HL Deb 31 January 1994 vol 551 cc1157-67

5.54 p.m.

Baroness Denton of Wakefield

rose to move, That the draft order laid before the House on 9th December be approved.

The noble Baroness said: My Lords, the order represents the first piece of Northern Ireland airports legislation to be brought forward since the Aerodromes Act (Northern Ireland) 1971. There has been a shift in the Government's airports policy during that period and that is now reflected in the proposal before the House. I shall return to that point in more detail.

The order also provides for the modification of existing airports legislation in Northern Ireland so that the rights of airport operators are more in harmony with those of their Great Britain counterparts. The most significant feature of the order is Part V in which the provisions clear the way for the privatisation of Belfast International Airport. I propose to comment first on that important area.

To return to my opening remarks, noble Lords will be aware that, in line with the policy of exposing public utilities to the challenge of market forces, all government-owned airports in Great Britain were privatised in 1987 when the former British Airports Authority became BAA plc. The remarkable commercial progress of that company since its transfer to the private sector stands as a testimony to the success of the Government's policy. Now Belfast International is the only remaining government-owned airport, and with its consistently good trading record over the past decade it is an obvious candidate to be allowed to follow the earlier example of airports such as Heathrow, Gatwick, Glasgow and Edinburgh.

In contrast to the privatisation of the British Airports Authority, however, Northern Ireland Airports Limited, the public company which operates Belfast International Airport, will be privatised on a trade sale basis. During the consultation period there was a degree of lobbying to float the company by means of a public share issue but that was discounted, primarily on the grounds of additional cost and lesser proceeds.

I mentioned earlier that the opportunity was being taken with this order to harmonise current Northern Ireland airports law with that which applies in Great Britain. That general principle is followed in Parts II and III of the order. The main changes to existing law involve primarily the compulsory acquisition of land, matters relating to airport safety, the appointment of airport constables and the provision by airport operators of consultation facilities for certain groups or bodies. In Great Britain that latter provision, when introduced, spawned the highly successful system of airport consultative committees which has enabled issues of common concern to be discussed by operators and users at those mainland airports designated for that purpose.

Part IV of the order will introduce to Northern Ireland a system of economic regulation similar to that which applies to Great Britain airports. While that will not apply to all airports, nevertheless any airport with a turnover of more than £1 million in at least two out of three consecutive years—in practice Belfast International and Belfast City Airports—will be required to apply to the Civil Aviation Authority for permission to levy airport charges. Such operators will also be required to make available to the CAA prescribed financial information with a view to identifying any subsidy element of charging policy. I should stress that the CAA will not determine airport charges, but it will be empowered to investigate complaints about charging policy or predatory pricing and enforce appropriate remedial measures.

I have already dealt with Part V. The order concludes with a supplementary part on amendments and repeals, and the making of subordinate regulations and orders under the primary legislation.

In winding up I should like to inform noble Lords briefly of the consultation process on the order. It attracted just over 30 responses, of a minor nature only, and in certain cases the Government have been able to accommodate suggestions that were put forward. For example, it will be noted that after representations the General Consumer Council for Northern Ireland has been included in Article 20 as a body for which designated airport operators must make consultation facilities available.

As more people take advantage of air travel, airports have an increasingly important role to play. The order is timely in that it introduces best practice for all airport operators, and, in the case of Belfast International Airport, frees it from the constraints of government control to take full advantage of the new opportunities on offer. I cannot over-emphasise the strategic importance to Northern Ireland life that Belfast International Airport, as the premier gateway to the Province, commands in economic and social terms. In moving forward with the privatisation of this major asset, the Government are confident that under private ownership it will enhance that reputation and ensure that the Province is able to compete even more robustly in the wider European and global markets which are so important to its economy. I beg to move.

Moved, That the draft order laid before the House on 9th December be approved.—(Baroness Denton of Wakefield.)

6.1 p. m.

Lord Cooke of Islandreagh

My Lords, as a native of Northern Ireland, I welcome the noble Baroness to her new duties and wish her success. I hope that she will enjoy her work.

This is a complex order. It repeals six former measures, and introduces a variety of articles on a number of subjects. However, there is no doubt that the underlying basis for the order is preparation for the privatisation of Belfast International Airport. There is widespread anxiety in Northern Ireland as to whether such privatisation is wise. Naturally, I shall explain why it is such a widespread view.

