Orders of the Day — Transport Bill

House of Commons, 9 May 2000.

1ST ALLOTTED DAY

TRANSFER TO BE TO COMPANY OWNED BY CROWN

Gwyneth Dunwoody (Labour, Crewe and Nantwich)

I beg to move, That the clause be read a Second time.

Alan Haselhurst (Deputy Speaker, Saffron Walden)

With this it will be convenient to discuss the following: New clause 36—Transfer to be to not for profit company— '.—(1) Any property, rights or liabilities shall only be transferred under a transfer scheme to a not for profit company. (2) The transfer of property, rights or liabilities under a transfer scheme may be by such means, including sale or lease, and on such terms as the Secretary of State, with the approval of the Treasury, may determine. (3) A transfer scheme shall not come into force unless a draft of the scheme has been laid before and approved by resolution of each House of Parliament. (4) A not for profit company to which any property, rights or liabilities have been transferred under a transfer scheme shall not— (a) issue any shares or share rights; or (b) pay any dividend or profits to its members. (5) For purposes of this Part, "not for profit company" means a company— (a) which has been formed and registered as a company limited by guarantee under the Companies Act 1985 or the Companies (Northern Ireland) Order 1986; and (b) the membership of which, in the opinion of the Secretary of State includes those who are representative of providers, employees and users of aviation, air travel, air navigation and related services.'. New clause 37—Parliamentary approval of transfer scheme— '.—(1) A transfer scheme made by the CAA or the Secretary of State shall not come into force unless it has been approved by a resolution of each House of Parliament passed on a motion moved by or on behalf of the Secretary of State. (2) No such motion shall be moved by or on behalf of the Secretary of State unless at least seven days before the date on which the motion is to be debated by either House of Parliament he has caused a report to be laid before both Houses which— (a) sets out the progress which has been made in respect of any project for the development of facilities connected with national air traffic services which was commissioned by the transferor before the date on which this Act received Royal Assent; and (b) confirms that the Treasury have given their consent to the proposed transfer.'. New clause 26—Disposal of shareholding in designated company— '(1) The Secretary of State shall procure the disposal of at least 51 per cent. of the shares in the designated company referred to in section 49 by way of an offer to the public of such shares and shall secure acceptance for an application for admission to the Official List (within the meaning of Part IV of the Financial Services Act 1986) in respect of such shares. (2) The terms on which such shares are offered to the public, as to price and otherwise, shall be such as the Secretary of State considers appropriate for the purposes of— (a) securing the best price reasonably obtainable for those shares; (b) securing widespread ownership of such shares by individual members of the public as well as institutions. (3) Any transfer or issue of a share or shares pursuant to such offer or any subsequent transfer or issue of a share or shares in the company in question shall have no legal effect (and in particular the transferee or allottee of such share or shares shall not be registered as a member of the company or exercise any rights in respect of such share or shares) if such transfer or issue would result in the legal or beneficial ownership of a majority of shares carrying voting rights in, or control of, the company passing to a person who is not a British citizen. (4) For the purposes of subsection (3)— (a) a company shall be deemed to be controlled by a person or persons who singly or together have the right to appoint or remove a majority of the company's board of directors holding a majority of the voting rights at meetings of the board on all, or substantially all, matters or if it is deemed to be controlled for the purposes of section 840 of the Income and Corporation Taxes Act 1988; (b) a company shall be deemed to be controlled by a person if it is controlled by a company or companies controlled by such a person. (5) The Secretary of State shall give to any such company as is referred to in section 48(1) above whatever directions may be necessary for implementing the provisions of this section. (6) The Secretary of State shall only take action under this section or section 49 or exercise any power in respect of the transfer or issue of shares in such company as referred to in section 48(1) if he has first obtained the agreement by resolution of both Houses of Parliament.'. Amendment No. 421, in clause 40, page 26, line 5, leave out from "which" to end of line 24 and insert— 'contains provisions for the transfer of— (a) any of the CAA's property, rights or liabilities or of all or part of its undertaking; or (b) the property, rights or liabilities of a company (the transferor) which is wholly owned by the CAA or all or part of the transferor's undertaking; to a company which is wholly owned by the Crown.'. Amendment No. 438, in clause 42, page 27, line 30, leave out from "unless" to end of line 31 and insert— 'a draft of the scheme has been laid before and approved by resolution of each House of Parliament in accordance with section [Transfer to be to not for profit company].' Amendment No. 452, in page 27, line 32, after "that", insert— 'and to section [Parliamentary approval of transfer scheme].'. Amendment No. 439, in page 27, line 33, leave out from "force" to end of line 37. Amendment No. 440, in page 27, line 40, at beginning insert— 'The Secretary of State may modify a scheme before it is laid in draft before Parliament and'. Amendment No. 422, in page 27, line 40,, leave out— 'or transferee (other than the Secretary of State)'. Amendment No. 441, in page 27, line 42, leave out "to approve and modify". Amendment No. 453, in clause 43, page 28, line 12, at beginning insert— 'Subject to section [Parliamentary approval of transfer schemes],'. Amendment No. 442, in page 28, line 12, after "section", insert— 'shall not come into force unless a draft of the scheme has been laid before and approved by resolution of each House of Parliament in accordance with section [Transfer to be to not for profit company] but, subject to that requirement,'. Amendment No. 423, in clause 45, page 29, line 25, leave out from "scheme" to end of line 34. Amendment No. 424, in clause 46, page 30, leave out lines 25 to 27. Amendment No. 425, in page 31, line 1, leave out Clauses 47 to 49. Amendment No. 454, in clause 49, page 32, line 9, at end insert— '(2A) The Secretary of State must ensure that the Crown does not dispose of any of the shares it holds in the designated company unless he is satisfied that a scheme is in place to ensure the completion of any project which— (a) concerns the development of major facilities connected with air traffic services, and (b) was commissioned before the coming into force of this section by the CAA or a company wholly owned by the CAA.'. Amendment No. 397, in page 32, line 16, leave out subsection (4). Amendment No. 455, in page 32, line 33, after "subsection", insert "(2A),". Amendment No. 456, in page 32, line 35, after "subsection", insert "(2A),". Amendment No. 396, in page 32, line 37, leave out subsection (9). Amendment No. 426, in clause 50, page 32, line 39, leave out subsections (1) to (3) and insert— '(1) The Secretary of State, with the approval of the Treasury, may make loans of such amounts as he thinks fit to a company which is wholly owned by the Crown and to which any property rights or liabilities are transferred under a transfer scheme.' Amendment No. 444, in page 32, line 39, leave out subsections (1) to (3) and insert— '(1) The Secretary of State, with the approval of the Treasury, may make loans of such amounts as he thinks fit to a not for profit company to which any property rights or liabilities are transferred under a transfer scheme.'. Amendment No. 427, in clause 51, page 33, line 29, leave out subsections (1) to (3) and insert— '(1) The Secretary of State or the Treasury, may guarantee the discharge of any financial obligation of a company (the transferee) which is wholly owned by the Crown and to which any property rights are transferred under a transfer scheme.'. Amendment No. 445, in page 33, line 29, leave out subsections (1) to (3) and insert— '(1) The Secretary of State or the Treasury may guarantee the discharge of any financial obligation of a not for profit company to which any property rights or liabilities are transferred under a transfer scheme.'. Amendment No. 428, in page 33, line 43, leave out subsections (6). Amendment No. 429, in clause 52, page 34, line 21, leave out subsections (1) to (3) and insert— '(1) The Secretary of State, with the approval of the Treasury, may make grants towards the expenditure of a company which is wholly owned by the Crown and to which any property rights or liabilities are transferred under a transfer scheme.'. Amendment No. 446, in page 34, line 21, leave out subsections (1) to (3) and insert— '(1) The Secretary of State, with the approval of the Treasury, may make grants towards the expenditure of a not for profit company to which any property rights or liabilities are transferred under a transfer scheme.'. Amendment No. 430, in page 34, line 37, leave out subsection (6). Amendment No. 431, in page 34, line 40, leave out Clause 53. Amendment No. 447, in page 35, line 27, leave out Clause 54. Amendment No. 432, in clause 54, page 35, line 27, leave out subsections (1) to (3) and insert— '(1) For the purposes of the provisions of the Companies Act 1985 listed in subsection (2) none of the persons listed in subsection (5) is to be regarded as a shadow director of a company which is wholly owned by the Crown and to which any property. rights or liabilities are transferred under a transfer scheme.'. Amendment No. 433, in page 36, line 8, leave out subsection (5) and insert— '(1) For the purposes of the provisions of the Companies (Northern Ireland) Order 1996 listed in subsection (4) none of the persons listed in subsection (5) is to be regarded as a shadow direction of a company which is wholly owned by the Crown and to which any property, rights or liabilities are transferred under a transfer scheme.'. Amendment No. 434, in page 36, line 27, leave out subsections (8) to (11). Amendment No. 435, in clause 60, page 40, line 23, leave out "47, 48" and insert— '[Transfer to be to company owned by Crown]'. Amendment No. 448, in page 40, line 23, leave out "47, 48 or". Amendment No. 436, in page 40, line 28, leave out "47" and insert— '[Transfer to be to company owned by Crown]'. Amendment No. 449, in page 40, line 28, leave out "47 or". Amendment No. 437, in page 40, line 30, leave out lines 30 and 31. Amendment No. 450, in clause 63, page 41, line 5, at end insert— '(dd) not for profit company'. Amendment No. 451, in page 41, line 13, at end insert— '(2A) "Not for profit company" has the meaning given in section [Transfer to be to not for profit company].'.

Gwyneth Dunwoody (Labour, Crewe and Nantwich)

It is important to say at the outset that I have put my name to nearly all the new clauses and amendments, and I hope that the House will be able to decide on the implications of the various suggestions that have been made. I have made it clear that, personally, I do not approve of timetables. The decision about the management of National Air Traffic Services is so important and fundamental that I hope that we will have time to put all the vital points. The new clause suggests one way in which the electorate as a whole can be absolutely certain that the most fundamental of our rights—the right to know that air safety is in the hands of those who understand and control it—is fully taken account of in legislation. The Transport Sub-Committee appears to have become the villain of many of our debates. When it discussed this subject, which it did not once but on three separate occasions, it took account of the fact that there were several factors that made it clear that we could not continue with National Air Traffic Services in its current form. There was a need to change, but we thought that the suggestion that NATS should go out to the public market and find money should be examined in the context of its reorganisation. After all, what does NATS do? It is a fully integrated service, not only providing flight information and weather services but fundamentally controlling the movement of aircraft in the airspace over the United Kingdom, in conjunction with the Ministry of Defence. Given that aircraft use is increasing at a rate of between 5 and 6 per cent. a year and a growing number of people are using increasingly congested air space, if we allow any slippage in the high standard of safety that we enjoy, we shall contribute to a potentially difficult situation. The Select Committee felt that NATS should have the right to raise the money that was essential for its development and that it could best do that either as a publicly owned corporation or in the other ways that we suggested in our report. We did not feel that there was any suggestion that NATS was not capable of providing high-quality services. Not only are air traffic controllers highly trained and working under enormous pressure, but they are men and women of great expertise and they do not provide a service based on the interests of the shareholders of a particular company; their job is performed wholly on the basis of safety and they are responsible to the entire United Kingdom for the maintenance of high standards. Having looked at various ways in which other countries across the world have reorganised their air traffic services, the Select Committee felt that the best way to ensure that those high levels of safety were maintained was to keep NATS either as a non-profit making company or, better still, as a publicly owned corporation. That has been made very clear. It is not true that NATS is not able to act as an adviser or take consultancy work from other air traffic services elsewhere in the world. I received a written answer today which makes it clear that it is already doing precisely that. It is not true that, under the new system, NATS would be able to continue operating as it does now because of something called the golden share. I am afraid that the history of Government privatisations that relied on golden shares is not that Governments maliciously set out to change the conditions under which sales take place, but that, once a strategic partner is in control of the company, it can change the terms and conditions and the way in which the company works. Safety should not depend on a fiduciary duty not to the general public but to shareholders of a particular private company. I recently attended a lecture where the representative of an airline made it clear what that airline's interests were in pursuing the sale of NATS, by saying to the air traffic controllers who were present, "You must remember that many of the decisions that we take have a direct impact on our commercial affairs and it is therefore essential to us that you are much more understanding of, and responsive to, the needs of individual airline companies." That was not said out of any malice aforethought, but it was a clear indication of the problem that a national air traffic services company would face. It is important for us to understand that, unlike airports, which can open more shops or expand the services that they offer customers, or airlines which can change the way in which they operate or offer cheaper fares, NATS has one basic and vital function—to ensure safety. It exists to maintain the safety of aircraft in the skies and as they enter and leave our airports and to control air traffic from the continent and across the Atlantic. It exists to ensure that, when we get on any aircraft, we are certain that the men and women operating the movement of those aircraft are answerable only to those who maintain high safety standards and not to anyone seeking to make a profit out of their organisation. I can give many instances of how the Committee looked at the details. I can answer many of the points that have been made. It is vital that the House asks itself why, before the previous election, the Labour party opposed the sale of NATS. Why did we say that our air was not for sale? It was not because it was an easy, cheap, propaganda point to attract voters but because we understood that, unlike almost any other service, this service is vital to the maintenance of safety and control in the skies over the United Kingdom. I beg right hon. and hon. Members not to make the mistake of thinking that a simple company reorganisation will maintain the same standards in the future that we have had in the past. Whichever of the three new clauses—35, 36 or 37—right hon. and hon. Members vote on tonight, I ask them to remember that they do so on behalf of every person in the country and, above all, that they do so for the right of the citizens of the United Kingdom to be safe for every moment that they are in the sky.

Don Foster (Liberal Democrat, Bath)

Many right hon. and hon. Members wish to speak. I am delighted to follow the hon. Member for Crewe and Nantwich (Mrs. Dunwoody) and, like her, I will be brief. The hon. Lady makes it clear that the matter must be decided by the House as a whole. She will recall that, on Second Reading, a number of Labour Members brought forward a reasoned amendment in opposition to the Government's proposals. Unfortunately, at that time, they did not believe it appropriate to move the amendment. It was in fact moved by Conservative Members, and was voted upon—[Interruption.]

Alan Haselhurst (Deputy Speaker, Saffron Walden)

I am sorry to interrupt the hon. Gentleman, but there is some device here which is making a noise. Can it please be silenced as quickly as possible? Madam Speaker has made it absolutely clear that this is quite improper. [Interruption.] I think that I have seen the source of it.

Don Foster (Liberal Democrat, Bath)

Before that brief interruption, I was saying that there was an opportunity to vote on the issue on Second Reading. The opportunity was not taken then, and we have it again today. What I believe unites Members on both sides of the House is the wish to see changes in the arrangements for National Air Traffic Services. First, I think that everyone agrees that NATS should be separated from the Civil Aviation Authority. Secondly, I suspect that everyone will see that there are benefits to be gained from introducing into the operation of NATS expertise from the private sector, particularly in relation to management. Thirdly, I suspect that we all agree that there is an urgent need to find ways of enabling NATS to gain funds for future investment, preferably without such funds coming within the public sector borrowing requirement. I believe that the House is united on those three points. The question therefore is: what is the most appropriate way of ensuring that NATS continues to operate as it does at present, as an organisation that has safety as its No. 1 priority? There are a number of ways of moving forward. The Government have proposed a part-privatisation model. The Conservative party has in the past proposed a complete privatisation model. The model that Liberal Democrats believe to be the most appropriate way in which to achieve the three key objectives to which I referred, and of ensuring that safety remains the paramount issue for the future of NATS, is by establishing an independent, publicly owned company. As we argued strongly in Committee, that particular model would enable the separation of NATS, the introduction of private sector expertise and the ability to raise funds, while ensuring that safety remained the key issue. 5 pm The Government's proposals have attracted criticism from many quarters. The hon. Member for Crewe and Nantwich has rightly referred to the work of the Transport Sub-Committee, which has issued three reports on this issue. On one occasion, the Committee had a majority of Conservative Members; on two occasions, there was a majority of Labour Members but, each time, the Committee came to the view that the most appropriate way forward was certainly not the one proposed by the Government. The proposals have also been criticised by airline pilots; they should know—perhaps better than anybody else—about the issues. The British Air Line Pilots Association has been implacable in its opposition to the Government's proposals. The national air traffic controllers, through their union, the Institution of Professionals, Managers and Specialists, have consistently and implacably opposed the proposals. The Parliamentary Advisory Council for Transport Safety is clearly opposed. I hope that there will be opposition from a large number of Government Back Benchers. The proposals certainly do not meet the requirements of the Conservatives nor the requirements and desires of the Liberal Democrats. On a free vote, there would be no chance whatever that the Government's proposals would go ahead. The hon. Member for Crewe and Nantwich said that the matter was of such vital importance to the public at large that the whole House must decide on it. I very much hope that the Government will ensure that there is sufficient time to vote on new clauses 35, 36 and 37 and that the vast majority of Members on both sides of the House will vote for each of them.

