as I was, as many noble Lords will know, the first chairman of the CAA when it was set up in 1972. Therefore, I approach the matter in a somewhat different way from my noble friend Lord Kinnoull. There seems to be implicit, and indeed in his speech perhaps explicit, criticism of the authority. I hope that whatever else my noble friend the Minister does, he will make quite clear what I believe to be the fact: namely, that the authority has done and is doing an extremely good job in what is an extremely difficult and responsible area.

I do not wish to weary the Committee with the details of such responsibility, but being responsible for the well-being of an industry in the immensely competitive world of civil aviation, with responsibilities for safety and for the licensing of air services, is an extraordinarily difficult and delicate task. My impression, gathered from what I still hear about the authority, is that it is doing the job extremely well. I hope that my noble friend the Minister, whatever his attitude towards these amendments—and I have no idea what it is—will make it clear that he will not accept them in any sense as a censure or criticism of the authority and the way in which it undertakes its work.

I should like to pick up the point made by the noble Lord, Lord Underhill, about the proposal to divorce the National Air Traffic Services (NATS) from the authority. I think that that would be a great mistake. First, it would deprive the authority of contact with a certain aspect of its own responsibilities and, secondly, it would very much narrow the background to the vital work carried out by NATS. The two organisations work extremely well together under a system whereby the chairman of NATS is a member of the Civil Aviation Authority, whether he be, as he is alternately, an air marshal or a very distinguished man in civil aviation. The working together of the two organisations has, and indeed does, work to the benefit of their effective operation. Moreover, the reference to the MMC in respect of NATS to which the noble Lord, Lord Underhill, referred makes it particularly inappropriate at this moment to impose a further type of inquiry or investigation in this area. I am inclined to suggest that the system is best left alone.

I take the point made by the noble Lord, Lord Underhill, about accountability. However, accountability can operate in a whole variety of ways. Certainly at the time when I was responsible it operated very much through close liaison with the Department of Trade and Industry. It did so under two governments. Mr. John Davis and Mr. Peter Shore were respectively the Ministers responsible for us at the Department of Trade—not the Department of Transport. I can say that both of them were extremely helpful and that close and informal contact between the chairman and the Ministers concerned seemed to work extremely well. I have no reason to doubt that it still works extremely well. I am at least dubious about the necessity for further amendment of the law.

I take the point about the airlines and the costs to them of the authority. The main cost is in relation to payments for air traffic control services. Given the complexity of those services, the importance of them and the fact that unless they are perfectly operated in an area such as Heathrow a disaster will most certainly happen, I think that on the whole the charges are reasonable. In any event, so far as concerns airline complaints, I believe that they relate to something which is nothing to do with this Bill or the Civil Aviation Authority. I refer to the charges made by the British Airports Authority to the airlines, which are undoubtedly high. However, as I said, that is absolutely nothing to do with the Bill or these amendments.

I hope that, whatever else my noble friend the Minister says, he will pay due tribute to the work of the present chairman of the Civil Aviation Authority, Mr. Christopher Tugendhat, whom many noble Lords may know. I think that he does an immensely good job with the aid of his very great experience in public life in this country and in Europe. It would be a great pity if even by implication or accident this Chamber were to appear to suggest that he was doing other than a first-class job. I shall be most interested to hear what my noble friend has to say, but until he has spoken I must say that I entertain considerable doubts not just about the general approach of the amendments but as to whether there is any need for them.

Viscount Davidson

I am indeed grateful to my noble friend Lord Boyd-Carpenter for the remarks he has made. He has made a valuable contribution to the debate. I can confirm to him straight away that the Government believe that the CAA is doing a first-class job in a very difficult sphere of operation. I should also like to pay tribute to the work carried out by the chairman of the CAA. I do not believe that these amendments reflect in any way upon the work of the authority.

I have listened with interest to the speech of the noble Lord, Lord Underhill, and that of my noble friend Lord Kinnoull. I note the points they have made. I think there is perhaps rather less in principle between us than these amendments might indicate since we are all concerned with efficiency. It seems right to make that point at the outset, even though I do not feel able to accept the amendments. Perhaps I can explain why.