Some three years ago when the decision was made to privatise Belfast International Airport, a Minister who sought advancement and perhaps brownie points could achieve them by announcing the privatisation of anything in sight. The privatisation of Aldergrove—the international airport—was announced without consideration, it now seems clear, of all the complications and problems which exist. Security is one. It may be helpful if I explain my interest in the international airport. In 1969—perhaps it was 1970—Belfast Aldergrove Airport was transferred from the Board of Trade to the Northern Ireland Government. I was one of six or seven persons who were asked by the then Minister of Commerce, Brian Faulkner, to form the board of the new company and to develop the airport. His brief to us was simple: to develop the airport in the interests of the Province, in particular the business traveller but also the private traveller; and to do that in a commercial manner as though it were a private company. I cannot think of a much better brief than that. But there was a reason for requesting that the airport be developed in the interests of the Province. In Northern Ireland we cannot jump in our cars or go to a railway station in order to travel to Birmingham or London. travel is vital to us. As the Minister correctly stated, Belfast International Airport is the gateway to Northern Ireland. It is vital, particularly in the present situation, that first-time visitors receive a good impression when they arrive at the airport. That has been a consideration of Northern Ireland Airports Limited throughout the development. It can make an enormous difference to a would-be industrialist who is considering opening a factory in Northern Ireland if he arrives in a well set out place with competent and friendly staff. Belfast airport is known as having such staff and such a reception.

It may cost more than is normally necessary to provide the current level of assurance. That might be difficult for a private operator. So far as I am aware, the security problems at mainland airports are comparatively straightforward. At the Aldergrove airport the position is extremely complicated. The facilities are shared with the MoD; there are RAF and Ministry facilities within the perimeter fence which is seven miles long. There is a continuing and real threat on the security front which is currently looked after in a corporate manner by the various interests involved. There is excellent co-operation between the different interests, and security arrangements have worked well.

It was perhaps fortunate that the security threat developed in advance of building work and construction of the airport. It was possible to design the airport in a manner to deal with the security threat. Those security arrangements are highly regarded throughout the world. The airport has been visited by security interests from North America, South America, the Continent and from this country. Such visits have been helpful to others facing a security problem.

Security is not referred to in the order but it is vital to the airport complex that the matter should be properly dealt with. Will the new operator be responsible for security? I hope not. I trust that security will be the responsibility of the security services generally. I hope that the Minister will assure us that security arrangements will be outside the operator's control.

Who will pay for the security arrangements if the responsibility is outside the operator's control? I assume the answer is that the operator will pay for them. That presents problems because the security scene often changes. Structural arrangements need to be carried out in order to deal with the threat. Will the private operator have to deal with sudden calls for substantial expenditure for which he has not budgeted?

Any airport operator is bound by regulations and restrictions. I refer to the CAA; landing fees, which may be too much or too little; the Monopolies and Mergers Commission; and, in the case of Belfast International Airport, substantial security costs. One wonders how attractive the sale will be to a private operator. We understand that it is to be a trade sale. That means that the department will negotiate with contenders and will presumably endeavour to achieve the best price. However, if the operator does not find it an interesting enterprise, what prevents him from selling it on to someone else—perhaps to an Iraqi operator? How can that be prevented? Is there an intention to have a golden share attached to the sale? How effective in the longer term is a golden share under European law? It is essential that the management of Belfast International Airport should be kept in safe hands.

It is worrying that much new traffic seems to be moving to Belfast City Airport. The airport is overcrowded it does not have the capacity to deal with the traffic which has gone there because it has lower rates than those applying at Belfast International Airport. It is clear from what has been happening recently that Belfast airport is being fattened up for privatisation. One wonders how much that has to do with its lack of ability to attract the new operators.

It is particularly worrying that a direct Belfast-Heathrow service now operates from Belfast City which may mean the cutting back of either the services at present operated by British Airways or British Midland. Those together offer a vital and essential service to business travellers. If the service should become split between the two airports it will be confusing and troublesome. For one thing, one's car may not be at the right airport when one wishes to return. I wonder how the Government intend to deal with the matter which has become urgent. Belfast City Airport is overcrowded. I hear some horrible tales and experiences of travellers, arising from the pressure on facilities.

It seems obvious that the transfer to the private company will be hedged with all manner of restrictions and the companies will not be masters in their own house. What will the department do if it does not consider that offers by the prospective companies are adequate to fund the assets which have been invested by the taxpayer?

We have in place at Belfast International Airport a management system which works. It has made money. It provides good facilities, and the service is excellent. Why change something that works? If the Treasury is concerned about borrowing public money to fund development, I am sure that arrangements could be made or powers provided whereby the present airport company could borrow on the commercial market.