Gavin Strang (Labour, Edinburgh East and Musselburgh)

Like the hon. Member for Bath (Mr. Foster), I served on the Standing Committee. We are discussing hugely important issues. As he pointed out, the Liberal Democrat members of the Standing Committee supported a publicly owned corporation as an alternative to the Government's proposal. That is what new clause 35 would provide. In her usual powerful and persuasive way, my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody) argued that the new clause would meet some of the Government's concerns that the service should borrow directly in the private sector. New clauses 35, 36 and 37 contain three separate propositions—I shall say a few words about each. New clause 35 deals with the independently owned public corporation. New clause 36 provides for the setting up of a trust along the lines of NAV Canada. Such a trust would include representatives of the airlines, the users, the customers, the trade unions and all who have an interest in the matter. If an independently owned public corporation is not acceptable to the Government, the trust would offer a way of meeting their objectives. The third proposition—in new clause 37—is quite different. If the Government are not able to accept either of the other models—although I hope that they will accept one of them—surely, at the very minimum, they would agree that we must not take the privatisation route until the new centre at Swanwick and the new Scottish centre at Prestwick are operational. Those are the three propositions before the House. If the Government are not able to accept them, it is vital—as my hon. Friend the Member for Crewe and Nantwich said—that the House is able to vote on each of them. It would be a travesty of democracy if we were not able to vote separately on each provision. I trust that there will be co-operation to do that. My hon. Friend dealt with the models for an independent publicly owned company. Such a trust would achieve the Government's objectives because it would split NATS from the Civil Aviation Authority, and allow it to borrow in the private sector and—if the Government want this—to invest overseas. It would achieve all those objectives, so I hope that the Government will be able to accept one of the two models proposed. If one of those models is not accepted, it is vital that, at the very least, the Government do not move towards privatisation before the Swanwick and Prestwick centres are operational. However, I emphasise that I think that it would be a great mistake to go ahead with the partial privatisation. As we have been reminded, it was not just anyone but an all-party Select Committee that said that the option in the Bill was the worst of all possible options. Why has no other country in the European Union or the world privatised its air traffic control system? The prime reason, I suggest, is national security. Fortunately, the domestic civil security risk has not been great recently, but the risk of hijacks or bombs on civil planes remains. If the system is publicly owned, there will be better co-operation with the police and the security services than if it were run—this is what the Government intend—by a private commercial company. The other aspect of national security is the military. The co-operation between National Air Traffic Services and the Royal Air Force is a model for the world. An international crisis could emerge and we might want to take complete control of our airspace. The Government might be clear that that is what they want to do, but control of the operation could remain with a foreign company. That is possible under the Government's proposals and the aims of that company in such a crisis might be different from those of the British Government. No other country in Europe has privatised its air traffic control system because of such national security considerations. To secure maximum co-operation with the security services, the police and the Ministry of Defence, it is best to retain the system in public ownership. My hon. Friend powerfully made the case for the second model. Privatising the air traffic control system is not like privatising an airline. A privatised airline can provide additional services, improve in-flight catering and do all sorts of things to maximise the return on the capital deployed so as to obtain more private profit. Air traffic control is all about keeping planes apart, but a private company would want a greater return on the capital deployed—Ministers have said that that is the intention—and it would extract profit from the system for private shareholders. The worry is that the only way that it could achieve that is by driving down costs. In time, that could impact on our safety standards, which have been the highest in the world. The Government have not persuaded the travelling public and many Labour Members and they have not persuaded the pilots or air traffic controllers. The key dialogue in air traffic control is that between the pilot and the air traffic controller, and the Government would make a great mistake if they proceeded with a policy that is opposed by airline pilots. I urge the Government to reconsider and accept one of the alternative models—the independent publicly owned company or the not-for-profit trust.

David Chidgey (Liberal Democrat, Eastleigh)

I shall not detain the House long, but I wish to point out how much I agree with the views expressed by the hon. Member for Crewe and Nantwich (Mrs. Dunwoody), who moved the new clause, and the right hon. Member for Edinburgh, East and Musselburgh (Dr. Strang). I was reminded very much of the previous Parliament in which I had the privilege of being the Liberal Democrats' spokesman on transport and I sat on the Opposition Benches with Labour Opposition. Members on the Opposition Benches at that time were in total agreement that we should not sell off NATS, so it is strange that this Government now subscribe to the views of the previous Government. I find that rather sad. It is a shame that the Government have not found time to reassure the House by explaining why things have changed since they were in Opposition and since Labour made pledges at its annual conference. I accept that it is entitled to make pledges and that it is a part of politics to do so. However, why have the Government not told the House why things have changed and why it is not possible to maintain their pledges? Why is the organisation for sale when it was not previously? It is disreputable that the Government have not had the confidence to explain to us as a body why we should see the way forward from their point of view. I have always subscribed to the view that we should bring in the private concepts of an independent publicly operated company. That is a way of introducing the necessary cash flow and revenue. However, we have never seen the need to privatise the system merely to provide more money and to put the operation of National Air Traffic Services and safety at risk. My final point is constituency based. Some Members may realise that the Euro centre at Swanwick is just over the border of my constituency. I am sure from correspondence that I have had with many of my constituents who work at the centre that they were not expecting to see such a policy. They are genuinely concerned about how they can maintain levels of safety in their work that keep airline operators and airline passengers confident within the proposed regime. I am not raising party political points. Instead, I am referring to genuine concerns that are felt by people who are highly professional, highly trained and extremely responsible in what they do. I ask the Government to listen carefully to the views of that body of opinion, which has no political axe to grind. It merely wishes to continue to serve the public to the best of its ability.

Sandra Osborne (Labour, Ayr)

I support amendment No. 454, which stands in my name. It would have the effect of ensuring that major planned development by National Air Traffic Services must be completed. I have a specific interest because, as most Members are aware, the new Scottish centre, which will secure 700 jobs, is in my constituency. As the issue is of such importance to my constituency, I am prepared to prioritise it over other issues. I have to insist that the Government support my amendment, otherwise I shall be unable to support the Government. I have spoken about NATS on numerous occasions. I have raised many of the issues of concern that have been brought to me by constituents and by representatives of trade unions and the work force at Atlantic house. Ministers are well aware that the proposed public-private partnership does not meet with the approval of the work force for many of the reasons that I stated on Second Reading, which have been repeated this afternoon. I shall concentrate my comments on the repeated suggestions, especially over recent weeks, that the new Scottish centre will not come about if the public-private partnership goes ahead. I have questioned Ministers on numerous occasions. My right hon. Friend the Prime Minister has twice publicly reiterated his commitment to the two-centre strategy. As recently as last week, he said that the strategic partnership agreement would guarantee the construction and the continued operation of the new Scottish centre at Prestwick. That was his reply to my question. As I stated on Second Reading, the work force at Prestwick does not believe that the centre will go ahead. That is hardly surprising because there has been a chronic lack of investment in NATS for many years. That was underpinned by the failed attempts at full-scale privatisation that were made by the Conservatives. I do not believe that the new Scottish centre would go ahead with full privatisation, and neither does anyone else. The period during which no progress has been made in building the centre has resulted in cynicism among the Prestwick work force. It was announced in 1993 by the Conservative Government that the project would go ahead on the basis of a private finance initiative, but there is still nothing on the ground. The PFI turned out to be unworkable. It would have cost at least twice the original budget of £200 million. It has had to be abandoned in spite of the best efforts of the Government to make it work, along with NATS officials. As hon. Members have said, since then, various Select Committee reports have been published, and the Government have conducted a consultation on the future structure of NATS. The initial contract was signed during that period and £60 million of public money has been released to fund the first phase of the contract. However, there is still nothing on the ground. 5.15 pm The first phase will consist of building a software system, some design work and eventually, a little initial building work. It is well known that a strong body of opinion in NATS itself feels that there is not any special need for the Prestwick centre. That, too, stems from the previous Government, who called into question the two-centre strategy and asked for a review, which concluded that the two centres were needed. The Labour Government accepted that when they came into power and have made a strong political commitment to providing the centre in Scotland as a replacement for the present facility at Prestwick. I repeat this evening what I have already told my right hon. Friend the Secretary of State: that is exactly what the people of Scotland expect from a Labour Government. However, it is also feared that a strategic partner will, at some point in the future, renege on the commitment to the two-centre strategy because of the cost and need for profit. There is also anxiety about future contraction of the number of air traffic control centres in Europe. From the outset, I have said that my priority as a local Member of Parliament is securing the 700 jobs in my constituency. For three years, I have made a robust case for considering the options that are proposed in the new clauses. However, it is clear that the Government intend to proceed with the public-private partnership for National Air Traffic Services. In the circumstances, I am sure that colleagues will seek further assurances on various aspects of the proposals. Indeed, I know that there have been discussions, especially on safety. When the partnership was first proposed, I made an undertaking to ensure that the views of the work force were heard in government. No one in government, from the Prime Minister down, can deny that I have made every effort to represent those views. At this stage, I wish to ensure that the new Scottish centre is secure now and in future by asking the Government to go a stage beyond guaranteeing the two-centre strategy in the strategic agreement. I hope that Ministers are minded to accept my amendment, which would entrench the new Scottish centre in primary legislation and enable me to do what my predecessor, Phil Gallie, totally failed to do: secure 700 highly skilled jobs at Prestwick and £25 million for the Ayrshire economy.

Desmond Turner (Labour, Brighton, Kemptown)

First, I want to reinforce what several hon. Members have said to the Secretary of State: no one questions the need to move NATS forward. The Government's agenda on creating investment, levering in private finance and updating the system is accepted without question. It is simply a matter of how we set about doing that. In opposition, Labour Members rightly poured scorn on framework legislation introduced by Tory Governments that did not say what it would really do. Similarly, it is a source of regret that the Bill does not say what it will do, although we all know. Hence new clause 37, which would have the virtue of requiring proposals for NATS to be brought to Parliament for a vote by both Houses before any transfer could take place. That practice is the backbone of democracy. Why are so many Members of Parliament objecting to the public-private partnership? Those objections are not restricted to Labour Members, but are reflected in the views of many Opposition Members. Basically, as my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody) said, the objections boil down to safety, safety and safety again. NATS's whole reason for existence is to promote safety, and so far, nothing has been allowed to stand in the way of that, the result of which has been the development of a safety culture in NATS of which we can all be proud. It is the fact that the men and women working in NATS want it to be safe that makes it safe. The Government have said that safety will be kept in public hands through the separation of regulation, but I have to tell the Secretary of State that that does not mean much—first, because regulation has effectively been made separate already, and taking NATS out of the CAA merely formalises that arrangement; and, secondly, because, as we all know from recent rail tragedies, the fact that safety regulation exists does not guarantee safety. Nothing can truly guarantee safety, but we can try to get as close as possible to guaranteed safety; whether it is achieved depends on whether the overriding culture of the organisation is the promotion of safety.

Mark Todd (Labour, South Derbyshire)

My constituency borders East Midlands airport; indeed, my home lies under the flight path. At that airport, air traffic control is handled entirely by the private sector—by the owners of the airport, which is a large and growing international airport. Should I be concerned?

Desmond Turner (Labour, Brighton, Kemptown)

I am glad that my hon. Friend has made that important and valid point, but it does not undermine the case against the PPP. East Midlands is a relatively small airport that has relatively little traffic movement compared with major airports such as Heathrow and Gatwick. NATS controls more than 70 per cent. of passenger movements by air in this country. It also controls all en-route cover. Finally and most importantly, NATS sets the standard that private air traffic control operators at less major airports have to follow. I am saying, not that my hon. Friend's constituents should feel unsafe, but that they might not feel as safe if NATS were privatised. Therefore, my hon. Friend's point does not undermine my argument.

Maria Fyfe (Labour, Glasgow Maryhill)

Has my hon. Friend seen a letter in The Guardian from Paul Noon, the general secretary of the Institution of Professionals, Managers and Specialists, in which he points out that 87 per cent. of passengers at all UK airports are handled by NATS?

Desmond Turner (Labour, Brighton, Kemptown)

I thank my hon. Friend for that intervention—I had not seen the letter, which underscores my argument. At issue is not whether NATS should be moved forward, but the means by which we finance its development and the mode of governance we establish. We are all happy to lever in private finance and get NATS out of the public sector borrowing requirement, so that public funds can be used for other priorities. That is fine; no one in the House cavils at that for one moment. However, there are plenty of alternative ways of skinning this cat, and two of them are before the House in the form of new clauses 35 and 36. Either of those proposals will suit the situation. They have their different merits; we know, for a start, that the trust model, as exemplified by NAV Canada, works. It has been in operation for several years, it has been highly successful, it has raised safety standards, and the costs of air traffic control in Canada are falling. As far as anyone can tell, it is totally successful. Such a model would achieve all the things that the Secretary of State wants, and would not bring the profit motive into conflict with safety. It has been said in this argument that people who are unhappy with the public-private partnership are unhappy for ideological reasons. I assure the Secretary of State that that is not so. I am perfectly happy with PPPs. One does not hear a great deal of complaint about such partnerships for hospitals, because people want their hospitals. However, we do not ask the PPP building consortium for hospitals to supply specialist medical services—do we?—because that is obviously not appropriate. Happily, my constituency is benefiting from PPPs for schools. That is great; I am very glad—it is the only way to get those schools that quickly. However, nobody is asking the building consortium to do the teaching—are they? A PPP is proposed for the tube, but operation of the tube, as the Secretary of State clearly said, is to remain in public hands. The Secretary of State was most emphatic about that, and safety was one of the considerations. If that argument is good enough for the tube, if safety is critical to the tube, it is doubly critical for the much more complex matter of air traffic control. It has been argued that because airlines are private, and fairly safe, the Government's proposal must be all right. Of course, if one does not think that an airline is safe, one does not have to fly with it. One flies with an airline that has a good safety record. One can choose one's airline, but one cannot choose one's air traffic control service. That is the difference. I end by making a plea to the Secretary of State. The conflict between the profit motive and the safety culture, which is inevitable in the structure that he is proposing, need not arise. Does he understand that, although many Labour Members will support the amendments and new clauses—effectively voting against the Government—most of us are extremely loyal Government Back Benchers, and it is a matter of great pain to us to find ourselves forced into so doing? Personally, I am satisfied that the PPP, as set forth, involves a very serious possibility of endangering lives in future. My conscience will not permit me to ignore that. I fancy that the same is true of many hon. Members.

David Wilshire (Conservative, Spelthorne)

I had not intended to speak until I heard the hon. Member for Brighton, Kemptown (Dr. Turner) express my fears. The hon. Member for Crewe and Nantwich (Mrs. Dunwoody) began the debate by making clear what I regard to be the fundamental issue at stake: safety. During the debate on the timetable motion, I reminded hon. Members who were present that the most recent crash at Heathrow was in my constituency. Because of that, and because of the seriousness of the issues raised by the hon. Member for Kemptown, I have not the slightest wish to play party politics in the debate. I believe that I speak on behalf not only of all 23,000 of my constituents who voted for me at the election, but of all 19,000 who voted for the Labour party, and all 6,000 who voted Liberal Democrat. I am convinced that we all see the matter in the same way. I shall not make a speech. I merely ask the Secretary of State one clear, simple question, which I shall be eternally grateful if he will answer in an equally simple and straightforward way, so that all my constituents can be clear about what the Government are proposing. The question is this: will the Secretary of State's proposals make things safer for my constituents? That is all they want to know. All the other arguments are peripheral to the question whether they will be safer if the Secretary of State's wishes prevail tonight. I should be grateful if he would give me a clear answer when he responds.