The Bill is about money for the CAA; and of course it is essential that that money is spent efficiently and wisely. We are agreed on that point. We have to remember that ultimately the cost of the CAA's investment and its day-to-day running costs as well are paid for by the aviation industry and that means further down the line still that some of the cost is met by each of us every time we buy a ticket.

But we also need to remember that the CAA has a job to do—for example, to provide air navigation services and to ensure safety standards throughout the aviation industry. Indeed a main purpose of the Bill is to facilitate the CAA in its £600 million investment programme, which will mean the installation of new systems and equipment, much of it technically very advanced, to a tight schedule. The traveller keen to avoid delays at Gatwick at the start of his holiday or the businessman keen to get to his appointment and not waste time at Heathrow need to be sure that the CAA will be getting on with the job of putting the new systems in place.

With every public body a balance has to be struck between proper checks and accountability and proper pressures to efficiency, on the one hand, and proper freedom to get on with the job, on the other hand. With great respect, and while recognising the thinking behind the amendment, it seems to me that the amendment of the noble Lord, Lord Underhill, veers too far towards interventionism and thus too far towards inhibiting the CAA in its very necessary tasks. Even at three-year intervals such a comprehensive review as is proposed, covering not just, say, air traffic control systems but also areas such as the personnel or office services departments, would be a far from negligible burden on the CAA. Indeed, I am afraid that such a comprehensive review would even be counter-productive. The CAA would need resources to respond to these reviews and if they were to be more than token superficial examinations or glances by the parliamentary committee there would, I submit, be problems of disruption and resultant inefficiency. The amendment would tend to cause the very problems which I entirely accept it aims to cure.

It must also be remembered in passing that such a review would be quite a burden for the parliamentary committee itself. There may even be those prepared to doubt whether such a committee, however, learned and expert its members, would be the best way of carrying out what would seem to be in effect a management consultancy role.

Having said all that, I stress that the CAA is by no means without checks and pressures to efficiency. I do not just mean its auditors or its use of management consultants from time to time or its own internal efficiency unit, important though these undoubtedly are. We also have the Monopolies and Mergers Commission, which carries out efficiency investigations of aspects of every nationalised industry's work every few years, under Section 11 of the Competition Act 1980. Indeed, National Air Traffic Services, and particularly its major capital investment programme and systems for improving efficiency, is being examined in exactly that way at present. I hope the noble Lord, Lord Underhill, takes reassurance from that, as I felt he did when I answered the same point at Second Reading.

In addition, my right honourable friend the Secretary of State for Transport, with the agreement of the Chancellor as necessary, approves all the CAA's capital investment over certain limits, and his department keeps in close touch with the CAA to monitor investment appraisal generally. The department is also involved in the CAA's corporate planning procedure, annually conducts the investment and financing review and administers controls such as the external financing limits, just as is done with all nationalised industries. As to parliamentary scrutiny, the Transport Committee in another place can and does conduct inquiries into aspects of the CAA's work. Finally, the Secretary of State appoints all members of the CAA board, including the chairman. The Secretary of State is of course ultimately accountable to Parliament for these appointments.

As to the CAA's income, increases in charges, where his powers are involved, are approved by my right honourable friend the Secretary of State for Transport. In the case of certain all-important air traffic control charges, they are actually fixed by statutory instrument and those are subject to parliamentary as well as ministerial scrutiny. I also venture to remind my noble friend Lord Kinnoull—for I know he is very well informed on aviation matters—of what is done already in the spirit of his amendment. Those who use the CAA's services are able to make their views known not only to the CAA but also directly to Ministers. I can assure your Lordships that they certainly do that.

The CAA already consults the aviation industry about any increases in charges which it wants to put forward. This is done by letter, setting out the details of what is proposed with background information. Nearly 1,000 such letters are sent out on regulatory charges alone and the CAA works hard at covering all relevant interests, including manufacturers and indeed user groups, as well as operators. This year, for example, a proposed increase was reduced in the light of consultation.

