§ Mr. Traceyasked the Secretary of State for Transport what response the Civil Aviation Authority has made to the Monopolies and Mergers Commission's report on the authority's provision of navigation and air traffic control services to civil aircraft published on 9 November; and if he will make a statement.
§ Mr. David MitchellI have arranged for copies of the authority's initial response to the MMC report to be placed in the Library.
The Commission was particularly asked to address six topics: cost control and allocation, use of manpower, the labour saving effect of new equipment, planning and appraisal of new investment, the carrying out of investment projects, and maintenance procedures. In relation to all of them the commission found a number of matters to which it felt the authority needed to give immediate attention in order to improve its efficiency without detriment to the performance of its international obligations and the maintenance of a high level of safety. The commission praised the very high standard of air traffic control provided by the National Air Traffic Services and did not conclude that the authority was pursuing a course of conduct contrary to the public interest.
The authority in its response says that it has accepted 37 of the MMC's 49 recommendations wholly or in part, and that it has already implemented 15 of them. I endorse the commission's recognition of the high standard of service provided by NATS, and in particular its excellent safety record. But I also accept the commission's view that there is scope for significant improvements in efficiency without prejudicing those high safety standards, and will be looking for quantifiable improvements in this respect as the MMC's recommendations are implemented.
275WThe MMC recommended that in seeking to improve its efficiency the authority should concentrate first on its use of manpower. The authority has affirmed its determination to seek improvements in productivity. To this end it is to conduct a thorough review of its manning arrangements. I hope both management and unions will approach this constructively.
The MMC drew attention to the importance of the authority's adopting some form of output measure and setting targets for cost reductions. The establishment of such performance indicators and the agreement of quantifiable objectives are an important element of the Government's nationalised industry policy. The authority doubts the validity of the measures of output suggested by the MMC and I accept that there may be more appropriate measures. The CAA is continuing to research more suitable alternatives for incorporation in future corporate plans. I have asked the chairman of the authority to give a high priority to completing this work, and I hope to be able to announce appropriate targets for the CAA shortly.
The MMC expressed doubts as to whether the division of responsibility for NATS between the CAA board and the MoD was best calculated to promote efficiency. In its response the authority proposes a reconstituted air traffic control board to review and endorse the work of NATS. I welcome in principle the authority's proposal for strengthening the oversight of NATS, which my right hon. Friend the Secretary of State for Transport will be considering with the Secretary of State for Defence.
I am asking the chairman to draw up a timetable for the implementation of the MMC's detailed recommendations, and my Department will be following up with the authority progress in achieving it. I propose to make a further statement reporting on that progress towards the end of the year.