Mark Todd (Labour, South Derbyshire)

I shall be brief. My difficulty in the debate has been the focus on safety and the direct relationship of that argument to the question whether the private sector controls any part of the service. As my intervention indicated, that is partly based on my local experience. I should declare that my brother-in-law is an air traffic controller who works for the private sector. I have spoken to him about his role and he has given his opinions, which have had little bearing on mine. Nevertheless, I have listened to someone who had some expertise in the matter. Clearly, although the 13 per cent. mentioned by my hon. Friend the Member for Glasgow, Maryhill (Mrs. Fyfe) is correct, in many instances the private sector provides the totality of the air traffic control service at particular airports—not for the en-route traffic, but at particular airports. I cannot see why there is an objection to the introduction of private finance to other aspects of the air traffic control service. Aircraft are constructed and maintained by the private sector, and airports and airlines are run by the private sector. The air services are controlled by the private sector now.

Tam Dalyell (Labour, Linlithgow)

East Midlands is an important airport; so is Edinburgh airport. The pilots tell us that there is no problem going into Edinburgh, Glasgow or East Midlands. The problem is going into the fourth busiest airport in the world—Gatwick—and the busiest airport in the world—Heathrow. The issue is control over the overcrowded skies on the approach to the city of London.

Mark Todd (Labour, South Derbyshire)

I thank my hon. Friend for that intervention. He qualifies the position somewhat, by saying that it is a matter of the scale of the operation, not the principle involved. That is a useful development. My concern is about the emphasis that has been placed on safety as the overriding reason for excluding private sector finance. As I said, we already have plenty of examples of that in the provision of air services in this country.

Gwyneth Dunwoody (Labour, Crewe and Nantwich)

I am grateful to my hon. Friend for giving way. Does he seriously think that if there is a legal duty on air traffic controllers to consider the interests of their shareholders, they will behave in exactly the same way as if they have a responsibility to consider only the safe passage of air transport in the United Kingdom?

Mark Todd (Labour, South Derbyshire)

I thank my hon. Friend. I worked in the private sector virtually all my working life, and I never regarded myself as having a legal duty to have regard to the shareholders. I had a legal duty to carry out the tasks given to me. I was not involved in the safety aspect, but I also had a responsibility to my own conscience. I would not expect that to be overridden in any circumstances.

Desmond Turner (Labour, Brighton, Kemptown)

Will my hon. Friend give way?

Mark Todd (Labour, South Derbyshire)

I am being more generous than others, but I shall give way.

Desmond Turner (Labour, Brighton, Kemptown)

I am grateful to my hon. Friend for returning the compliment. The debate is not about private finance per se, because there is no specific opposition to the use of private finance. The debate is about private, for-profit governance. I hope that my hon. Friend will deal with that point.

Mark Todd (Labour, South Derbyshire)

Indeed. I would have preferred a debate about the relative merits of the Government's model in ensuring corporate governance to focusing on safety as the key aspect of our discussions. My hon. Friend has begun to move in that direction, and that is welcome. There are genuine questions about which model produces the best means of modernising NATS. I am inclined to support the Government's approach because of the prospect of more robust management in the service, based on the new en-route centre project. I have long held the view that the management of highly complex technology projects in the public sector has been almost universally poor. We must tackle that problem, and that is the second reason for my support for the Government's position: it offers a better prospect of producing successful, high-technology control systems for our airspace. I have listened carefully to the debate, and I have read the Select Committee report, which was informative. However, none of the arguments deals with the points that worry me. First, the private sector in this country already has safety models. I do not believe that I should return to my constituency and tell my constituents that they should be alarmed by the prospect of the private sector controlling the airspace over their homes.

John Smith (Labour, Vale of Glamorgan)

My hon. Friend has been generous in giving way. Does he know that NATS operates in a private environment at some airports and provides not only air traffic services but Ministry of Defence and en-route services, albeit not on the scale of the operation at Gatwick?

Mark Todd (Labour, South Derbyshire)

That is an important point. Many services that NATS wins—that is a key word—in a competitive tendering process, are won on a commercial basis. They are subject to commercial contracts, which the relevant airline operators award. My short contribution has lengthened because of interventions, but I have tried to make the point that the private sector model is not a problem per se. However, I shall listen to the rest of the debate carefully and learn from it, because I am interested in the model that will best produce a modern and effective air traffic control system to secure as far as possible—it cannot be guaranteed—the safety of air travellers and those who live near flight paths.

Martin Salter (Labour, Reading West)

After 18 months of imploring Ministers from the Prime Minister down to reconsider plans to privatise the control of this country's airspace, I am sad to face the prospect tonight of voting against my Government for the first time to keep faith with a clear pre-election pledge that I gave my constituents and that the Labour party gave the public. Government is a messy business; it is about doing what works, making compromises, listening to a broad range of views and acting accordingly. In my short time in this place, various Bills have received a bumpy ride, not because of the tactics of Opposition Members, much as they would like to believe that they were responsible, but because of the legitimate anxieties of the Government's supporters. I am thinking in particular of lone parent benefit, welfare reform, the Freedom of Information Bill and the Immigration and Asylum Act 1999. In almost every case, the Ministers in charge listened carefully to the concerns and, after due modification, we ended up with better legislation and a happier parliamentary Labour party. I regret that I am unable to report any such substantial progress on the private-public partnership for National Air Traffic Services. In fact, there will be no partnership and the Bill alarms us even more because the Government propose to sell off 75 per cent. of NATS shares. That is some partnership—a 75:25 split. It is nothing short of privatisation and it breaks the bond of trust that we made with the electorate, the travelling public and the men and women who gave us the finest, most efficient and safest air traffic service in the world. I have listened to the arguments about private finance and will deal with them later, but I must tell those who laud the fact that non-NATS staff in the private sector handle a few air traffic movements that the logical extension of that argument is full-scale privatisation of the service, not a part privatisation. If that is what people want, they should say so. I thoroughly endorse the new clauses, especially new clause 36, which proposes the trust model. I want to examine briefly the case against the Government's proposals and in favour of establishing that trust, as recommended by the Labour-dominated Transport Sub-Committee. Several cases can be made against the PPP, even in its 49 per cent. form. There is a political case: it clearly breaches the spirit of what we said before the election. There is strong opposition in the House and the country. The last opinion poll data showed that 72 per cent. of the public oppose even the partial privatisation of NATS. This is a matter of trust in more than one sense. There is an economic case against the PPP, even in its original form. As the Select Committee report and all the other data made clear, aircraft movements have increased by 7 to 8 per cent. year on year. The industry is highly profitable, but it is a safety industry. In 1998–99, it returned pre-tax profits of £64 million. In many years, it has returned a surplus to the Treasury of between £30 million and £40 million. We shall forgo that if we go down this road. The capital receipt, at the upper end of the estimates, would perhaps be some £600 million. Let us set that against the Budget surplus and the increased revenues to the Exchequer, which we all welcome. There is a safety case, but I shall not emphasise it. Perhaps it has been emphasised too much—my hon. Friend the Member for South Derbyshire (Mr. Todd) nods—and there are powerful political, economic and military and defence cases against the proposal. Our airspace is controlled by the public sector—not from East Midlands airport—so there is a tremendous sharing of military intelligence and information with the armed forces and our NATO allies. Imagine what would happen if we sold off 75 per cent. of the shares in our airspace to, for example, a Serbian-owned company. Imagine the reluctance to undertake the military co-operation that served us so well in the Balkans conflict. The Government have clear objectives—I have always said that they are entirely laudable—but we desperately need the lateral thinking to deliver those objectives without breaching a pre-election pledge and without the dangers of privatisation. They rightly want to take NATS out of the public sector borrowing requirement. They want it to break free from Treasury orthodoxy. We have achieved that with the Post Office; we can deliver it with either of the models in new clauses 35 or 36. 5.45 pm The Government want to deliver an investment stream. We all want to do that, and it can be done by means of either the trust or the IPOC—independent publicly owned company—model. We want to achieve a separation in respect of the CAA and the operational requirements of NATS. In effect that happens already, but hon. Members should bear in mind the fact that the CAA lays down only the minimum standard, while NATS operates far above that standard. It is dishonest to suggest that we are providing a safer service as a result of that separation. If we returned to CAA standards, we would be delivering a worse service, so that argument does not stand up. Yes, we need private-sector management. I am not an ideologue in that regard. I have taken on colleagues in this place who have argued for the return of the Atomic Weapons Establishment at Aldermaston to the Ministry of Defence, which is the last organisation that should run it. It is a question of who runs the service best. How do we achieve the balance between public concern for public safety and the dynamism of private-sector management? The answer lies in the Select Committee's recommendation of a "not for profit trust". What will the trust model deliver for us? It will certainly deliver the cash. It worked in Canada, which established NAV Canada in 1995. NAV Canada operated successfully for more than five years, and in the first year delivered from the banks and the private sector an investment stream of $3 billion. The trust model works. It does not compromise safety; it is not subject to takeovers by foreign banks, foreign powers, foreign nationals or Asil Nadir—or any other person in the queue to fund the Tory party. It delivers accountability. It is outwith Treasury rules, so there is no need to compete for hard-earned public resources for schools, hospitals, firefighters and so on. It is politically in line with what we are achieving following our pre-election pledge. Perhaps most tellingly, it has support from surprising quarters. If the government had decided to adopt this trust model, I doubt there would have been any opposition from the CAA or NATS. Who said that? None other than Mr. Bill Semple, NATS chief executive, on 22 March 1999. So there we have it: the case for the trust, and the case for keeping our bond of trust. For the last time, I implore the Government to think again. The case for privatisation has not been made. The Government have not only lost the argument, but failed to take with them the air traffic controllers and pilots on whom our lives depend when we take to the skies. They have failed to convince the public, 72 per cent. of whom are against the proposals, and they have failed to convince their supporters in this place. Only as a result of the legitimate work of the Whips, to whose efficiency I pay tribute, will Members go into the Lobby to support the Government's proposals—in many cases against their better instincts, and in many cases against their consciences. I know that, because I have had conversations about the issue for months. The safety of the skies, and the safety of my constituents who live under the Heathrow flight path, is too important to be sacrificed on the altar of political virility. This is a privatisation too far—for goodness sake drop it, and drop it now.

Sam Galbraith (Labour, Strathkelvin and Bearsden)

I want to concentrate on amendment No. 454, tabled by my hon. Friend the Member for Ayr (Ms Osborne), but first let me make a few comments about the debate that has taken place so far. Clearly, everyone agrees that the status quo is not an option; the question is, what is the best model to choose? I have listened to some of the arguments against the Government's proposal. The security argument struck me as slightly tenuous and dubious. I have attended debates on similar issues, and security red herrings have always featured. As I consider the argument advanced today to be such a red herring, I shall not say much more about it. The safety argument is valid, in that we must not do anything to compromise safety. However, I was rather turned off the safety argument when we got into the debate about only 17 per cent. of air traffic control being in the private sector. I did not quite follow the logic of saying, "If it is a small place, you could have a profit motive, but if it was a busier place you could not." I did not quite understand. That seems an argument about numbers. It might be about the experience on staffing levels, but it did not seem to be simply about private ownership. That was one of the things that swayed my mind.

Tam Dalyell (Labour, Linlithgow)

The trouble is what the pilots who are going into Gatwick and Heathrow believe. All we can report is that they believe that overall control gives them the confidence in a stressful situation.

Sam Galbraith (Labour, Strathkelvin and Bearsden)

Belief is an important factor that we should always consider, but belief is not necessarily fact. People used to believe that the world was flat, but that did not make it flat. Therefore, people's belief is a different issue in these matters. I do not have to go through all the arguments that people have.

Gavin Strang (Labour, Edinburgh East and Musselburgh)

Like many of us, my hon. Friend probably flies into Heathrow quite a lot. If he were to stand on the A4 on a Sunday evening, look up in the sky and see all the planes queueing up and coming into the airport, he would realise that there is no comparison between the challenge faced by the aircraft traffic control system there and that faced by some of the small airports. However, it is not just about Heathrow and Gatwick; it is about all the en-route traffic that is the responsibility of NATS.

Sam Galbraith (Labour, Strathkelvin and Bearsden)

I agree. There is no comparison. There is a difference, but the principle that I have been hearing is that if the service is privately owned, there is a threat to safety and, if it is publicly owned, there is not. It should apply across the board. It is not something that we can start chopping up, saying, "It depends on the amount of aircraft that goes in or out." What is the level? Fifty per cent? Seventy-five per cent?

Desmond Turner (Labour, Brighton, Kemptown)

rose—

Sam Galbraith (Labour, Strathkelvin and Bearsden)

I have obviously started a debate.

Desmond Turner (Labour, Brighton, Kemptown)

Does my hon. Friend agree that it is vital to control any form of risk and we are dealing with a highly safety-critical area? At present, in, if you like, meaningful large-scale air traffic control—which sets the standard—there is no risk element from profit motive coming into contest with the safety prerogative. Pressure on air traffic control systems can only increase; the risk elements can only increase. Is it not unwise to introduce another potential risk element to the equation?

Sam Galbraith (Labour, Strathkelvin and Bearsden)

Again, I do not quite follow the logic. Risk will vary with any reason. If it is risky at one level, it is risky at the other. Degrees of risk might vary, but I do not follow the logic and where the dividing line comes.

Gwyneth Dunwoody (Labour, Crewe and Nantwich)

Will my hon. Friend give way?

Sam Galbraith (Labour, Strathkelvin and Bearsden)

This is amazing. I am more than delighted to give way to my hon. Friend.

Gwyneth Dunwoody (Labour, Crewe and Nantwich)

If my hon. Friend were operating in a private hospital as a neurosurgeon and were told that it was more important that he operated much more frequently to make a bigger profit, would he rather operate in a private, profit-driven hospital or in the national health service?

Sam Galbraith (Labour, Strathkelvin and Bearsden)

The thing that controlled my work in the public sector was laziness because I could not be bothered working too much, so I will just leave it at that. I drive home the point. What is the level of traffic that makes it dangerous to be owned privately, but not to be owned publicly? Let us have a figure. [Interruption.] Much more than could be coped with? What level is much more than could be coped with?

Michael Connarty (Labour, Falkirk East)

One more.

Sam Galbraith (Labour, Strathkelvin and Bearsden)

That is a false logic. On the argument that the service must be publicly owned for safety reasons, I do not have to go through all the various examples, but the publicly owned Chernobyl comes to mind. I do not think the argument follows. May I move on to say a few words on behalf of the amendment tabled by my hon. Friend the Member for Ayr? I hope that the Government will consider accepting it. The whole matter has been dogged for a number of years—it was particularly the case under the previous Government—by a lack of commitment to the two-centre strategy. It has constantly cropped up. The issue has arisen again. It is producing great uncertainty and doubt in Ayrshire, including in my hon. Friend's constituency. She is to be highly commended for, and congratulated on, her sterling work for her constituents and on fighting for jobs and investment, something which her predecessor never did, or was not capable of doing. I hope that we can lay the issue to rest and build the provision into the fabric of the Bill, so that the matter can no longer be used as a red herring. The question of how best to operate the service is a difficult one. Everyone is agreed that the status quo is not an option. I happen to think, particularly having listened to the debate and the false logic involved, that the Government have got it right. That is why I will be happy to support them in the Lobby.