It seems that a great many complex arrangements will have to be made to deal with the problems. It would be much simpler to reverse the decision to privatise. One has the impression that a decision, once made by government, is not changed because of fear of losing face. I suggest that on this occasion the Government would earn respect by changing the decision. I hope and trust that the Minister, having considered the matter, will advise the House in a short time that other arrangements can be made.

Lord Hylton

My Lords, before the noble Lord sits down, does he agree that a measure of competition between the two airports works in favour of the consumer? We accept that the proximity of the city airport to the city centre and to east Belfast tells strongly in its favour.

Lord Cooke of Islandreagh

My Lords, there are certain services for which that is so. Belfast City Airport has done a good job in opening up many minor routes and services which would not have happened in the main airport. However, it has now reached the point where main line services are threatening to move. It is said that British Airways proposes to move. That would not be helpful to either the business traveller or the private traveller.

6.14 p.m.

Lord Holme of Cheltenham

My Lords, I thank the noble Baroness for the extremely clear and helpful way in which she introduced the order. It is a complex order but I should say that it is relatively uncontentious. If it is thought sensible to privatise Belfast International Airport, then the order follows naturally from that premise.

When the noble Baroness replies, she would do us all a great service by taking up the points of the noble Lord, Lord Cooke, with his great experience, about security and the question of a sale on to a third party by the trade sale recipient of the franchise. Both those are major questions and I shall return to security in a moment.

Other points about the order are these. I welcome the attention which is given in Articles 21 and 22 to noise pollution—a problem which may become greater in the future. The order empowers the department to take action when aircraft are too noisy. Can the noble Baroness tell us whether the department expects to be receptive to complaints about noise and how it will treat them when such complaints are made?

On a different point, in Article 23 there is provision for the sale of aircraft after 56 days of non-payment of outstanding airport charges. We on these Benches are rather in favour of penalties for the late payment of commercial bills, but I must say that after 56 days, to sell the aircraft seems draconian. Is it the Government's intention that there should often be recourse to that provision? I have a feeling that that may hamper the commercial prospects of Belfast International Airport. At the least, I should like some reassurance about flexibility on that, when the Minister replies.

Another point is that Article 49 is somewhat worrying as regards the restriction on the disclosure of information. The article lists several bodies which should have access to privileged information, but for some reason the list does not include Parliament. If the information were to be relevant, for example, to some future order before the House, then Parliament could only obtain it through a stratagem such as asking the Director General of Electricity Supply for Northern Ireland, who is allowed to have the information. Could the Government please add Parliament to the list of bodies with access to the privileged information?

Finally, I should like again to raise with the noble Baroness the question of security, which is extremely important. There is total integration of security at present at Belfast International Airport, as we all know. Article 19 of the order gives the contractor the power to create a constable to oversee the airport. I think that the creation of a new constabulary is rather an important move. Has it been cleared in consultation with the RUC? And what is the attitude of the RUC to contractual security at the airport with the status of a constable? I should be grateful if the noble Baroness could reassure us on that. Speaking from Benches that are on the whole in favour of the privatisation of airports, I have no other comments to make on the order.

6.18 p.m.

Lord Williams of Mostyn

My Lords, I must congratulate the Minister on winning her first Division; I hope that it does not set a precedent for the future. I recognise, of course, that the Government at present in power are obsessed with selling public assets, quite often at too low a price, if we think back to the Statement this afternoon. Perhaps that is an argument that is outside the sensible terms of reference. However, perhaps I may support and endorse the questions which the noble Lord, Lord Cooke of Islandreagh, asked in particular in the security context.

I wish to take up the questions put by the noble Lord, Lord Holme of Cheltenham, about Article 19(4). As I understand it, as at April last year there were 59 airport police at the international airport in Belfast. But Article 19 authorises an airport operator himself to appoint any person to be a constable. Article 19(3) states that such person on appointment shall, on the airport, have the powers and privileges and be liable to the duties and responsibilities of a constable". Curiously, with those powers and responsibilities, under Article 19(4): Constables appointed under this Article shall be under the exclusive control of the airport operator by whom they are appointed". That seems extraordinary. That operator may suspend or terminate the appointment of any such constable.

The questions that really trouble us are these. Who is to control these police officers? Is it to be the private company? What powers are the officers to have? What safeguards will there be about appointment and training? Will pay and conditions be tied to comparable pay and conditions in, for instance, the RUC? Will there be adequate testing for these new recruits? Ought there not to be at least a police committee attached to deal with these important questions? Will the equivalent of the Police Complaints Authority have jurisdiction over the airport police? Are they to be allowed the use of fire-arms? If so, on whose authority and on what basis of training?

