National Air Traffic Services (Hansard, 19 October 1999)

§ Mr. McDonnell
To ask the Secretary of State for the Environment, Transport and the Regions if he will make a statement on the time scale and arrangements for the exploration of his proposal for more conventional contractual arrangements for the provision of air traffic control services by NATS to BAA plc. [94337]

§ Mr. Mullin
Where NATS provides air traffic control services at an airport, it does so on the basis of a contract with the airport operator. However, the means by which it charges for these services differs between six of the BAA airports and other airports. Outside the BAA-run airports, NATS is paid by the airport operator, but in the case of Aberdeen, Edinburgh, Gatwick, Glasgow, Heathrow and Stansted, the contractual arrangement between NATS and the BAA provides for NATS to charge airlines directly for its services. No other provider of air traffic control services at airports has the ability to recover its charges direct from the airlines.
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The Government, in line with its expressed desire to explore the feasibility and desirability of a more conventional contractual arrangement, have recently written to representatives of the airlines, air users and the airport operators. These parties have been invited to comment on the arguments for and against direct charging for air traffic control provision at airports.
The Government propose that the CAA, as regulator, should review how direct charging is working after the PPP is set up. In carrying out this review, the CAA will consult with air traffic control service providers, airport operators and users. The Government will take a final view as to whether the facility should be extended to all providers, or should be withdrawn, when this review is complete. It is not the Government's intention unilaterally to force an end to a charging method that, on reflection of the arguments, was acceptable to all three parties involved.

§ Mr. McDonnell
To ask the Secretary of State for the Environment, Transport and the Regions if he will make a statement on those synergies which are to result from the public private partnership proposed by the Government for the future of National Air Traffic Services Ltd. [94322]

§ Mr. Mullin
We are determined to secure a genuine partnership between the public and private sectors. Private sector status will allow important investment and management decisions to be taken on commercial grounds while the public sector interest will be protected through the Golden Share, the shareholders agreements and the Government appointed partnership directors. There will also be a stakeholder council to provide a forum for consultation with all stakeholders in the partnership.

§ Mr. McDonnell
To ask the Secretary of State for the Environment, Transport and the Regions for what level of proposed reduction in the Government's shareholding in NATS it will be required to seek prior parliamentary approval. [94330]

§ Mr. Mullin
The Government intends to retain a 49 per cent. stake in NATS and will seek to ensure through legislation that there can be no reduction below this level without Parliamentary approval. In addition to this, a mechanism will be devised which will allow for limited dilution of the Government's stake if that is necessary in order to raise investment capital.

§ Mr. McDonnell
To ask the Secretary of State for the Environment, Transport and the Regions if he will make a statement on the detailed discussions which are to take place with potential strategic partners in the public private partnership proposed by the Government for the future of National Air Traffic Services Ltd on the suggested employee share scheme, setting out the arrangements for the timing and publication of the results of these discussions. [94323]

§ Mr. Mullin
The Government have said that 5 per cent. of NATS shares will be made available for an employee share scheme. Details of that scheme are being developed and we intend to discuss proposals with pre-qualified potential strategic partners, and with employee representatives in due course. However, as the pre-qualification process cannot begin until well into the 513W Parliamentary process for the legislation which will enable the PPP to be effected this will not be for some time.

§ Mr. McDonnell
To ask the Secretary of State for the Environment, Transport and the Regions if he will list the dates and duration of the meetings held by (i) himself and (ii) his Ministers with representatives of trade unions representing staff at National Air Traffic Services Ltd in the six months prior to 27 July. [94320]

§ Mr. Mullin
My right hon. Friend the Deputy Prime Minister met with representatives of the IPMS and PCS on 27 July 1999 to discuss the NATS PPP.

§ Mr. McDonnell
To ask the Secretary of State for the Environment, Transport and the Regions what assessment he has made of the effect on employment levels of the Government's proposed sale of 51 per cent. of National Air Traffic Services Ltd in the (i) five years and (ii) 10 years following the sale. [94321]

§ Mr. Mullin
No formal assessment of staffing levels has been undertaken by the Government. However, it is expected that due to the continued increase in the growth of Air Traffic, coupled with the new opportunities the PPP will create, there should be no adverse effect on staffing levels as a result of the PPP.

§ Mr. McDonnell
To ask the Secretary of State for the Environment, Transport and the Regions what assessment he has made of the proportion of employees taken on by the public private partnership proposed for National Air Traffic Services Ltd who will be able to join the Civil Aviation Authority Pension Scheme. [94331]

§ Mr. Mullin
All NATS staff who are in employment with the company at the time the public-private partnership is established will be entitled to remain in the Civil Aviation Authority Pension Scheme. It will be up to the strategic partner to determine the pension arrangements to be offered to staff taken on by the partnership after it is established.

§ Mr. McDonnell
To ask the Secretary of State for the Environment, Transport and the Regions if the decisions of the regulator proposed for Air Traffic Services in determining a dispute between the service provider and users envisaged under the public private partnership proposed for the future of National Air Traffic Services Ltd. will be open to judicial review. [94328]

§ Mr. Mullin
Decisions of the regulator will be open to judicial review in the same way as those of regulators in other regulated industries.