John McDonnell (Labour, Hayes and Harlington)

I speak from a constituency interest, as well as from a party interest, I suppose. Heathrow is in my constituency. Many of my constituents live under the flight paths. Many of them work at Heathrow, so I have a direct constituency interest and in no way apologise for raising the issue of safety again. Not a single constituent in my constituency with any involvement in the aviation industry supports the proposal. I have consulted at length within my community. I have met not just trade unions, but members of the community who have worked in the industry for a long time as individuals. I have met air traffic controllers. We gave commitments before the last general election. Letters went to some of my constituents informing them that the air was not for sale. They believe that a singular act of political disingenuity is being done today. Air traffic controllers in my constituency have served the country well. They have given us possibly the safest form of transport over the years and the safest aviation industry in the world. Our amendments seek to retain NATS as a public service in some form. They try to commit us to the promise that we made before the last general election. The proposal will enable NATS to operate within a commercial structure that will provide the commercial freedom that the Government seek and that the Deputy Prime Minister considers desirable. It is not an argument for the status quo. We have already dealt with that discussion. We all accept the split between the CAA and NATS. It is a compromise; both the IPOC—the independent publicly owned company—and the trust are compromises. It is a desperate plea from me and from many of my comrades and constituents. Last Thursday, at the London elections, I met lifelong Labour supporters who were not voting Labour for the first time in their lives. We had a virtual strike among campaign activists because we had stopped listening to them. The amendments are a plea to the Deputy Prime Minister and others to listen to what our people are saying. They do not want any further privatisations. No matter how much we try to dress this one up—I have put the arguments—whether it be as a part sale, a public-private partnership, the introduction of commercial disciplines and incentives or whatever, the general public and Labour supporters in particular throughout the country view it as a privatisation and—I echo what has been said—a privatisation too far. They are right because, as has been said, we now find that, in the legislation, the potential private sector stake is not restricted to the initial allocation of shares. When we discussed that before, I was anxious about only 49 per cent. being retained by the Government. Five per cent. was to go to staff and 46 per cent. to the private sector, but, in future, according to the legislation, there will be no restriction on the privatised NATS issuing further shares to raise finance. The only bottom line on the eventual size of Government shareholding is 25 per cent. At that point, 70 per cent. of shares will be in the hands of the private sector. I call that privatisation; I believe that most people will believe that it is full privatisation. 6 pm As for employee shareholding, yesterday, in a letter from Lord Macdonald, we were informed: Staff shares can only be sold to other staff or a staff trust. I cannot find anything in the Bill that guarantees that. After a certain time, 75 per cent. of the shares could be in private hands. The private hands could be those of the private sector strategic partner that the Deputy Prime Minister has prayed in aid in supporting the legislation, the Airline Group. Eventually, that group could possess control.

Peter Pike (Labour, Burnley)

Is my hon. Friend aware that, when the Trustee Savings Banks Act 1985 was passed, certain time-limited safeguards were provided on the maximum size of any one shareholding? Once those safeguards lapsed, the entire shareholding situation changed, and, very rapidly, TSB went with Lloyds.

John McDonnell (Labour, Hayes and Harlington)

My hon. Friend is an experienced Member. He makes a valid point and offers a history lesson that we should all bear in mind as we debate the proposal. As I said, the Airline Group has been prayed in aid in support of the proposal. Of course it supports the proposal. It could gain control not only of the NATS company, but of the air itself. A few months ago, in The Observer business section, a leak revealed that the beneficent, altruistic Airline Group, which wants to become the key shareholder under the proposal, has initiated a discussion on how the airlines comprising the group could receive preferential treatment and access via NATS, which they would jointly own and control. I believe that the Airline Group is proposing a physical and financial cartel. The legislation, however, contains no provision to prevent such a cartel from being created. Interestingly, yesterday's letter from Lord Macdonald reveals that, although the Government are willing to countenance a NATS board where the private sector may have 75 per cent. control, there will be no representation on it for trade unions. Instead, trade unions will be offered a stakeholder consultative council in which they will be but one interest among many. That is not a partnership, but a sell-out. It is a takeover. I make no apology for raising the safety issue. After the railways were privatised, we had Southall and Paddington, which is down the track from my constituency. I lost constituents. Those disasters put beyond doubt the link between privatisation and public safety. The public sector should have the preponderant role in guaranteeing public safety. In the past fortnight, we have even had reports of complaints about private bus companies' safety policy in recruiting drivers. In this debate, we have discussed balances of proportionality in safety. Just to put it beyond doubt, the fact is that those who know the aviation industry tell us that there are doubts about safety in the private sector. In 1999, the Environment, Transport and Regional Affairs Committee reported on aviation safety, and it drew the Government's attention to the safety risks posed by commercial pressures in the aviation industry. I invite hon. Members to read that report, which states: in spite of the protestations of the airlines that "safety [is] our most important priority…[we] do not seek competitive advantage as far as safety is concerned", concern remains that in the event of conflict between safety considerations and profit margins, airlines may favour their profit margins. Aviation safety is already a concern. In theory—let us get the theory right—there is a view that commercial pressures within a privately owned company create risks to safety. It does not require a great theoretical leap to understand why. A private company's first priority is profit; every other factor is secondary and short term. The public-private partnership needs to produce a return for its shareholders. The company will not be able to increase charges, so profits can be maintained only by reducing costs, which entails reducing staff and cutting equipment. The Government do not accept that that creates a risk. However, when I take off in an airplane with my family, I want to hear reassurances about safety not from the Deputy Prime Minister, but from pilots, backed up by professional air traffic controllers. Those who are strongest in opposing the proposal are pilots, air traffic controllers and our own Transport Sub-Committee. It is not as though the Committee has not had a good go at this type of proposal. Year after year, we have had reports—they could not have been more categorical— advising the current Government, and the previous one, that this proposal is the worst possible option. It is the worst because it privatises part of the regulation system. Air traffic controllers are a part of that system—keeping people apart and dealing with commercial competition between airlines—but we are selling them out. As has already been said today, no other country has privatised its air traffic services. The Government have seized on the comments of a visiting Dutch Minister, who said that his country may consider such a proposal and that it is an interesting option. Pardon me, but I do not think that that constitutes an international riot clamouring for privatisation. The Government have circulated detailed notes on discussions on safety that were held last week between unions and the Government. I am grateful for them, but I also note that they show that the unions refused to sign up to the proposal or to state that they were satisfied about safety. Today, they have reiterated in their briefings to us that they do not support the proposal, which they believe will increase risk to the travelling public. Let us be honest with people. How did the proposal arise? It was made because, in the previous general election campaign, the Tories found a black hole in our budgetary plans. The telephone call went out to each Front-Bench team to find a few hundred million, and the proposal was plucked out of the air. Let us not kid ourselves about it. The proposal is a political disaster and, potentially, a physical disaster. My constituents are the ones who are most at risk. They will never forgive a Government who put dogma before their safety. As has already been said, those who have attacked my constituents for their opposition to the proposal have attributed to them two motives, the first of which is industrial. However, the fact is that my air traffic controller constituents are passing up a £13 million handout because they want to keep the skies safe. Ideology is supposed to be the second motive for opposition to the proposal, but I say that ideology is forcing the proposal on us. There are now some Labour Members who think, "Public sector bad, private sector good." As a previous leader of our party said, when theory gets pickled into dogma, we wind up with a Labour Government privatising our air. Brian Cooper was one of the train drivers who died at Paddington. He was my constituent. Based on my memory, I will never support a further privatisation. I will vote for this group of amendments.

Donald Gorrie (Liberal Democrat, Edinburgh West)

I should like to respond to the speech by my fellow countryman, the hon. Member for Strathkelvin and Bearsden (Mr. Galbraith), but also to animadvert on the absence of some of my other countrymen. The Scottish National party made a big issue of the proposals in the Scottish Parliament, where it has no authority over them at all, but SNP Members have declined to appear in the Chamber to participate in today's debate. Some of them may come to vote, but I have seen none in the building. The three main arguments on the subject, to which I have listened with great interest, boil down to a safety issue, a political continuity issue and the fact that those who know about the subject say that they disagree with the proposals. National security is an additional issue. Like the rest of us, the hon. Member for Strathkelvin and Bearsden can make up his own mind on safety. However, the argument that airplanes flying into Heathrow and Gatwick will be safer if air traffic services are under commercial pressure to make a profit is not an intellectual concept that I can sign up to. The political continuity argument is important, but the hon. Gentleman did not deal with it. Things change. It is legitimate for a party to change its position in the light of changing circumstances. Ministers' position would be legitimate if they could say, "We promised in the past that we would oppose privatisation or partial privatisation of air traffic control. However, things have changed in the following ways, and we have therefore changed our mind." That would be legitimate, but Ministers have not done it. They have merely adopted this new policy. I think that such ditching of promises contributes to the low turnouts at elections. There is a clear connection between the public being turned off—or scunnered, as we say in Scotland—by politicians who, collectively, do not stay firm on what we have said we would do.

Robert Syms (Conservative, Poole)

Like Scottish student fees.

Donald Gorrie (Liberal Democrat, Edinburgh West)

We have delivered on Scottish student fees. I would be happy to argue with the hon. Gentleman about that at another time. With all due respect, neither the hon. Member for Strathkelvin and Bearsden nor I know all that much about radar and air traffic control. The people who do know about it are all against the Government on this. Surely it is compelling that those who work in the area and have no axe to grind in terms of profit are all on the same side. The House should support them, and not listen to Ministers who seem to be driven by some extraordinary remote control.

Geraint Davies (Labour, Croydon Central)

I wish to make a short speech in favour of the Government's proposal. I declare a personal interest, in that, over the years, I have flown thousands of passengers on holiday—using NATS, of course—and I have a vested interest in keeping them alive. Any private operation has a concern for safety in terms of commercial viability and being sensitive to customers. There are a number of common objectives across the House, including the guarantee of heavy investment to secure the best air traffic management and safety system in the world. The system must become a benchmark for best practice. Beyond that, we want to extend our operations into European air space and to be a model for other air traffic control systems. We do not have a standstill situation. It is not good enough for people to say that we have the best system in the world, and that it will remain the best in the world. Britain is the biggest hub for international airlines in the world, and business is growing by 6 per cent. a year. To continue as we are is not a sustainable option. The reality is that the system is becoming more complex and more congested. Who has the resources in terms of skills and technology—as well as cash—to sort it out? What is the best incentive structure for efficiency and safety? Not every speaker has approached the issues in an upfront way. Frankly, in certain airports, NATS needs to deliver safety systems that are not being delivered. In Edinburgh, we want a new NATS to bring in a requirement for night-time approach radar at affordable prices. That service should be deliverable to all significant airports as congestion grows. Those who think that NATS is great and that everything is all right should know that this is a moving picture, and we need a system that delivers increasing standards and provisions. Those who speak about increasing congestion at Heathrow and Gatwick are right, and that is the very reason why we need a mechanism for more investment and skills.

Michael Connarty (Labour, Falkirk East)

My ears pricked up when I heard my hon. Friend mention increased services in Edinburgh. Is there any suggestion or evidence that those could not be delivered by the trust model or by a wholly publicly owned company if it were allowed to get the money from the private sector?

Geraint Davies (Labour, Croydon Central)

We need increasing standards and resources from the CAA. We need also to be confident that those complex services are delivered. I am trying to show that the model put forward by the Government satisfies all those criteria. It is not enough to say that we can fund safety, and we need to investigate the matter carefully. I recognise the sincerity and commitment of those who argue for fresh resourcing for the current system, and I respect their position. However, I ask everyone to listen to all sides of the debate. 6.15 pm There is some consensus in the industry—across the airlines, the pilots and the unions—in terms of a public-private partnership. One would not have thought that from listening to some of the speeches today. Some of the unions—including the pilots—are sympathetic towards public-private partnership. There is a debate about corporate governance, and there is consensus that extra cash should not necessarily be at the whim of individual Governments, who will have priorities such as the NHS. There is consensus on the need for certainty in investment flows. There is consensus on the opportunity for risk transfer into areas where risk can be managed more effectively, such as information technology systems. There is a view that there is something to be added from the private sector. The horizons for air traffic control should go beyond UK airspace, or any European airspace, and into other airspace. With the current dynamics of the industry, it is not enough simply to think about planes flying over Britain. I am not of the view that the private sector necessarily does project management better than the public sector. The Croydon tramlink—a public-private partnership—is four months late. However, the point is that the cost of the delay is with the private sector, not the public sector, and there is a lot of pressure to deliver. Nobody is saying that the private sector manages everything well, but there is an issue of risk transfer and of who does what best. People have focused on the tensions between safety and profit, and between operational standards and costs. Those are relevant, and it is not enough to dismiss them. The Select Committee recommended that the CAA should be separate from NATS, and everyone agrees on that. That separation of regulation from operation has been introduced on the railways and is much to be welcomed. Ministers must underline the fact that the CAA's guidance and operation should be transparent so that people know what is happening and that safety is being enforced. We have debated whether the profit motive is in collision with the idea of investing in safety. If the new NATS has ambitions to take over European airspace and to sell itself as a model of best practice, surely it is in its commercial interest to invest in safety, as safety is its business.

John Smith (Labour, Vale of Glamorgan)

Is there not a more fundamental point? The product of NATS is safety; the very service that NATS provides is safety. There is no safety dimension: NATS could not survive unless it delivered safety.

Geraint Davies (Labour, Croydon Central)

My hon. Friend is right, and that is why there is an incentive to innovate in safety. NATS must sell safety and be the safest system in the world, with new technology to provide better safety and fewer congestion delays. That is its motivation. One of the amendments refers to a not-for-profit model, and the airlines are keen on that model. If they buy NATS—I am not averse to that—the airlines can make their money by investing in NATS and by reducing delays at airports by 10 per cent, after which they could make an enormous profit by selling tickets to people flying on their planes. The amount that the airlines would have to invest in the system is not all that great, and they have £24 billion worth of aircraft sitting on the tarmac in Britain. The idea that they would not invest in safety, in information technology and in efficiency does not stand up. Given the fact that they are vertically linked in the air business, it is not easy to put a limit on how much they would bid. We must also consider the management of technology. I have served on the Public Accounts Committee for the past three years, and week in, week out, we see examples of public sector management of very large IT infrastructure programmes going massively wrong. There are cultural issues and issues about whether we are paying civil servants enough to secure the skills to compete and negotiate on an equal level, but that is another debate. The private sector is in a position to manage the skills and the IT risks. There are complex issues of cash, IT, management and, ultimately, safety. My view is that the interests of securing our future as the international hub of air transport with the best record of safety and efficiency will be served by the model that the Government have proposed.

Frank Field (Labour, Birkenhead)

On a point of order, Mr. Deputy Speaker. In your judgment, if we are to have three votes on this group, will we not need to conclude the debate by about 7 o'clock?

Alan Haselhurst (Deputy Speaker, Saffron Walden)

That is an observation that may be widely agreed with in the House. We shall observe what we shall observe in due course.

Maria Fyfe (Labour, Glasgow Maryhill)

I congratulate my hon. Friend the Member for Ayr (Ms Osborne) on her campaign over the years to secure hundreds of jobs in her part of the world. If she has succeeded in that endeavour, that is no mean achievement. I wish that my hon. Friend the Member for Strathkelvin and Bearsden (Mr. Galbraith) was still in the Chamber. He accused those who disagree with him of being illogical. When I see him, I will have to ask him what adjective he would apply to someone who has considered an issue for considerably less time than those who work in the industry and provide the service, yet thinks that he knows better than they do what is good for the service. This is not a partnership, as others have said. It is a privatisation. The Government's holding can be reduced to 25 per cent. without the House being consulted again. Some day we will not even have that 25 per cent. The then Government will say, "What are you complaining about? You went three quarters of the way down this road." Joseph Chamberlain said 100 years ago that he did not want water to be held in the private sector because some things … are too important to leave to bodies whose first motive is profit and whose first fiduciary duty is to their shareholders. I would not disagree with him. I am not saying, "All private bad, all public good," but there is a difference, and one day it could be a crucial one. I sought some figures from the Library to compare the safety records of the public and private sectors. I was told that 85 per cent. of private sector employees were employed in establishments with occupational health measures, compared with 100 per cent. of public sector employees. The proportion of employees covered directly by such measures were 66 per cent. and 99 per cent. respectively. That is a useful measure of how the private sector can often be good on safety but can also fall down on it. The public sector is certainly under more pressure to deliver totally on safety. If the pilots are not convinced, I am not convinced. I do not believe that the two alternative proposals can be brushed off with a one-line statement that neither fits the needs of the service. I would hope to hear more from the Government. Before the 1997 general election, our party said: Our air is not for sale. I featured that in my election campaign, and I will not go back on my word to those who voted for me unless I see good reason for doing so—and I do not see sufficient reason here.