The Minister mentioned that the device of privatisation would bring Belfast International Airport in line generally with airports of a significant size in England and Wales. My understanding is that the policing of Heathrow is under the jurisdiction of the Metropolitan Police Commissioner. If that is right, why does one need a separate police force for an airport in Belfast, bearing in mind that the security problems, as both noble Lords who spoke before me have rightly observed, are much more acute and difficult in Belfast? My understanding also is that other metropolitan airports in England and Wales are normally under the jurisdiction of the local police authority. Those are important questions. I realise that there are a number of them, but they all derive either from Article 19 or from the worries that we on these Benches have, which have been expressed by noble Lords who spoke before me, about security.

I shall now turn to a different aspect:, having asked a fair barrage on the police. Is it correct that within the past three years or so Belfast International Airport has received grants of about £7.5 million from the European Regional Development Fund transportation programme? If it is intended that the sales should be at full market price, what is the estimated clawback which the transportation programme will look for? The Minister has said that she will give further clarification in closing. We should be grateful to know the safeguards, if any, for the employees presently at Belfast International Airport in respect of this trade sale? What are the costs of privatisation? What is the differential between a flotation on the open market and a trade sale in anticipated net receipts? None of these things has been described in any sort of detail at all. Given that, as I understand it, there was a 71 per cent. increase in profit in 1992-93 compared to the previous year, what is the discernible benefit to travellers, local employees, the business community and the economy in Northern Ireland generally?

Finally, I want to revert to the defence aspect. It does not seem to us, from the explanations given so far, that sufficient in-depth attention has been given to the defence and security aspects. We look at least for some reassurances about selling on. One does not want to be over-dramatic. However, as the noble Baroness's colleague indicated in the Statement earlier this afternoon, once a company has been privatised—-Rover in that case—any subsequent transaction is a purely commercial transaction between Rover, and the purchaser, BMW. Will there be any legally enforceable guarantees about a subsequent sale of an airport of this importance, not simply as regards commercial implications but also defence and security implications?

6.24 p.m.

Baroness Denton of Wakefield

My Lords, I am grateful for the comments that have just been made on this Order. As the noble Lord has said, I outlined the background in my opening remarks and I shall deal with specifics in a moment. May I say that the questions of the noble Lord, Lord Williams, came so thick and fast, especially towards the end of the debate, that I hope he will understand that I may have to read Hansard before I can register all of them. However, I will certainly write to him on any questions that I do not reply to now. In particular, I hope the noble Lord will accept that as regards questions with close security implications, I will make a point of writing about them if it is not appropriate to answer them here and now.

I should like to thank the noble Lord, Lord Cooke of Islandreagh, wholeheartedly for his welcome to me in my new job. I am quite certain that I shall enjoy it—indeed, I am already doing so. I also join with him in endorsing the value of inward investment to the Province and say how important Belfast International Airport is in that respect.

I believe that we are following the correct course by permitting Belfast International Airport to enter the private sector. For example, a study of the Government's privatisation programme begun in 1979 shows that privatisations generally have demonstrated that increased efficiencies are introduced into a business for the obvious reason that commercial decisions are taken on a more profit-motivated basis and that profits allow investment. Privatisation has meant that goods and services are provided at the lowest economic cost by virtue of the competition which privatised companies then face. Decision taking is speeded up, unhindered by government interference and procedures. Here perhaps I may divert in the way that the noble Lord, Lord Williams, did and say that, having worked at Rover when it was a government business, I have been pleased to see it progress since it went into the private sector. Decision taking, as I have said, is unhindered by government interference and procedures and is given exposure to the disciplines and opportunities of private sector markets. All these positive steps assist towards turning privatised entities into streamlined businesses. That can only be of benefit to the consumer.

Perhaps I may also draw attention to the fact that our privatisation policy is being copied in many countries now. Again, as the noble Lord said, the experience of British international airports in security matters has been something for which other countries have turned to us for lessons. I would expect Northern Ireland travellers to benefit. The BAA, to which I alluded in my opening remarks, continues to be a beacon of success as a privatised airport group. I am sure that Belfast International Airport will follow that pattern.

