Municipal Airports: Future (Hansard, 22 April 1991)

§ Viscount Davidson
My Lords, the Government wish to see the local authority airports grow, but the public sector cannot afford all the resources which are necessary to achieve this. The answer is for local authorities to structure their development so that the private sector will take the major share in both the opportunities and the risks of expansion.

§ Lord Dean of Beswick
My Lords, are not local authority airports public companies with councillors on the boards as directors? Does that not make it more difficult to privatise the airports? If privatisation is carried out, will the noble Viscount give an undertaking that the local authorities involved and therefore the ratepayers will receive full market compensation and will not have the goods stolen from them without compensation as occurred with water privatisation?

§ Viscount Davidson
My Lords, I am not in a position to give any guarantee. However, as my right honourable friend the Secretary of State said last week, he is looking at privatising local authority airports. No decisions have been taken. It would be foolish not to examine the options.

§ Baroness Hollis of Heigham
My Lords, given that some municipal airports receive local authority subsidy in order to provide an essential service for local industry and commerce, especially in regions of the country where communications are poor, what assurances will the Minister give that once privatised such airports will not be asset stripped and closed down to the detriment of the local economy?

§ Viscount Davidson
My Lords, as long ago as the 1985 White Paper on airports policy, the Government stated that private ownership and management would have major advantages at least for the largest local authority airports. They also said that they would encourage them to introduce private capital. There has been no secret about what the Government have been trying to achieve since then.
For the current financial year, the Government will be making £87 million available in credit approvals for investment in local authority airports. That is on top 10 of profits that the airports reinvest. Over the past 10 years we have made £310 million available for investment.

§ Baroness Hollis of Heigham
My Lords, will the Minister be kind enough to answer the second part of my question? What assurances will he give that such airports will not be asset stripped and closed down should building land prices rise again?

§ Viscount Davidson
My Lords, I can give no assurance to the noble Baroness. As I said, the matter is still speculation.

§ Baroness Hollis of Heigham
My Lords, that is precisely what we fear.

§ Viscount Davidson
My Lords, I cannot speculate on speculation.

§ Lord Underhill
My Lords, from the noble Viscount's reply, may we assume that there will not only be encouragement for local authority airports to take up private capital on a long-term basis but also the removal of present restrictions? That seems to be an important matter. Since the Government are considering options may we assume that they will not follow any doctrinaire policy on privatisation?

§ Viscount Davidson
My Lords, local authorities already have the power to dispose voluntarily of all or any of their interests in public airport companies and to sell their non-company airports and airfields. Disposal does not require the Secretary of State's consent. The private sector can be involved by the sale of a controlling interest in an airport company or by a variety of joint individual projects. The new terminal which is nearing completion at Birmingham is an excellent example of constructive co-operation between the public and private sectors.

§ Lord Sefton of Garston
My Lords, does the noble Viscount agree that the siting and running of airports in this country are of great international significance? How does he reconcile the ownership of those airports and the Government being responsible for a strategic plan in regard to our international transportation?

§ Viscount Davidson
My Lords, the civil aviation authorities advise that traffic at regional airports will continue to grow strongly irrespective of whether further South-East capacity is built. We welcome that because we wish to see regional airports handling all the traffic they can.

§ Lord Underhill
My Lords, the latter part of the noble Viscount's reply to my previous question did not answer the point that I raised. I do not refer to disposal of assets or of the controlling interest. Local authority airports should have the freedom to go into the private capital market.

§ Viscount Davidson
My Lords, that is one of the options being considered.

§ Lord Dean of Beswick
My Lords, if local authorities wish to deal with property or land in their area, they have to go through the processes of the CPO. Such valuation is decided by the district valuer. 11 Will the district valuer value those airports or will it be the duty of the Secretary of State, who will give them a knock-down price as has occurred with other public assets that have been sold off?

§ Viscount Davidson
My Lords, I shall pass on the noble Lord's comment to my right honourable friend.