§ Mr. McDonnell
To ask the Secretary of State for the Environment, Transport and the Regions if he will list those potential strategic partners identified by the Government to date for participation in the public private partnership proposed for the future of National Air Traffic Services Ltd. [94324]

§ Mr. Mullin
The strategic partner for the NATS PPP will be selected following a competitive tender process. The Government will seek the widest possible participation in the process in the first instance, to enable them to pre-qualify a shortlist of quality and most appropriate candidates.
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§ Mr. McDonnell
To ask the Secretary of State for the Environment, Transport and the Regions what assessment has been made of the proposal that the employee share distribution involved in the public private partnership arrangements proposed for the future of National Air Traffic Services Ltd should include the distribution of shares into a Trust fund controlled by the employees. [94325]

§ Mr. Mullin
The form of the employee share scheme will be discussed with NATS staff representatives in due course. A Trust Fund is one option which will be considered.

§ Mr. McDonnell
To ask the Secretary of State for the Environment, Transport and the Regions if he will make a statement on the assurances to be given to leisure users of National Air Traffic Services Ltd on their exemption from certain charges under the proposed public private partnership. [94336]

§ Mr. Mullin
Leisure fliers are currently exempt from most air traffic control charges and NATS is not seeking to change this. There have, of course, long been differing views as to whether these exemptions should continue. But there will be full consultation with air users and other interested parties, if at any time in the future, there are proposals to remove these exemptions.

§ Mr. McDonnell
To ask the Secretary of State for the Environment, Transport and the Regions what mechanism will be set up to assess on its merits each occasion when it is necessary for the United Kingdom to be represented in international fora on air traffic matters by(a) Government officials and (b) the private sector partner envisaged in the public private partnership proposed for National Air Traffic Services Ltd. [94327]

§ Mr. Mullin
The question of United Kingdom representation at international fora is presently being considered. Many international panels and study groups, upon which the UK is represented, are highly technical in nature. In such cases the prospect of a conflict between commercial and public interest may be minor, and outweighed by the benefit of having the best qualified body take the lead. The Government are the signatory to most international instruments and must, therefore, ensure both that all interests are taken into account in deciding the UK's negotiating position, and that all relevant sources of expertise are used to the greatest effect.

§ Mr. McDonnell
To ask the Secretary of State for the Environment, Transport and the Regions if he will list the dates and duration of the meetings held by (i) himself and (ii) his Ministers with the senior management of National Air Traffic Services Ltd in the six months prior to 27 July. [94319]

§ Mr. Mullin
In the six months up to 27 July, the Minister for Transport met with Senior Management of NATS on 4 March, and 8, 22 and 27 July. The DPM met with senior officials of NATS in a separate meeting on 27 July, and that meeting was also attended by the Minister for Transport.

§ Mr. McDonnell
To ask the Secretary of State for the Environment, Transport and the Regions if he will make a statement on the Government's proposals to take powers of direction over National Air Traffic Services Ltd, the Civil Aviation Authority and UK civil aviation in times 515W of hostilities, severe international tension or great national emergency; and what will be the arrangements for consultation on these proposals. [94334]

§ Mr. Mullin
The Government will need to be able to exercise control over NATS operations, and over UK civil aviation in the event of crisis, war, severe international tension or national emergency. The Government therefore intends to bring forward legislative proposals to take powers to direct the CAA, NATS and any other owner or operator of a relevant asset toparticipate in planning for an emergency; in the case of the CAA, to discharge its functions in accordance with the directions; in the case of owners of assets and operators of air services, manage the asset or provide the service in accordance with the directions.
The Government will be seeking the consent of Parliament to these powers of direction being available in times of hostilities, severe international tension or great national emergency.
The Government's proposals were set out in the consultation paper "A public/private partnership for National Air Traffic Services Ltd (NATS)", published on 20 October 1998, and in the Government's report on the responses received, which was published on 27 July 1999.

§ Mr. McDonnell
To ask the Secretary of State for the Environment, Transport and the Regions what contingency arrangements are to be put in place to ensure the uninterrupted provision of air traffic control services and the compliance of the United Kingdom with its international obligations in the event of insolvency of a strategic partner in the proposed public private partnership for National Air Traffic Services Ltd. [94326]

§ Mr. Mullin
The United Kingdom is bound by the Chicago Convention to provide continued air navigation services in national airspace. Where the company is, or is likely to become, insolvent, the proposed legislation will provide that the Secretary of State and the regulator have powers to petition the courts for a special administration order, to appoint an administrator to manage the affairs of the company. The administrator will oversee the transfer to another company, as a going concern, sufficient of the licensee's business to ensure that the licensed activities can be properly carried out, and to ensure that the licensed activities are carried out pending completion of the transfer. It is envisioned that these powers would be applied in the event that NATS was or was likely to be unable to pay its debts, or if it would be just and equitable under the Insolvency Act for the company to be wound up.