Not surprisingly, noble Lords felt anxiety about the security implications of this airport. There can be no question that matters of security in Northern Ireland on any aspect are treated with the utmost seriousness and resolution in order to maintain the high security standards that are needed. This matter of airport security, once it is in private hands, has been examined thoroughly with the appropriate bodies and I can assure your Lordships, without going into details, that security will not be affected by privatisation either now or later. The Ministry of Defence has been very closely involved in discussions in bringing this Order forward. Present security arrangements will apply. The present company meets appropriate charges as laid down in regular surveys by the RUC, and that position will continue. Any new owner will be aware through the sales prospectus of his responsibilities in that area. I would add that those responsibilities do not appear to have deterred interest in the airport. I am sure noble Lords will be pleased to hear that there will be put in place a system which effectively gives Government full control over the vetting of new owners, subsequent to the original buyer.

With regard to the question of whether the taxpayer will receive full recompense, the public investment at Belfast International Airport has been made at every stage over its 30-year history, as the noble Lord, Lord Cooke, will know better than I. The Government expect that that soundly-based investment will be recognised in the price offered by bidders and have complete confidence that after privatisation all the assets of the airport will be fully exploited. There will be no clawback of the grant on ERDF. That has been confirmed by Brussels.

With regard to competition between Belfast City and Belfast International Airport, it is the Government's policy not to interfere in the marketplace. Having said that, the growth of Belfast City Airport will be measured against the policies adopted as a result of the Belfast Harbour local plan inquiry. The noble Lord, Lord Holme, raised the question of noise pollution, which is crucial and of growing interest. The department initiated a scheme to identify noise contours at Belfast City Airport. Although the location of Belfast International Airport means that environmental problems are not apparent, I can assure the House that they will be monitored closely and complaints carefully considered.

Perhaps I can cover a point raised by the noble Lord, Lord Holme, regarding the Government's plans for the policing of Belfast International Airport. They were drawn up in full consultation with the Royal Ulster Constabulary. Where it is necessary for airport constables to carry firearms after privatisation, the RUC is content that adequate controls will be in place regarding their issue and use.

The question of security and the airport constabulary is a matter of major concern. Government security advisers carefully considered the issue of policing following the privatisation of Belfast International Airport. They are satisfied with the performance of the present airport constabulary, which is under the direct control of the airport management. They are content that the force can transfer into the private sector. But the Government will be putting in place certain safeguards and strict monitoring arrangements to ensure that the commercial interests of the new management do not undermine the operational independence and professionalism of the force or the security of the airport generally.

Lord Holme of Cheltenham

My Lords, I am grateful to the noble Baroness for giving way. I am not sure that I heard her correctly. Do I understand that there is some question of this privately contracted police force carrying firearms? For that to be the case in any part of the United Kingdom would be an extremely serious step to take. I do not know whether the noble Baroness misstated herself or whether it is possible that a privately-contracted police force would carry firearms.

Baroness Denton of Wakefield

My Lords, the noble Lord heard correctly. I said that where it is necessary for airport constables to carry firearms after privatisation, the RUC is content that adequate controls will be in place regarding their issue and use.

Lord Holme of Cheltenham

My Lords, I am sorry to press the noble Baroness. But does that mean that those firearms will only be issued with the explicit consent of and under the control of the RUC? Is there any situation where that would not be the case?

Baroness Denton of Wakefield

My Lords, I am pleased to say that the RUC would work on the issue and in close collaboration with the airport authorities. It is the responsibility of the RUC to advise and ensure that the last thing we do is put the security of the airport at risk.

Lord Williams of Mostyn

My Lords, perhaps the noble Baroness will allow me to intervene. In England and Wales, as is well known, a firearm can only be issued to a police officer of a lower rank by a designated officer of a significantly superior rank. Both the noble Lord, Lord Holme, and I are concerned about the issue. I would not wish to press the Minister this evening because, in fairness, we asked a number of detailed questions. For my part I would be happy with a written, researched reply. That would perhaps be a fairer way of dealing with the matter. We are both concerned about the aspect, as I believe appears from our earlier questions.

Baroness Denton of Wakefield

My Lords, I thank the noble Lord, Lord Williams, for those remarks and understand that the noble Lord, Lord Holme, also will accept a detailed, researched reply. I shall ensure that that is forthcoming. I should like to conclude that issue now by saying that if for any reason the airport were to cease to maintain a satisfactory level of policing, powers are available under the Aviation Security Act 1982 to allow the policing role to be taken over quickly by the RUC.

I can assure the noble Lord, Lord Holme, also that the sale of aircraft has not been seen as a major source of revenue in the prospectus. The issue of the commercial payment of debts is one which I know we both hold close to our hearts.

The questions your Lordships asked were detailed and are deserving of a detailed response. I shall ensure that comes to your Lordships. With that assurance, I commend the order to the House.

On Question, Motion agreed to.