Maria Fyfe (Labour, Glasgow Maryhill)

The hon. Gentleman makes an important point. No other country in the world has privatised its air traffic control. Are other countries not faced with hard choices, too? We keep on hearing from the Government, when they want to do something that is unpopular and unwanted by their own supporters, that we are making a hard choice. On some things, we should make a choice that people like, then fewer people might stay at home at elections. Why are the Government flying in the face of public unhappiness at this step? Why are we ignoring those who work at NATS and those who fly the planes? They have not merely gone through the motions of opposing the Bill: they have campaigned ceaselessly. They are serious about this. There was a time when a Labour Government would have listened more carefully to those who actually do the work. I have been reading the Government's briefings and I gather that a not-for-profit trust would be allowed to compete for the contract. If such a trust would be acceptable, why cannot the Government accept a new clause that allows us to go straight for that option and keep the private motive out?

John Redwood (Conservative, Wokingham)

I support my hon. Friend the Member for North Essex (Mr. Jenkin), who has done a superb job in piloting the Opposition case, and I look forward to what he has to say later. I support new clause 26, to which he may speak if he catches your eye later, Mr. Deputy Speaker. In past debates on these matters, I have always declared the fact that my wife works for British Airways, but I can assure the House that she no longer does so. She has resigned from British Airways, so she is no longer privy to the ways of the board or beholden to the company. One of the big issues that has come out in this fascinating parliamentary debate is what the Government are trying to achieve. Is it a privatisation or is it not? As I urged several privatisations for love on previous Conservative Administrations, and for profit on Governments elsewhere in the world, when I was in business, perhaps my remarks may have some interest and merit. It is clear to me that privatisation occurs if control passes from the Government to a private sector interest. By that test, this is self-evidently a privatisation. The Government may try to dress it up in the new language of public-private partnership, but on this occasion that is either misleading or a load of ideological claptrap. This is a privatisation and it must be judged as such. We must apply the normal tests: whether it will be sold to the right people or group of interests; whether it will be sold at the right price; whether it will be run better than if it had remained in the public sector; and whether there might be a better way of serving the public interest and securing gain for the public purse. In all my experience of privatisations around the world, this is by far and away the worst model that I have ever seen. It manages to combine all the worst features of privatisation and avoid practically all the good ones. That is why my hon. Friend the Member for North Essex is right to say that the official Opposition cannot support this version of privatisation and was right, in his ever-helpful spirit, to suggest a better alternative. The models on offer from Opposition Members—the independent trust and the public corporation—which we have heard debated at some length, represent a much better interim position, at least, than the Government's version of privatisation. It would be far better to leave it alone or to keep it under the new control and ownership that has been suggested by Labour Members until it could be privatised properly than to do what the Government propose. 6.30 pm The proposals are a kind of punk Thatcherism. The Government have a strange love-hate relationship with the Thatcherite message. As one who was proud to be involved during the 1980s and thought that a lot of good things happened then, I now recognise that it was a long time ago. The Government should recognise that the problems and solutions of this century are rather different. If they wish to be Thatcherite, however, they should try to understand the essence of the Thatcherite experience instead of producing a punk version that true Thatcherites cannot possibly support. A proper privatisation would surely seek to maximise wider share ownership, make sure that the British national interest was secure and protect the organisation from the possibility of being sold on the cheap to a single foreign interest. I have never come across a Government who wished to sell control for only 46 per cent. of the shares. One would at the very least expect them to sell 51 per cent. of the shares to the controlling interest.

John Prescott (Labour, Kingston upon Hull East)

The Conservatives gave it away.

John Redwood (Conservative, Wokingham)

The Secretary of State dares to say that, but the Conservative Administration gave away shares to company employees, which was a good thing to do. They did not give them away to people from outside who had the money to buy. They were careful to protect important public interests from foreign acquisition by using golden shares that worked. I am concerned that the present Government are inventing a golden share that may well not work and may not protect the national interest. There is a strong possibility that the Government will end up selling 46 per cent. and a controlling interest for less than 46 per cent. of the true value. The numbers that they have trotted out so far and have got into a tangle over show that they envisage a sale at fire sale prices when there is absolutely no reason to sell an important national asset at a knock-down price. I do not wish to intrude on the debate about how Labour Members feel about supporting or not supporting the Government who stated clearly before the election that the air was not for sale. My right hon. and hon. Friends and I made no such statement, so we do not have that problem when deciding how to vote tonight. It is an important issue. I can speak from experience of supporting a Government who occasionally broke their word. I know how difficult it was and what an uncomfortable feeling it was. I always felt better when I stuck to what the Government had originally said and did not let down my voters by going along with the change of tack or script. I hope that the Government are aware that there is unity across the Floor of the House tonight on whether or not this botched and muddled privatisation should go ahead. The House should categorically say no; it is the wrong privatisation at the wrong time. It is stripping a national asset on the cheap. It is punk Thatcherism of the worst and that is why there will be surprising unity in the Lobbies tonight on this issue.

Jane Griffiths (Labour, Reading East)

It has been fascinating to listen to my constituency neighbour, the right hon. Member for Wokingham (Mr. Redwood), talking about punk Thatcherism, which may be an insult to punks and Thatcherites alike. Perhaps I am naive in these matters, but I cannot understand how an organisation that operates in the private sector, as NATS does, can be privatised and how we can describe the Government's proposals as privatisation. However, as the word has been bandied about, I shall let it go. In an intervention, my hon. Friend the Member for South Derbyshire (Mr. Todd) referred to the number of airports in the private sector that are not part of NATS and asked whether he should be concerned. Other hon. Members said that as only small numbers of air movements were not controlled by NATS, it did not really matter. However, if one air movement at any airport was not conducted safely or was not subject to proper controls and that aircraft fell out of the sky, we should all be concerned.

Gwyneth Dunwoody (Labour, Crewe and Nantwich)

As soon as any aircraft moves out of any airfield it is immediately taken over by an air traffic controller from the National Air Traffic Services who controls its flight wherever it goes.

Jane Griffiths (Labour, Reading East)

I understand that and I thank my hon. Friend. However, my point relates to the numbers. I have figures for 1998, the most recent year for which there are complete statistics, which show that some 22 million passengers were carried for at least half of their journey outside the control of NATS. That is a lot of people by anyone's understanding. Almost half the air traffic movements in that year were, at least partially, not under the control of NATS. There are airports all over the country where NATS does not operate. They are in or near the constituencies of many hon. Members on both sides of the House. However, I have never heard of an hon. Member going to one of those airports and saying to the people there, "It is a pity, but you are not quite as good as the boys and girls at Heathrow and Gatwick. You are a bit second class and it is not good enough." Thinking about those matters leads me to seek reassurance from my right hon. Friend the Secretary of State. If all those people are working as air traffic controllers—and there may or may not be problems—will the new safety system that the Government propose for NATS affect the regulation of those operating outside NATS? Will it create more of a division? It does not seem to me that it will, but I should like some reassurance. We have heard some dud logic today. Is safety an issue? Of course it is because safety is the product of air traffic control. Air traffic control exists to make the skies safe, but one cannot be a little bit safe. Either something is safe or it is not. It is like saying that one cannot be a little bit pregnant. Safety, however, can never be totally guaranteed no matter what system we have. There were horrendous rail crashes under British Rail and subsequently after privatisation. Unsafe practice is bad practice, whether it happens in the private sector or the public sector. I am not ideological about it, and I do not believe that any right hon. or hon. Member should be. We should all be concerned about moving into the 21st and 22nd centuries with good, safe, dynamic and vibrant air traffic control. So much in the Bill has not been discussed because we have been talking about air traffic control, which matters a lot. We should vote on the amendments as people's views are important, but it is a pity that the issue has overshadowed so many other good things that we are doing in transport. I shall not be supporting the amendments.

Tam Dalyell (Labour, Linlithgow)

In his serious and thoughtful speech, my hon. Friend the Member for Croydon, Central (Mr. Davies), who takes a different view, referred to some pilots sharing the general views of the Government. Like you, Mr. Deputy Speaker, I travel every week between London and Scotland and on 17 occasions now—as will be borne out by the hon. Member for Tweeddale, Ettrick and Lauderdale (Mr. Moore) and others—I have sent my executive card or my diamond card to the captain to ask whether he is prepared to have a word about air traffic control. On every occasion the captain has said yes, other than when he is engaged in training. I have asked the following question: "Do you, captain, back up the views of the British Air Line Pilots Association?" and on every occasion the answer has been emphatically, "Yes. We think that Chris Darke and his colleagues are right and we are very deeply concerned." Senior captains of British Airways have used the word "dangerous". It is not my word—it is theirs.

Geraint Davies (Labour, Croydon Central)

May I make it clear that I said not that the british air line pilots association, Chris Darke and all pilots agreed with the Government's prescription, but that they agreed that a form of public-private partnership was the way forward? The debate is not about public-private partnership but the nature of corporate governance. The issue is whether the two converge. My hon. Friend will find that I am not disagreeing with what he says.

Tam Dalyell (Labour, Linlithgow)

I am grateful for that correction. Time presses, and I wish to ask my right hon. Friend the Secretary of State this question: why has he failed to persuade the pilots if his scheme is so watertight? They are serious people. Why is BALPA so opposed to it? We need an answer to that question. Let me share one other thought. What will people in this country think of the House if we are seen to impose on controllers and pilots, against their best judgment, a scheme that they do not want? Heaven help us if there is a crash, let alone a mid-air crash. What would people think of the House of Commons doing that?

Peter Pike (Labour, Burnley)

I am glad to have the opportunity of saying a few words in the debate. I speak as one who has not yet been convinced about which way to vote. We have not yet heard the Government's case. Although I have considerable sympathy with the new clauses, I have not been completely convinced that I should vote against the Government tonight. I have not yet voted against the Government, but they have still to convince me to go through the No Lobby. My hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody) spoke earlier in the debate. The reports of the Transport Sub-Committee of the Select Committee on the Environment, Transport and Regional Affairs, of which my hon. Friend is the Chairman, have probably influenced my views on the issues more than the debate so far. Obviously, safety must be paramount. I would not for a moment accuse my right hon. Friend the Secretary of State for the Environment, Transport and the Regions of not believing safety to be of the utmost importance. My hon. Friend the Member for Brighton, Kemptown (Dr. Turner) spoke about having a choice of planes. If airlines are not safe, there is something sadly wrong with a system that allows planes into the air. I do not particularly want to be on the ground, whether I have a choice or not, if the plane above me is about to crash. That worries me. On the forms of ownership, golden shares have become meaningless. Most of them were time-limited, and some have already lapsed, so that does not convince me. Share ownership for staff after privatisation has not been all that important. The worker-management buy-outs that took place in some sectors, which some of us strongly supported, ultimately sold out to Stagecoach, so that form of succession did not last very long. When we compare what is offered by the Bill and what is offered by new clauses 35 and 36, there does not seem to be much difference when it comes to the public sector borrowing requirement. I understand the Government's attitude, as it would ensure that the necessary investment can be made. However, it is time that the Government found a way of financing capital requirements for Government and public spending as opposed to revenue expenditure, without merging the two. It is nonsense that the Government should not be able to borrow on the normal market for long-term finance without such borrowing being included in the PSBR. It is nonsense to make a judgment in the year in which the expenditure is incurred. 6.45 pm The real difference is the cash that we will get for the shares—whether it will be 50 or 75 per cent. The Government do not need that money at this stage. The first tranche of money from the recent sale of the mobile phone network bands, which will be available over the next 20 years, is more than double what we will get for the sale of these shares. My right hon. Friend will argue that we need to spend money on hospitals and schools. However, I do not believe that the money from the sale of these shares is required. I remain unconvinced of the Government's case. I ask my right hon. Friend, even at this late stage, to think again about these provisions and say that he is prepared to consider them before the Bill is dealt with in the other place. We still have time to find a compromise. New clauses 35 and 36 propose what I believe to be solutions that the Government should not totally reject.

Norman Godman (Labour, Greenock and Inverclyde)

I promise that I will be brief—I simply wish to make a couple of points. I have signed the three new clauses. I hope that my right hon. Friend the Secretary of State for the Environment, Transport and the Regions will give sympathetic consideration to the case put so eloquently by my hon. Friend the Member for Ayr (Ms Osborne). As my hon. Friend the Member for Strathkelvin and Bearsden (Mr. Galbraith) rightly said, my hon. Friend the Member for Ayr has fought this campaign in a remarkably sustained and tireless way, quite unlike her predecessor, and she and her case deserve to be listened to. In a debate such as this, which is largely, if not completely, confined to Labour contributions, I am reminded of the words of a retired deputy in Dail Eireann. He said that, as a Government Back Bencher, he always felt that, if he praised the Government, he would be accused of sycophancy by some, but if he had the temerity to criticise the Government, he would be accused of treachery by others. I hope that my right hon. and hon. Friends who have signed the new clauses will not accuse me of sycophancy when I say that my old friend the Deputy Prime Minister is utterly committed to the very highest safety standards. I first met him in the mid-1960s when he and I, along with my hon. Friend the Member for Hull, North (Mr. McNamara), fought campaigns to enhance the safety of merchant seamen and fishermen. So I have every confidence in my right hon. Friend—so does my family, which is made up of fishermen and their wives, daughters and sons—where maritime safety is concerned. For me—and, I am sure, for my family—that extends to his commitment to rail and air safety. I will now be accused by some of treachery for saying that I have some criticisms of the Bill. I genuinely believe that the trust option offered in this civil-minded debate is the best way forward for the Government. I asked my right hon. Friend a question at a meeting, and then disappeared before he had the opportunity to answer it. I offer my apologies to him publicly for that, but I had visitors from Australia to see to. The question was: why are we out of kilter with so many other states? Some of those states have right-wing Governments, but all of them seem to believe that such services should remain public. I have to be honest and point out that I am old, and thus old-fashioned enough to believe that some institutions, organisations, services and facilities should remain in the public domain. I believe that of the Prison Service and of NATS. I am happy to come out of the closet and say that, ideologically, it is better that some services and some resources are managed in the public interest by public servants—servants of the state. I shall not apologise for being old-fashioned in my views. Furthermore, I have long opposed private finance initiatives and public-private partnerships for the building of schools and hospitals—I am sorry that my hon. Friend the Member for Strathkelvin and Bearsden (Mr. Galbraith) is no longer in the Chamber. I have had to accept a PFI for the building of a service for geriatric patients in my constituency, but I have publicly voiced my opposition to private involvement in such an essential service. I hope that my friendship with my right hon. Friend the Deputy Prime Minister will not be diminished, but philosophically and ideologically, I think that the Government are wrong. I say that with great reluctance because I have great respect for, and trust in, my right hon. Friend. All my hon. Friends who have spoken in favour of the new clauses have emphasised safety; they are right to do so. I do not take issue with those who support the Government, but safety measures should remain in the public domain. I shall always believe that. That is why I shall support the new clauses, even though they will not be accepted by the Government. However, I do ask the Government to take heed of the powerful case eloquently presented by my hon. Friend the Member for Ayr. They must concede that case. I hope that my right hon. Friend will reconsider that and other issues. As I am such an old-fashioned ideologue, perhaps it is just as well that I am not seeking reselection, but I hope that my right hon. Friend will listen to those who argue against him in this civil-minded debate.