Regulatory charges are also considered by the Safety Regulation Group Finance Advisory Committee, the Operators Advisory Committee and the Air Registration Board, on all of which the industry is represented. In addition, the CAA also holds meetings with organisations representing the aviation industry, including the major airlines, to discuss its charging policies and its costs. Such consultation is carried out both directly and through the Eurocontrol consultation procedure when the air traffic control charges, which are collected through the international Eurocontrol mechanism, are concerned.

Turning to the question of efficiency indicators, there is already a considerable amount of information published in the CAA's annual report and accounts. This includes not just aggregate financial information—what I might call the usual bottom line figures—but also breakdowns for different areas of the authority's activities. This means, for example, that in the 1988–89 accounts one can see how much went on staff costs, or research and development, for air safety services or United Kingdom airspace traffic services.

The accounts also give non-financial statistical information, such as traffic handled or licences granted. They also include key performance indicators, very much in the spirit of my noble friend's amendment, such as the cost of safety regulation work as a percentage of UK civil aircraft production, or a capacity-manpower index showing the number of air movements against operational manpower.

However, I can go further and say that my right honourable friend the Secretary of State is already discussing with the CAA what more could be done. A much longer and even more comprehensive list of performance indicators is being drawn up. The intention is that they will be published in the CAA's annual report and accounts for 1990–91. I hope that my noble friend will feel that this is an important step forward.

I have sought to indicate what is already being done and what more it is intended to do. I hope, against the background of what I have said, that your Lordships will agree that it would really not be appropriate for this small Bill, which focuses only on a particular though important point of financial mechanism, to have put into it a much broader policy requirement not directly related to borrowing.

I am honestly not persuaded that these amendments, which would entail arrangements going beyond those for any other nationalised industry, are the best way to achieve efficiency. Nor am I convinced that the Civil Aviation Authority is the unaccountable monolith some would have us believe. I hope that the noble Lord, Lord Underhill, and my noble friend will feel that the present arrangements to promote efficiency and responsibility are, after all, appropriate to their purpose and that, recognising that we largely share the same objectives, they will feel able to withdraw their amendments.

The Earl of Kinnoull

I am grateful to my noble friend as I am sure he is grateful to my noble friend Lord Boyd-Carpenter for his powerful defence of the Civil Aviation Authority. The discussion which we have had this afternoon is no criticism of that authority and the noble Lord, Lord Underhill, went out of his way to state that. It is a question of accountability. I add that I am delighted that my noble friend Lord Boyd-Carpenter was able to intervene because he was the distinguished first chairman of the Civil Aviation Authority and brought great lustre to that position when the authority was set up.

I am sure that my noble friend would not defend the Civil Aviation Authority to such an extent as to say that there is no weakness at all in it. It is a large and efficient organisation. In many ways it does a wonderful job but there are weaknesses. If I may say so to my noble friend, with respect, there is a continual weakness over the air navigation services. He may have read the independent report of the committee chaired by my noble and learned friend Lord Rawlinson which looked into the Civil Aviation Authority. The report specifically referred to the air navigation services and said that there was no reason why it should not be healthy to have competition with those services. There was no reason why individual airports should not use the public sector ATC agency.

I know that my noble friend is aware of this and I hope something may come out of it because competition would help efficiency. That is a fair comment and it is not a matter necessarily of divorcing air navigation services which carry out a tremendously responsible job for the major airports in our country. It is at the smaller airports where this might be put to private use.

I am grateful to my noble friend. I feel that he has gone some distance in showing his sympathy for the spirit of the amendments. I am grateful to learn that his right honourable friend is seeking to ensure that in future the Civil Aviation Authority will put more information into its annual report which will give better accountability. For those reasons I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 2 and 3 not moved.]

Clause 1 agreed to.

Remaining clause agreed to.

House resumed: Bill reported without amendment: Report received.