§ Lord Clinton-Davisasked Her Majesty's Government:
What steps have been taken regarding the application by the National Air Traffic Services to amend its charges.
§ Lord McIntosh of HaringeyMy Lords, the Civil Aviation Authority, which is NATS's economic regulator, has proposed some changes to the way in which NATS is regulated. Its proposals include giving NATS some protection from traffic fluctuations and allowing it to levy slightly higher charges—although charges will still decrease in real terms. These changes will make a vital contribution to the financial package that NATS and its shareholders are putting together to put NATS's finances on a secure footing for the future.
§ Lord Clinton-DavisMy Lords, I thank the Minister for that reply. Does he agree that, in the wake of the events of 11th September 2001, it was important for NATS to restructure its balance sheets? Does he also agree that the new regime proposed by the CAA will in no way impinge on the airlines except that there is likely to be a gradual reduction in charges over the years? Is not the corollary of that that there will be an unlocking of resources to improve air traffic control services? Does he also agree that, in the light of the overall situation, the quicker the recommendations are accepted, the better it will be for the whole airline industry?
§ Lord McIntosh of HaringeyMy Lords, my noble friend Lord Clinton-Davis is right to draw attention to the effect of September 11th, which affected not only our own air traffic control system but all air traffic control systems, all airlines and the whole airline industry, all of which are having financial troubles of different kinds. It is certainly true that any changes will have to be acceptable to the airlines, not only as users, but, in some cases, as shareholders of NATS. I also agree that the issue should be resolved as soon as possible. The consultation period to which I referred ends on 14th November. It is important that the CAA should seek agreement on a way forward as soon as possible.
§ Lord RotherwickMy Lords, let us bear in mind that NATS's current financial problems were caused by a downturn in the demand for its services following the events of 11th September. Does the Minister think that NATS could survive another downturn in business 864 due to a similar event such as a war with Iraq? What are the Government doing to ensure that NATS can survive such unforeseen predicaments?
§ Lord McIntosh of HaringeyMy Lords, the proposals put forward by the CAA, which are being consulted on at the moment, cover a considerable number of years ahead and will have to take into account the type of consideration that the noble Lord, Lord Rotherwick, raised. As for the immediate future, NATS has satisfactory financing for some time ahead.
§ Lord BradshawMy Lords, in giving general guidance to the CAA as the economic regulator for the industry, will the Government ensure that matters of great importance to the airline industry—matters such as surface access which are probably more important than NATS to the development of airlines—are properly funded from the regulated charges imposed on the airline industry?
§ Lord McIntosh of HaringeyMy Lords, the noble Lord, Lord Bradshaw, is right to refer to general guidance because, although the CAA is the regulator, it is the independent regulator and it would be wrong for the Government to indulge in micro-management of it. I am not quite sure on which side of the line the issue which he raises falls.
§ Lord HoyleMy Lords, can my noble friend confirm that, if we can get it in place, the new financial regime will lead to long needed and long overdue increased investment? Can he also confirm that the new regime will not be a burden on the airlines as it will lead to reduced costs in the long run?
McIntosh of HaringeyYes, my Lords, the airlines have the same interest as NATS; they, too, have an interest in an efficient, up-to-date and well-resourced air traffic control system in this country. They also have very much the same interests as we do as the users of their services.
§ Viscount AstorMy Lords, does the Minister agree that safety is paramount? Is it not surprising and a matter of concern for the Government and the CAA that, while traffic has decreased this year, delays have increased and there has been a record number of what are called "risk-bearing incidents"—in laymen's language, near collisions? There have been seven such incidents so far this year. Is that not a cause for great concern? As to restructuring, is it not the case that NATS has been saddled with £780 million-worth of debt, costing more than £45 million in interest a year? If that is going to be converted into shares, will the Government decrease their NATS shareholding or put up their share of the money in the restructuring?
§ Lord McIntosh of HaringeyMy Lords, I agree with the noble Viscount, Lord Astor, that safety must be paramount. However, even in the period soon after the construction and commissioning of Swanwick, safety standards have been very high. Significant delays, 865 which are the other aspect, have also not been very significant. In the year to date, delays attributable to air traffic control have been 2.8 minutes per flight. That is not what one hears from the pilots but that is what actually happens. Speculation on changes in shareholding as between us and the airlines is premature.
Lord BerkeleyMy Lords, my noble friend said in answer to an earlier question that it was important that the airlines accepted the new financial structure for NATS. Does he not agree that whether or not they do so, the important factor is that NATS works efficiently and effectively and has long-term financial stability regardless of the ups and downs and the fluctuations of the airline market? If that means a short-term rise in charges to the airlines, at least it will help NATS get on its feet.
§ Lord McIntosh of HaringeyMy Lords, in the sense that it is important for the management of NATS to get on with managing rather than worrying where the money is coming from, I entirely agree with my noble friend.