§ Mr. McDonnell
To ask the Secretary of State for the Environment, Transport and the Regions what sanctions the Economic Regulator will be able to impose under the public private partnership proposed by the Government for the future of National Air Traffic Services Ltd. for any abuse of the monopoly position of the private sector strategic partner. [94335]

§ Mr. Mullin
The Government feels that any proposed enforcement regime should be both prompt and effective. However, in order to ensure that the UK can provide an uninterrupted service—as the Chicago Convention requires—the holder of the en-route licence must be allowed to continue its licensed activities while any abuse516W of its monopoly position is rectified. To this end, the Government will be seeking powers for the CAA, as economic regulator, to secure, where necessary, Provisional or Final Enforcement Orders. These Orders will be used to prevent any contravention or likely contravention of a licence obligation. The regulator will be able to enforce such Orders through civil proceedings, in order to obtain appropriate relief.

§ Mr. McDonnell
To ask the Secretary of State for the Environment, Transport and the Regions what mechanisms and criteria he will use under the public private partnership proposed by the Government for the future of National Air Traffic Services Ltd., to determine whether the strategic partner is, and remains, a fit and proper person whose ownership will not compromise the public interest or national security. [94333]

§ Mr. Mullin
The strategic partner will be selected via a rigorous, competitive process—to ensure that they have the pre-requisite financial capability, proven commercial management expertise and strategic rationale for investing in NATS.
The Government will wish to satisfy them, at the earliest possible stage of the selection process, that the strategic partner passes all probity and national security examinations. The Government will also ensure resolution of any actual or perceived conflict of interest issues and that the partner is committed to maintaining and, where necessary, improving NATS provision of safe air traffic control services to users of UK airspace.
The design of the remaining stages of the process will allow bidders the opportunity to demonstrate their understanding of the aviation industry and public interest concerns. Shortlisted bidders will be required to prepare thorough final offers which will detail their long term commercial business plans for NATS and allow them to provide commitments for the further development and enhancement of NATS infrastructure and the broadening of NATS management skill base.

§ Mr. McDonnell
To ask the Secretary of State for the Environment, Transport and the Regions what assessment he has made of the response by the trade unions representing NATS staff to the Government's plans for selling 51 per cent. of National Air Traffic Services Ltd. [94332]

§ Mr. Mullin
The Trade Unions response to the Government's proposals for the future of NATS was contained in a joint submission made by the Institution of Professionals, Managers and Specialists and the Public and Commercial Services Union. In it, the Unions recognised the case for change, in order to access additional sources of capital investment, to meet the needs of maintaining existing safety and efficiency levels against increased traffic. However, they disagreed on the best way to achieve this, arguing that NATS should stay in the public sector, and putting forward as their preferred solution, an Independent Publicly Owned Company (IPOC) option.
The Government considered the IPOC model, and a range of other options, both in deciding on their preferred option in the first instance and in considering the responses to the public consultation. There are many similarities between the IPOC model and the New 517W Partnership Company, but the Government believe that the New Partnership Company approach supplies all the solutions of an IPOC model, but with additional benefits.
In common with the IPOC, the New Partnership Company secures access to private capital, separates regulation from operations, introduces economic regulation, involves all stakeholders in the company's future, provides for Government to appoint Partnership Directors, gives Government—and consequently the taxpayer—annual dividends, and provides on-going assurances that the company is operating properly in the national interest. However, the New Partnership Company also: removes any future risk of investment counting in the public accounts and therefore becoming subject to Government controls; enables private sector investment, project and commercial management expertise to be introduced; brings in genuine private sector efficiency drivers at the outset; gives the company more freedom to extend its operations world-wide, while minimising the risk to the taxpayer of possible financial failure; provides proceeds for use in other transport projects.
The Unions also put forward a trust model (such as NavCanada) as an alternative to IPOC, if the Government's overriding objective was to raise proceeds for other transport projects. The Government also considered a trust model in deciding on their preferred option. They concluded that, while a trust might offer limited benefits, primarily the potential for involving airspace users and NATS staff, there were a number of weaknesses in the model. These included the lack of real commercial incentives or disciplines, making costs higher than they could be, difficulties in ensuring adequate accountability, and the potential complexity of the ownership structure.

§ Mr. Mitchell
To ask the Secretary of State for the Environment, Transport and the Regions what communication he has received from the institutions of the European Community concerning the proposed share of Her Majesty's Government in the re-organised National Air Traffic Services; and if he will list the articles of any treaty relating thereto. [94635]

§ Mr. Mullin
A copy of the Government's consultation paper, setting out the proposals for the Public-Private Partnership, was sent to the European Commission at the time of its Publication in October 1998. The commission acknowledged receipt of the document and said that it awaited, with interest, further developments.
In July 1999, the Government sent a copy of their report on the responses to the consultation exercise to the Commission, and offered an explanatory presentation, at official level, of the proposals. Arrangements for this presentation, particularly on the proposed regulatory, are oversight of the new partnership company currently in hand.