Alan Keen (Labour/Co-operative, Feltham and Heston)

As time is limited, I shall concentrate briefly on the crux of the issue. Since my election to this place in 1992, I have often been asked what it is like to be in Parliament. My standard answer is that it is better than going to work. I know that we work long hours in this place, but I worked in the private sector for the whole of my previous working life and it is pretty tough there—efficiency is achieved through drive and ruthlessness. My hon. Friend the Member for South Derbyshire (Mr. Todd) said that he wanted robust management—so do I. I want robust management in the design and installation of the IT systems and in their testing and re-testing. However, I want that robust management to end at the interface between managers who have to answer to shareholders and the people in front of screens who talk to pilots for hour after hour. I do not want robust management there. That is the crux of the debate. There are parallels with PFI in hospitals. I strongly support PFI in such cases—so no ideology is involved. However, as my hon. Friend the Member for Brighton, Kemptown (Dr. Turner) pointed out, we do not allow the people who build hospitals or those who have 25-year contracts to clean them to be involved on the clinical side—carrying out operations. My objection to the Government's proposals is based on that one issue. I repeat that I want to remove robust management—chasing profits and applying cost pressures—from that interface. I do not want such management to control the individuals who have the crucial job of talking to pilots. Some hon. Members have asked whether there is a difference between a small and a large airport in relation to safety. I have lived within five miles of Heathrow airport for 37 years. Those who do not live around the airport cannot fully understand the dangers. I lived close to the area of the Staines plane crash. Of course, that was nothing to do with air traffic control; it was a faulty plane. The trial taking place in Holland reminds us of the devastation that can happen on the ground—never mind a collision in the sky. My constituents suffer from aircraft noise day in and day out; a plane lands or takes off every 90 seconds. They deserve the best service that we can give them. For the third time, I repeat that we do not want robust management to affect those people who sit in front of the screens doing that vital job. If we want our Olympic athletes to break world records, we take every worry away from them so that they can focus on their running or whatever event they are competing in. The people in front of those screens as just as important—indeed, they are much more important than Olympic athletes. We should treat them in the same way. They should not be subject to the pressures of the private sector.

Michael Connarty (Labour, Falkirk East)

I join my other colleagues in commending my hon. Friend the Member for Ayr (Ms Osborne) on her speech on amendment No. 454. She has worked tirelessly to convince the Government that, whatever other structures are put in place, they must manage a two-centre strategy. Given that she is a Parliamentary Private Secretary—as I was for a year—I realise how difficult it must have been for her at times to convince the Government. Governments obviously assume that they have the votes of PPSs, who will be loyal. My hon. Friend has worked hard and I commend her on the amendment. It represents one last throw of an important dice—to include in the measure a commitment to the people of Prestwick and the workers there, so that they can be confident that, whatever the management system, there will be a second air traffic control centre. I seek one assurance from the Deputy Prime Minister. The amendment includes the words "was commissioned". How does my right hon. Friend interpret that? Does it mean that projects that are only at the planning stage? If the planning stage has already been initiated, will the project be encompassed under the provision? That is an important point, because Prestwick is at that stage—no bricks and mortar have been laid, so the project is at an early stage. I prefer new clause 37 because it would require a report to the House on the progress of those establishments before any commitment is given on transferring assets or shares—it would be the belt and braces for that operation. I should like either new clause 35 or new clause 36 to be passed because they offer a better structure than that proposed by the Government—whether the percentage share is 46:5:49 or 75:25. A couple of small matters keep coming up. It has been said that, because the rates for air traffic control are set by Europe, a publicly owned corporation could never finance its investment of £1.3 billion. In that case, why are no other EU air traffic services in the private sector? They, too, have to set their rates under European controls. The hon. Member for Croydon, Central (Mr. Davies) made an important point. If there were better IT efficiency in NATS, there would be a greater flow through airports; there would be fewer delays and income would increase. That would be true of the private sector—it would be a public or a private option. On management, the amendments on the trust model state clearly that all those involved in management would be from the private and the public sectors. The motivation would be the same for a trust or an IPOC as it would be for anyone else. Why is a public plc acceptable for the Post Office and not for NATS? As a member of the CWU—Communication Workers Union—parliamentary panel, I have to ask whether the measure is a Trojan horse. If air traffic control is privatised, will there be full privatisation of the Post Office? Will the Secretary of State explain the meaning of clause 49(4), if it does not mean that 75 per cent. will be owned by the private sector and 25 per cent by the public sector? Is that not privatisation? There is a difference between regulatory control and private profit. I recently picked up an example in the Financial Times which said that airlines in America have asked for a decrease of 10 per cent. in the amount of fresh air that circulates in cabins. They have done than to save millions of dollars in the cost of the fuel that is used to circulate the fresh air. If they are willing to make that cut, they will be willing to make others. 7 pm My final point is one that I have made time and again. I am against the proposal in principle. When we campaigned against water privatisation in Scotland, we were opposed not just to the method, but to the principle. I am against the proposal, and I believe that the Government will pay the consequences, because the people who voted us in are against both the principle of the privatisation and the method to be used.

Bernard Jenkin (Conservative, North Essex)

I am the 22nd Member to take part in the debate, which has been an exceptional parliamentary occasion of great credit to the House as a whole. We have had an extremely good debate. Part of the concern expressed by Labour Members reflects a point made by the hon. Member for Falkirk, East (Mr. Connarty) about whether the proposal is or is not a privatisation. Part of the concern has revolved around the issue of safety, but Conservative Members do not accept that there is any inherent conflict between safety and the right kind of privatisation. As has been pointed out, our airlines and airports are already in private hands and they are part of profitable enterprises, and civil aviation just happens to be the safest form of transport. A sensible privatisation scheme would present no safety threat at all. I wish to speak initially to our new clause 26, which sets out the policy on which the Conservative party stood at the previous general election. We have proposed a full flotation of NATS to create a great new British company with effective golden share arrangements that would protect the business from unwelcome foreign takeover and provide the widest possible share ownership among the British public. Labour's proposed public-private partnership, however, is something of a mess. The Secretary of State has many friends, but not, I fear, on this issue. Although we reject the notion that safety is incompatible with private ownership, we have several concerns about the proposed scheme and its circumstances. As my right hon. Friend the Member for Wokingham (Mr. Redwood) pointed out, this public-private partnership provides poor value for the taxpayer. National Air Traffic Services is probably worth between £1 billion and £1.5 billion and the PPP offers release of loans of about £300 million and net proceeds of £15 million from the sale of operational control of the business. A straight flotation would raise considerably more for the taxpayer, especially if sold in stages rather than in one go. Furthermore, sale proceeds are likely to be significantly enhanced after 2002 when the Swanwick centre becomes operational. Our amendment therefore also argues for delay. Labour's PPP will not extend share ownership. It is a complex part trade sale, forced on NATS to try to disguise the reality that it is just privatisation by another name. A straight flotation would create thousands of new shareholders. The strongest bidders appear to be foreign companies: Lockheed Martin, which is NATS's key supplier, is from the United States; Raytheon, which is working with the state-owned German air traffic control company, DFS, is also from the US; and Thompson CSF, with its avionics subsidiary, Airsys, is a French virtually state-owned company. The only UK bidder appears to be the Airline Group, but there is no guarantee that its bid will be successful. The PPP will create not a new British company, but probably a foreign-owned subsidiary, and that does not appear to be in the national interest. Sale of control to a trade bidder carries extra risks. A straight flotation provides for continuation of the same business, but under the same management. A trade investor offers the downside risk of adverse interference in the management of the company and, in particular, in procurement issues. NATS could finish up tied to a less satisfactory supplier of equipment and there are also risks of transferring control to a state-owned entity in another country. Moreover, the shareholding structure of the PPP creates its own uncertainties about who will be in control of the business. The Government intend to hold more shares than the so-called strategic partner and the draft articles of association for the partnership company and the draft strategic partnership agreement are both complex documents. In this privatisation, confused responsibilities about who is responsible for safety could give rise to safety concerns. NATS's management are excellent and they have no need for outside expertise from a trade investor. Recent developments in European Community law mean that a sale at this time also presents a threat to national security on two fronts, and I totally reject the idea that this point is a red herring. First, after the PPP, the UK Government will not be able to determine who owns the controlling interest in NATS. The Bill provides for a golden share, but, in July 1999, the European Commission issued an opinion on golden shares in former state-owned companies as a preliminary to infraction proceedings against BAA's golden share. The Commission says that such shares are illegal under European Community law because they infringe provisions on the free movement of capital and the freedom of establishment. Secondly, it is likely that the provisions in the Bill, which provide for the intervention of the Secretary of State to protect national security, are also invalid under EC law. NATS deals with military flight plans and has knowledge of the whereabouts of military assets at times of international tension and during hostilities. Although that issue will be dealt with in a later debate, I point out that Royal Air Force chiefs of staff have expressed concern that sensitive intelligence information could be compromised. In short, Labour' s PPP is deeply flawed. Moreover, the assurances given by the Government are false. They continue to mention the strategic partner, but why does clause 53 refer to the possibility of flotation? In Committee, the Minister told us that recourse to immediate flotation can be made under the Bill in the event that a suitable strategic partner cannot be found. Why do the Government continue to talk about the retention of 49 per cent. when clause 49, now that it has been amended in Committee, specifically spells out that the Government's shareholding could be reduced to 25 per cent? What will happen if there is a rights issue then? What is clause 49 worth when it has a Henry VIII provision stuck in it so, at a stroke of pen, the Government can, at a later date, tear up the golden share and the share restrictions provisions in the clause? It is incumbent on the Secretary of State to tell us exactly what the golden share is for, given that the European Commission has made it clear that it regards it to be illegal under European Community law. The Government's PPP is a bad privatisation that we cannot support. The Select Committee described it as the worst of all the possible options. The Conservative party invented privatisation, but we have never been the party of privatisation for its own sake. Privatisation should be a means of improving efficiency and effectiveness, but Labour's privatisation carries risks and disadvantages compared to our scheme. The Deputy Prime Minister has brought this so-called PPP to the House only because the Treasury is forcing him into the privatisation against his will. It is flawed by the Government's attempt to pretend that they are not privatising something when they are. Having promised before the election that our air is not for sale Labour is now promising a back-door privatisation. Our amendments sets out our policy for the privatisation of NATS—the solution that the aviation industry would truly prefer once national security issues have been resolved. We will vote to try to stop the Government from making a mess of one of this country's vital safety industries.

John Prescott (Labour, Kingston upon Hull East)

I think that everyone will agree that this has been a good debate. It has reflected Members' real concerns about change and about the possibility of a public-private partnership, as set out in the Bill, for air navigation services. I welcome all the contributions that have been made to the debate. I have disagreed with some comments and agreed with others; that is inevitable on these occasions. The Government have some differences both with the official Opposition and with the opposition on the Government Benches, but I shall choose to direct myself to the Bill. The hon. Member for North Essex (Mr. Jenkin), who spoke from the Opposition Front Bench, talked about a wonderful privatisation programme, of which, as he readily said, the proposal before us is not a part. The history of selling the public assets of the United Kingdom is not something to recommend when dealing with further privatisations. In whatever area, privatisation cost the country billions of pounds. The assets sold off were undervalued, as the Public Accounts Committee has made clear. I would not want to put forward any privatisation proposals of that sort. I am pleased, however, to support proposals that will allow the development of National Air Traffic Services and introduce measures to enhance air safety, at a time when the volume of air traffic is increasing extremely quickly. It has increased by about 20 per cent. in the past five years. This is clearly a growth industry in which safety is a major consideration, and I think that we all agree that there is a good safety record. I shall take up some of my hon. Friends' comments about the commitment and promise that "Our skies are not for sale". We did not state in the Labour party's manifesto that there was a commitment to do this or not to do it, but it was said at the general election that after the decision to take on two years of the financial programme of the previous Administration, the question had to be asked, "What about the privatisation to which the previous Government were committed?" We took the view that we would not privatise NATS but would pursue a public-private partnership. That was at the heart of the election, and the point was made by my right hon. Friend the Chancellor of the Exchequer. This is not something that we have sneaked into the House. There was debate, which is a matter of record. It is possible to read exactly what was said at the time. The proposals that we are discussing are an important part of the Bill, which I am proud to endorse. The Bill will bring improvements to the railways, bus services, and local transport provision. Two key themes are improvements in public transport, which is once again a growth industry after decades of neglect, and an emphasis on the public and private sectors working together for the best overall solution. Much of the debate, quite properly, has been about safety. I have spent much of my 30 years in the House—I am grateful for the comments that have been made in that regard—dealing with safety issues in all industries. That is a matter of record. Some of my efforts have been successful; others have been less successful. However, it would be most unusual for me to make a proposal that threatened the safety of air navigation. If that is not enough to convince the House, I shall explain why the proposal will make air navigation far safer. Nothing is more important to the Government, or to me personally, than safety in transport. Everyone who has contributed to the debate, as well as the Select Committee on the Environment, Transport and Regional Affairs, has made it clear that the status quo is not acceptable—that is, that the roles of the operator, which is now responsible both for regulation and for operation, should be separated. The Select Committee said that the status of the CAA with NATS as a subsidiary was not acceptable. The Committee has been making that recommendation since the late 1980s. I agree with it, but I go further. The Government do not accept that the status quo is good enough for safety. There is a conflict of interest, and a change must be made, which is embodied in the Bill. We also consider that the status quo is not sufficient to meet the long-term investment needs of NATS, which will be the key to maintaining safety, better project management and the ability to grow. 7.15 pm When we consider the safety record we see that there has been an increase in airprox near misses over the past 10 years. Near misses over those 10 years have increased by almost a third. That is alarming. However, there has been a tremendous growth in air traffic. A fair analysis of safety would mean setting the number of incidents against the growth of aeroplane passenger traffic. Against that background, it is essential that the new technology and the two-centre approach, which the previous Administration announced, is introduced if we are to improve safety. Swanwick has been delayed for five years, it is £400 million or £500 million over budget and it has still not been implemented. Perhaps someone should have been concerned to ensure that the project was properly financed and properly implemented. It might have played a part in reducing the number of airprox incidents that we are now seeing. The amount of money that is invested in safety is just as important as skills and equipment. The issue is whether NATS can secure sufficient long-term investment and handle it efficiently. I have examined the record, and it is my judgment that it has not done so. We must change that. In that context, the status quo is not satisfactory.

Jenny Tonge (Liberal Democrat, Richmond Park)

The Deputy Prime Minister has mentioned three times already that there has been a huge growth in air transport in this country. Does he agree that if terminal 5 is allowed to go ahead, there will be a huge growth in movements in and out of Heathrow?

John Prescott (Labour, Kingston upon Hull East)

I have to deal with appeals on such planning issues, so I cannot make any comments now. The hon. Lady will have to wait until the report comes out. There has been considerable debate about traffic using privately run or publicly NATS-controlled airports. The argument has not greatly benefited the House, but at the same time it has been a good debate. NATS controls much more air traffic than anyone else, whether in terms of movements or of numbers of passengers, but the fact that it is larger does not necessarily mean that it is safer. Private sector companies, or non-NATS organisations, in Humberside, for example—the airport in my area—enable Concordes to land. Airbuses and jumbo jets land at Luton. Whether controllers are dealing with 10 or 400 people or with a jumbo or a small jet, I am sure that there is equal concern for safety. I think that that has emerged during the debate. The argument that private air traffic controllers are less safe than public controllers in NATS has been rejected. It has not emerged from the debate that NATS bids for private contracts. Presumably it does so with a profit motive. The assumption that profit undermines safety is not proven. Our experience in visiting airports is that it does not. All the discussion in the world, and all the cockpits that my hon. Friend the Member for Linlithgow (Mr. Dalyell) has visited, do not change that essential point. As for chats with pilots—I do not disagree with the idea that pilots are important people to take into account—I can recall pilots saying, "Don't privatise BAA; it will be less safe."

John Redwood (Conservative, Wokingham)

Will the Deputy Prime Minister give way?

John Prescott (Labour, Kingston upon Hull East)

Not now. I apologise. I am dealing with the real opposition. When I was talking to a pilot about these matters, he admitted that safety had improved since the privatisation of BAA. I do not want to advance the argument that private is good and public is bad, or vice versa. I want to come to a judgment on whether we are introducing measures to make the industry safer. The new clauses and amendments focus on whether a different company structure can achieve that objective. We have made it clear that we seek to introduce the public-private approach. New clauses 35 to 37 and new clause 26 provide different options. Full privatisation is represented by new clause 26. My right hon. Friend the Member for Edinburgh, East and Musselburgh (Dr. Strang) seeks to retain a Companies Act company. The NAV Canada solution means that shares in the company cannot be sold, but there is a sale to a non-profit company. No shares are involved. So we are being offered a state corporation, a sort of trust corporation and the full privatisation that I have mentioned. I am confused when it comes to how Members will vote for all these propositions, unless it all amounts to a belt-and-braces job and, if they lose on the first one, they will move on to the next. I hope that they will not touch the third one. The Government believe in a public-private partnership. That is not a privatised approach but it is a different form of the public-private approach. It involves shares in the private sector, and is a different form of the public-private partnership from the one that I have developed for the London underground. There are horses for courses. It is a different partnership from the one I have developed for the channel tunnel rail link, which I had to rescue from the terrible mess created by the previous Administration. All those measures involved £20 billion. Those who said that the money would come from telecoms include, I think, my hon. Friend the Member for Burnley (Mr. Pike). However, that money has been spent at least five or six times already. Nobody needs to be convinced that Labour knows how to spend money; the difficulty is in pointing out where we raise the money that we spend. There is a history to that argument. The £20 billion has been raised from an industry that has an income flow, which means that there is less pressure on the public sector to raise revenue or capital for hospitals and schools. The £500 million that would be raised from the sale of NATS is equivalent to putting a pound on pensions. Judgments must be made about public expenditure priorities and the Government will take such considerations into account in their public expenditure programmes.

John Redwood (Conservative, Wokingham)

It is generous of the Deputy Prime Minister to let me intrude on private grief. He would agree that the Treasury would be over-generous if it offered £5 notes for £1—it might mean that there was an election coming up—but when the Government offer to pass on control of £1.5 billion of assets for £300 million, are they not offering £5 notes for £1? Those are the figures that the Government have supplied. Is not the sale of those assets, over the heads of British management and employees and probably to a foreign stakeholder or shareholder, a big slap in the face for those British managers and workers?

John Prescott (Labour, Kingston upon Hull East)

If the hon. Gentleman has read our response to the Select Committee report or our letters to the Committee, he will know that that is complete nonsense. The argument about those figures concerns a judgment about debt and equity, which we have dealt with before. I shall take no lectures from the hon. Gentleman, who was a member of the Government who, as the Public Accounts Committee has pointed out, undersold most of our assets by billions of pounds. He now has the audacity to lecture us about selling off assets. Whatever the intention of the previous Administration, those sales were hardly good for the taxpayer.

Bernard Jenkin (Conservative, North Essex)

Will the right hon. Gentleman give way?

John Prescott (Labour, Kingston upon Hull East)

No, I must make progress.

Bernard Jenkin (Conservative, North Essex)

rose—

John Prescott (Labour, Kingston upon Hull East)

Sit down. A public-private partnership, or any of the alternatives, must satisfy the Government's criteria. First, we want to separate NATS operation from CAA regulation—there seems to be agreement on that in the House—not only to maintain safety but to enhance it. I shall return to that point. We also want to maintain the national security objective, to secure the long-term investment that I have referred to, to introduce stability to the investment programme and to get better project management skills. I have heard the talk about Rover's management skills. Considering the problems that I inherited as Secretary of State, it is no wonder that in some of our public sector industries, projects are not completed on time and are over budget by billions of pounds. It was estimated that the two centres for NATS would cost about £600 million, but they will now cost us over £1 billion and the project is five years late. I could give several examples that demonstrate that although the public sector culture is plainly good for safety, the public sector is not too good at handling projects. The taxpayer has to make up any difference—to the tune of £1.5 billion in the case of the Jubilee line extension. A public-private partnership for London docklands light rail is on time, is as efficient as it is effective and imposes no extra cost on the taxpayer. We must take such examples into account when considering the quality of management. I have been a defender of the public sector all my life, but it costs a great deal more than the private sector, and we must ask why. Various explanations have been given, but I am faced with the practicalities. When considering a public-private partnership, we decided on a trade sale, to which the hon. Member for North Essex referred, to a strategic partner. The hon. Gentleman did not seem to think that that was a good idea. So why did the Conservative Government sell Rover to BMW for £1? When English, Welsh and Scottish railways came along, there were three companies to be sold. The American buyer said that it would only buy the lot. Not only did the Conservative Government give it the lot, but they gave it £250 million to take it away. [Interruption.]

Michael Martin (Deputy Speaker, Glasgow Springburn)

Order. There are many private conversations taking place in the Chamber. The right hon. Gentleman is addressing the House, so hon. Members should listen to what he has to say.

John Prescott (Labour, Kingston upon Hull East)

I certainly believe and intend to show that a public-private partnership with a strategic partner will provide a strong framework of public accountability.

Bernard Jenkin (Conservative, North Essex)

May I point out that if the right hon. Gentleman chose to pursue the NAV Canada proposal, the Government would still receive a capital receipt for the sale of the business. NAV Canada raised a large sum in bonds to pay for the business, so the public sector still received a capital receipt.

John Prescott (Labour, Kingston upon Hull East)

I hear that defence, but my point was that although a strategic partner was involved, the business was sold to one operator. There are several examples of that, so I find it difficult to understand why the hon. Gentleman cannot accept the idea of a strategic partner. Indeed, his proposal would not allow for that: the hon. Gentleman wants to float shares in a full privatisation. That is a straightforward position, and it is argued that that is best for the taxpayer, but I am bound to say that the record of privatisations does not bear that out. New clause 35, which was moved by my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody), makes it clear that we should take the option of state ownership. It would permit the separation of the provision of a service from its regulation, but would do little else. It would retain the service in the state sector and would therefore lead to problems in acquiring public investment. The service would have to apply for the Treasury for resources. There would also be all the difficulties of being unable to get a programme established for more than two or three years. The service would have to compete with others requiring public expenditure. Those problems have undermined the public sector in this country. Inadequate finance for the quality of service required is a reason why the quality of public services has got worse. We are desperately seeking to change that. The public sector suffers from stop-go investment, as I suggested, and that has dogged most of the transport industry for a long time. Swanwick is a classic example of a project that is over budget, over time and, frankly, will not even produce the facility that we want. Indeed, it is dogged by concerns of one form or another. My hon. Friend the Member for Ayr (Ms Osborne) told us about the two-centre operation, pointing out that a privatised service might not retain two centres. I listened carefully to what my hon. Friend had to say, and she made a powerful case tonight for what she has been advocating for a long time. There is no disagreement between us on the matter. In fact, the Prime Minister made it clear at the Dispatch Box that he accepted the spirit of her amendment and that her proposals would be written into the strategic agreement. The strategic partner would be required by the Government to build the second centre. The proposal would involve a golden share, directors and articles of association, as we pointed out to the Select Committee. I understand the fears expressed by my hon. Friend, and the concern about the matter in Scotland. On behalf of the Government, I accept her amendment.

Sandra Osborne (Labour, Ayr)

I just want to be absolutely sure about this. Is my right hon. Friend saying that he unequivocally accepts my amendment and that it will be added to the Bill?

John Prescott (Labour, Kingston upon Hull East)

Yes, my hon. Friend has re-emphasised my point. Her amendment will become a Government amendment, so I hope that that does not cause her embarrassment. My right hon. Friend the Member for Edinburgh, East and Musselburgh spoke to new clause 36. The new clause and the amendments associated with it seek to achieve a different end from the Government's. They would involve the separation to which I referred, and would establish a strategic partner, but restrict it to being a not-for-profit company. That is a bit like Virgin saying that it would run the lottery on a not-for-profit basis—I shall leave aside the fact that my right hon. Friend would want a bit of profit for investment and equity. My right hon. Friend cited NAV Canada as a working example of that model. That suffers most of the drawbacks of a state-owned option. A letter sent to us makes it clear that the assets were sold by the state, and there is no accountability. Although the agreements and safety regulations do not say so, NAV Canada is privatised. All the assets that were owned by the state, and which in all other countries are still owned by the state, have been sold to a trust company. People have been appointed from the unions and other companies to sit on its board, but the trust company runs the service. There is no accountability to the Government, or Government ownership. Agreements have to be struck about defence—an issue that I should have thought would be of some concern to the House. Such an arrangement does not provide the proper degree of accountability; I believe that there must be accountability, which is why we are writing it into the process.

Gavin Strang (Labour, Edinburgh East and Musselburgh)

At a meeting a week or so ago, we heard an address by the trade union director of NAV Canada, who explicitly stated that NAV Canada was answerable to the relevant Minister.

John Prescott (Labour, Kingston upon Hull East)

That Minister can issue directions along the lines of, "On safety, you must do this." However, NAV Canada does not raise money from the Government; it raises it from the private sector and is free to do so. In addition, it can do whatever it likes in respect of prices and profits—the Government have no control over those aspects. My point is that the arrangement brings all the problems that are associated with many trusts. I remember that when I first entered Parliament in the 1970s, there were problems with the Merseyside docks, then controlled by a trust. People got hold of it, forced down the prices and the brave Selsdon men would not allow it to be rescued. Eventually, they were forced to mount a rescue. That trust arrangement had failed to provide adequate investment or proper accountability to Government. That would not be a satisfactory way to deal with air traffic control, with all its defence implications and investment requirements; nor would such an arrangement allow the business to invest abroad. I always take the cost-plus approach to public investment. An arrangement such as the one proposed could not be controlled; it could set its own prices and exploit its monopoly position—unaccountable to anyone, it would simply pass on all the costs. That is not the sort of culture that will produce the efficiency and investment that the modern aviation industry needs.

Lynne Jones (Labour, Birmingham, Selly Oak)

Do my right hon. Friend's comments about the lack of accountability of trust bodies apply to registered social landlords, to whom the Government propose to transfer council housing?

John Prescott (Labour, Kingston upon Hull East)

There are all sorts of trusts, including hospital trusts. There are always problems to be addressed. My point is that, while a trust body could raise the capital to make the necessary investment, it could not provide the sort of flexibility, management and efficiency that we want. Furthermore, I believe that the Government should have some control and that the industry should be accountable. We can argue about percentages—49 per cent., or whatever it might be—

Michael Martin (Deputy Speaker, Glasgow Springburn)

Order. It is a small matter in the circumstances, but would the right hon. Gentleman please face the Chair?

John Prescott (Labour, Kingston upon Hull East)

I apologise, Mr. Deputy Speaker. We do not accept that a public-private partnership would jeopardise safety. The airline operators told the Select Committee that the Government's proposals would enhance aviation safety and they stated why that was. People say that the airline operators would say that, but I cannot accept that the 13 major UK airline operators are indifferent to whether or not an aeroplane crashes, or to their safety record. To say that they are is silly and dangerous and undermines the very concept of safety. Safety regulation will remain firmly in the public sector in a reformed Civil Aviation Authority. We shall ensure that we remain the safest providers of air traffic control services in the world. There was some doubt about whether such an approach would be effective, but the CAA is a public body and I thought that everyone accepted that safety should rest with a public body, not with the body that is responsible for operations. Therefore, the CAA has to do the job. Safety is of paramount importance, which is why we have made it clear that the CAA is to set minimum standards. As my hon. Friend the Member for Reading, West (Mr. Salter) said, there are higher standards than those enforced by the CAA. However, we have made it clear that all the standards that currently apply will continue to do so. Furthermore, we have transferred safety from the operating body to the public body—the Select Committee asked for that major change and we have made it. We have done more, by making it absolutely clear to the companies involved they cannot provide air traffic control services unless the CAA safety regulation group is satisfied that they can do so safely. The CAA will continue to conduct regular inspections and audits. The competence and medical fitness of all operators will be tested annually. Procedures and equipment used by controllers must be approved by the CAA, and it will control maximum working hours. A company will not be able to make controllers work longer, because their hours will continue to be controlled by regulation—nothing will change. Given the growth in the industry, it is likely that more air traffic controllers will be required in future. The point is that controllers cannot be made to work more hours. The type of equipment used will be set down in the licence and controlled by the CAA. Therefore, nothing changes in respect of controllers and their equipment. We met trade union representatives and discussed all those matters. Let me make it clear: the unions did not endorse our proposal and I did not ask them to. However, we have adopted important safety measures, continued existing measures and then gone further, in response to union concerns. Safety will be mentioned in the strategic partnership agreement; a NATS board director appointed by the Government will have specific responsibility for safety; and a safety monitoring committee will be established, chaired by a Government-appointed director. The safety management system that includes elements that exceed statutory minimum requirements will remain in place. The CAA's audit arrangements will be extended to ensure that there is an annual audit of safety management. Finally, training and development standards will be improved. Those are the safety concerns of people in the industry and we have met those concerns. I have not asked the unions to endorse the Government's proposal for a public-private partnership. However, the unions have endorsed those safety improvements. We have a gold-plated arrangement. First, we have separated the public safety regulator from the service operator, as everyone wants us to do. Secondly, we have strengthened the strategic partnership agreement and the articles of association. Thirdly, the Government will appoint to the board directors who have specific responsibility for safety. By any stretch of the imagination, those measures represent an improvement on current safety standards. I do not accept that safety will be weakened, even though we can argue about how far we should go to improve it. The Bill will ensure far better safety standards than I inherited and than were prevalent when I started with the public-private partnership.

Tam Dalyell (Labour, Linlithgow)

Given my right hon. Friend's comments of the past five minutes, how come he has failed to persuade IPMS and BALPA?

John Prescott (Labour, Kingston upon Hull East)

They were the ones that argued that BAA should not be privatised, saying that it would be less safe, but they changed their minds. I had to argue the Government's case for this PPP, but I listened carefully to workers and operators in the industry. My hon. Friend the Member for Greenock and Inverclyde (Dr. Godman) mentioned the fishing industry. When we tried to improve safety in that industry, those who opposed our measures most fiercely were the fishermen. They gave us all sorts of reasons why they did not believe in it—for example, that it would cost a lot more. However, on safety we have to do what is right. That is the obligation that I have accepted and I can live with its being unpopular, just as I can live with leaving a safer system than I inherited. I have heard a lot of tosh about the public and private sectors. Do hon. Members feel less safe when they get on board a private-sector aeroplane than they did when British Airways was a public company? When that airline was publicly owned, did they choose it because they believed it was safe? Perhaps they are the sort of people who felt better on reading the old local authority notices that said, "This is a nuclear-free area." It is a load of nonsense—[HON. MEMBERS: "Come over here."] The Conservatives invite me to cross the Floor, but I am just trying to make a point within the context of the amendments. We have been told to remember Paddington, but I remember King's Cross and Clapham—public sector disasters. Safety was not better under the public sector in that industry. [HON. MEMBERS: "Come on over."] I shall present the arguments and state our priorities as I think best. I have heard a lot about safety, but no one has said anything about the safety improvements. A lot of tosh has been said about the public and private sectors; my response is to cite the example of the railways. I have never accepted "public good, private bad," or "private good, public bad." I believe that a balance has to be struck so that we can get the best from both, and a public-private partnership is designed to do exactly that. That is what the Bill will achieve. The Tories' alternative is privatisation—they have made that absolutely clear. They do not want there to be any control or accountability; they simply want to sell the operation for the best possible price. They are indifferent to the safety, efficiency or effectiveness of the industry. We utterly reject such an approach. We shall retain shares through the public-private partnership because we believe that that will provide one form of accountability. That accountability is also expressed in the articles of association, the strategic partnership agreement, a strict operating licence, the continuing Government and employee shareholding, and the appointment of Government directors with a veto in respect of key issues such as safety, major investment and national security. As I have heard a bit about national security, I might add that the annual report of the Joint Air Navigation Services Council—the body that brings together the CAA, NATS and the Ministry of Defence—which has just come out, says of the Government's proposals: the Council believes they will preserve the successful civil/military relationship that currently exists between NATS and the MOD and ensure that air traffic services are sustained on a joint and integrated basis … I refer to my right hon. Friend the Member for Edinburgh, East and Musselburgh that report of the bodies that have responsibility for defence and national security, which is the subject of the next debate. We have put into the Bill many checks and controls. I have made my points about safety. I believe that it is absolutely clear that we can enhance the safety of the system. I have made it clear that I accept amendment No. 454 tabled by my hon. Friend the Member for Ayr. That is right; we shall be writing the proposal into the Bill. We said from the beginning that we would listen to what was said on the changes. Governments cannot be arrogant and ignore matters; they have to make their case in the House. We have made it clear from the beginning that the changes constitute a public-private partnership, and that the two-centre model may be written into the Bill—we have listened on that and accepted it. We have increased and enhanced safety, as requested by the trade unions, after months of negotiation. All that makes for a good Bill. All that, in my mind, produces a public-private partnership that will meet the needs of the country and the investment requirements of civil aviation, which will be safer, more accountable and over which the Government will have considerable influence and control. Above all, that will provide safe and sustained investment. I commend the Bill to the House.

Gwyneth Dunwoody (Labour, Crewe and Nantwich)

NATS has no comparison in the private sector. Air traffic controllers do not compete against one another for the control of aircraft—they co-operate. The men and women working in the sector are absolutely certain that the Government's proposal is not the way forward. We believe, as the Transport Sub-Committee pointed out, that there are various ways in which that paying service, which has always been able to return money to the public sector, could operate safely and effectively either as a public corporation or as a trust. I hope that every Member will decide that they must live with their consciences on the quality of the votes that they cast tonight, and I hope that they will bear that in mind.

TRANSFER TO BE TO NOT FOR PROFIT COMPANY

PARLIAMENTARY APPROVAL OF TRANSFER SCHEME

Phil Hope (Labour/Co-operative, Corby)

On a point of order, Mr. Deputy Speaker. There appears to be a delay in the Lobbies; could the reason for it be investigated?

ORDERS FOR POSSESSION OF AERODROMES, ETC.

Nick Raynsford (Labour, Greenwich and Woolwich)

I beg to move, That the clause be read a Second time.

Nick Raynsford (Labour, Greenwich and Woolwich)

The theme that unites the new clauses and amendments is the important subject of national security. The Government have proposed amendments designed to improve the Bill further in respect of national security; the Opposition have proposed amendments that are essentially destructive, and based on false assumptions about the interplay between the PPP and national security. I intend to compare and contrast the proposals, because they highlight important differences between the Government's approach and that of the official Opposition. 8.30 pm The Bill already contains substantial measures designed to protect the national interest in respect of security. Clause 81 empowers the Secretary of State to give directions to a range of people engaged in aviation and related activities in times of hostilities, severe international tension or great national emergency. Contravention, or failure to comply with a direction, is an offence punishable on indictment by unlimited fines and/or imprisonment. New clause 5 enables the Secretary of State by order made by statutory instrument, but not subject to parliamentary procedure, to provide for taking possession of, and using for the purposes of the armed forces, any aerodrome, aircraft, or other things in or around the aerodrome in the event of actual or imminent hostilities, severe international tension or great national emergency. In other words, it is a power not to direct, but to intervene directly. An order made under that power may include provision to secure compliance with the order, including the detention of aircraft. There is an entitlement to compensation from the Secretary of State in the event of any person suffering direct injury or loss arising from compliance with an order under the new clause. In default of an agreement between the claimant and the Secretary of State, provision is made for the amount to be settled by arbitration. The new clause allows for greater flexibility in the choice of action that may be taken in times of hostilities. The existing power in clause 81 requires directions to be given to persons as a pre-condition for securing various controls. The new clause allows possession to be taken of aircraft or aerodromes that are the subject of an order without the need first to identify their owners or operators or to give notice. Further, instead of obliging a recipient of a direction to secure that assets are taken into the possession of the Crown, the new clause enables the Crown to take possession directly without relying on the recipient complying. Amendments Nos. 125 to 133 are consequential to the new clause. Amendments Nos. 134, 137 and 138 substitute the new term "undertaking" for "business" to match the language in Council regulation 2407/92. Amendment No. 135 omits the requirement for prior consent of the Secretary of State or the Director of Public Prosecutions before a prosecution. Amendment No. 136 is consequential in that it applies to the new clause the definitions in clause 82 and provides for the order to be a statutory instrument not subject to parliamentary procedure. Those are wide-ranging powers that reflect the importance that the Government attach to national security measures. Although the contents of new clause 5 were largely present in the Civil Aviation Act 1982, we have introduced it alongside the direction-making power to ensure that the Government have available to them all the means that they may need to defend the national interest at such times. Those are real, tangible protections. I commend them to the House. By contrast, the Opposition seek only to fuel fear and suspicion. New clause 27 and the accompanying amendments are simply mischief making. They purport to ensure that the United Kingdom can exercise the functions and powers of transfer and direction under the clauses on the mistaken assumption that what we are proposing would conflict with European law, that European law will develop in such a way as to give rise to such a conflict, or that EU institutions will take over, or replace the Eurocontrol treaty arrangements. Those matters were debated ad nauseam in Committee. I hope, although not with great confidence, that we will not end up covering the same ground in the same detail tonight. Although I respect and share the enthusiasm for national security that the hon. Member for North Essex (Mr. Jenkin) demonstrated in Committee, I tired of dealing with his fanciful interpretations of European Community law and his scaremongering on Community competence. Indeed, some of us in the Committee suspected that the mere mention of the term "Eurocontrol" was enough to elicit a Pavlovian reaction from him and some of his hon. Friends. The best interests of UK air traffic services are served not by flogging that particular dead horse, but by putting NATS in a position to benefit from the changes that will and must come about in Europe. As many of us know from our travels throughout the continent, all is not well in the state of Denmark—or, indeed, in France, Italy, Switzerland and a number of other countries in the core area of Europe—with regard to air traffic management. The reasons are many and complex, but among the most important is the fragmentation of the system, with efficient airspace management being constrained by national boundaries, inflexible allocation of airspace between military and civilian use, and continuing under-investment in the air traffic control capacity needed to meet the relentless growth in air traffic movements. In Europe, there are three key organisations in air traffic management: Eurocontrol is the European organisation for the safety of air navigation and has 28 members; ECAC—the European civil aviation conference; and the European Union. However, the EU's role is very limited, being confined largely to technical standards and the like. The Government believe that Europe can and must do better. The air traffic management system is crucial for the economic well-being of the continent generally and for the United Kingdom particularly. We are therefore active members of Eurocontrol. There is broad support for the EU's early accession to Eurocontrol. The Government are also keen to work with the European Commission on its ideas for "A Single Sky for Europe". We do not necessarily agree with every word in the document, but it represents a genuine attempt to deal with the serious problem that I mentioned earlier, and it offers the United Kingdom a real opportunity to have influence over the way in which those issues will be tackled.

John Wilkinson (Conservative, Ruislip - Northwood)

Does the Minister agree that there is all the difference in the world between the facilitation of air traffic by better use of air traffic control systems and a more efficient Eurocontrol and the assumption by the European Union of a common European airspace? Airspace is a fundamental element of national security and of the sovereignty of individual nation states. Will he help the House to understand whether Ministers are clear in their own minds that the way in which the European Commission is developing its outlook on those matters could have a profound impact on our sovereignty and nationhood?

Nick Raynsford (Labour, Greenwich and Woolwich)

I agree with the hon. Gentleman, and I am glad that he shares my view about the importance of continuing to work actively within Eurocontrol to develop the current arrangements and tackle some of the weaknesses. I made it clear that we do not necessarily agree with every element of the concept of the single sky for Europe. However, we want to engage in a constructive dialogue to ensure that there is effective movement across the continent as a whole. Nothing could be more damaging both for the economic future of Europe—the United Kingdom is intimately connected with that—and for the safety of air traffic and the development of air traffic services than a failure to achieve the necessary integration when that is required, particularly in bearing down on some of the problems and pressure points in current arrangements. We shall therefore approach the matter pragmatically, but positively—engaging in Europe to improve the standard of services.

Bernard Jenkin (Conservative, North Essex)

To pursue the issue raised by my hon. Friend the Member for Ruislip-Northwood (Mr. Wilkinson)—I have pressed the Minister on that before—will the Minister acknowledge that if the EU becomes a member of Eurocontrol, it will acquire exclusive competence both externally and internally in all matters to do with airspace policy? When the European Commission joined the general agreement on tariffs and trade, it took control of trade talks. When it joined the international patents organisation, it took control of international patents. When it joins an international airspace management organisation, it will take over competence in airspace matters. That is the purpose of the European Union's single sky programme.

Nick Raynsford (Labour, Greenwich and Woolwich)

The hon. Gentleman confirms my fear that we would hear more of his fanciful views on the European Union's aspirations completely to take over and transform the nature of organisations. That is not the agenda. There is a straightforward proposal for the European Union to become a member of Eurocontrol. We are more than happy to discuss and consider that, and we believe that there is a general support for it. The fanciful suggestion that that will involve the total transformation of Eurocontrol's framework and of the role of individual member states is one that is lodged solely in the hon. Gentleman's wilder fantasies. We are committed believers in Eurocontrol, but it is not beyond improvement. Indeed, the problems that we face in Europe today suggest strongly that that is the case. We are keen to see the organisation's regulatory role made quite separate from its service provision arm. Therefore, in the coming year, we shall also be working hard to secure change. In Committee, the hon. Member for North Essex suggested that our aims were somehow at variance with Community law and Community policy, both current and prospective. The UK is a member of the European Community and bound by its treaties, legislation and case law. The Secretary of State inevitably will be bound to exercise the functions and other powers highlighted by the amendments and the new clause—and any other powers in the Bill—so as not to be inconsistent with Community law. We are satisfied that our proposals are not inconsistent with those obligations and that law.

Bill Cash (Conservative, Stone)

Would the Minister explain why the new clause refers to duty rather than function?

Nick Raynsford (Labour, Greenwich and Woolwich)

Is the hon. Gentleman referring to our new clause 5, or the new clause tabled by the Opposition?

Bill Cash (Conservative, Stone)

I am referring to subsection (4) of new clause 5. It says—

Nick Raynsford (Labour, Greenwich and Woolwich)

I am aware of what it says.

Bill Cash (Conservative, Stone)

The Minister is not aware of anything else by the sound of it.

Nick Raynsford (Labour, Greenwich and Woolwich)

I do not share the hon. Gentleman's European fantasies. The new clause states: A person must comply with an order under the section notwithstanding any other duty, however arising. That provision is extremely important, and is necessary to ensure that, in times of emergency, the Government can act. The hon. Gentleman will recognise that it would be difficult if another party were to prevent the Secretary of State from taking control of assets, such as an aerodrome or aircraft, by threatening legal action under whatever pretext. He will undoubtedly see a European dimension, but this is drafted for far wider purposes—to ensure that there is the power for the Secretary of State to act in these specific circumstances without the risk of legal challenge.

Bill Cash (Conservative, Stone)

I asked the Minister a simple question. Why does the word duty appear, and not function? In addition, has he read the title on the provisions on a common foreign and security policy in the Amsterdam treaty, which his Government brought into effect?

Nick Raynsford (Labour, Greenwich and Woolwich)

I feared that we would get into this kind of detailed textual analysis. The explanation that I gave was full and straightforward. We are creating a power to enable the Secretary of State to act effectively in national emergencies without the risk of challenge. That is the purpose of the proposal. There is no hidden European subtext.

Robert Smith (Liberal Democrat, West Aberdeenshire and Kincardine)

Where did the concept of a great national emergency come from? Has that been defined in previous legislation?

Nick Raynsford (Labour, Greenwich and Woolwich)

It appears in clause 81 of this Bill. New clause 5 is designed to mirror clause 81, which gave the power to issue directions. New clause 5 gives the power to act directly to take control of assets. That is important for the reasons that I outlined, and the wording of the two clauses is totally analogous and refers to the same circumstances.

Iain Duncan Smith (Conservative, Chingford and Woodford Green)

When the Minister says that there will be no legal challenge, does he believe that anyone who presumed that the Government's actions were beyond the scope of the requirements in the European treaties would therefore be unable to take legal action?

Nick Raynsford (Labour, Greenwich and Woolwich)

This proposal is drafted with a view to protecting the national interest in a situation of emergency where it is necessary for the Government to act. That proposal was inserted to give the Secretary of State the power to act without the risk of such a challenge. There is always the possibility that someone will seek to challenge such an action, but in any case brought before the courts, it will be clear that there is a power giving the Secretary of State the ability to intervene in this way. The obligation is a clear way of saying that. That is the purpose behind the proposal.

Iain Duncan Smith (Conservative, Chingford and Woodford Green)

I believe that the Minister is leaving a caveat to what he said earlier and saying that if such a challenge takes place, the higher duty is to European law and overrides the Bill.

Nick Raynsford (Labour, Greenwich and Woolwich)

I suspected that the hon. Gentleman was going in that direction. I remind him of what I said earlier. The Government are clearly bound by our international treaty obligations and we must act in compliance with European law. The provisions are compatible with that, for reasons that I will explain in a moment. The fantasy conjured up by the hon. Member for North Essex in Committee, whereby the Government are unable to protect the national interest because European law takes precedence is no more than that: a fantasy. We are a member of the European Community and will respect its legislation and case law. We are satisfied that the measures that we are taking are consistent with our obligations. Conservative Members believe that developments in Europe will inevitably lead, with or without the consent of the United Kingdom, to a situation in which our policies and practices on all matters affecting the use of airspace and the provision of air traffic services will be dictated from Brussels. We spent a lot of time in Committee on textual analysis of the treaty of Rome, its amendments and cases taken under it dealing with Community competence in matters of national security. As I made clear then, we are satisfied that our ability under the treaty to take measures to protect national security is not impaired by the case law cited by the hon. Member for North Essex as evidence of an imminent erosion of sovereignty. The case was not proved in Committee and we provided decisive rebuttals. It is a fact that national and international law develops over time, and I submit that to behave like Canute is not the best means of ensuring that our view on the way forward for air traffic services influences the approach taken by the Community and by Europe generally. I make no apology for playing a full part in the current discussions on how all European Governments can best act together to meet the challenges presented by ever more crowded airspace and a plethora of service providers. The current situation cannot be sustained indefinitely and those with the most forward-looking approach to both airspace management and service provision will be those whose future is best protected. That is very much one of the guiding principles behind the PPP, and I reject wholeheartedly the case for new clause 27 and its attendant amendments.

Tam Dalyell (Labour, Linlithgow)

When are the current discussions, which are very important, likely to reach a conclusion? There is considerable interest in the matter.

Nick Raynsford (Labour, Greenwich and Woolwich)

I cannot give my hon. Friend a date, because it is not known generally when the discussions will reach a conclusion. They are continuing and I suspect that they will continue for the rest of the year. I undertake to write to him to give him further news of when progress is likely to be made on some of these rather important issues. I urge the House to support new clause 5 and its attendant amendments.

Iain Duncan Smith (Conservative, Chingford and Woodford Green)

The Minister, who dealt with these matters in Committee, may wonder why I am standing at the Dispatch Box. It is not because I favour him and therefore want to give him some light relief from my hon. Friend the Member for North Essex (Mr. Jenkin)—I know that he will have withdrawal symptoms as a result of my hon. Friend's absence—but because, having read what took place in Committee, I took the view that the matter was serious enough to merit the attendance of a spokesman on defence matters. I consider national security to be of overarching importance and I think that serious questions relating to defence remain following the exchanges in Committee, which is why I am here, with due deference to my hon. Friend. In addressing the amendment and other similar amendments that apply to other parts of the Bill, I wish to establish whether clauses 38 and 81, and particularly new clause 5, will address the concerns about the control of our airspace, and thus important issues of national security. I shall return to some of the issues directly arising from the clauses, but I shall begin by trying to establish why the matter is peculiarly important given the nature of the Bill. It is important to state from the outset that my main concern is not particularly the critical time of war or even the run to war which may be well established, with the security environment setting the tone of the Government's behaviour. It has more to do with the security issues that arise as a result of military training and operation in and around our existing airspace. In an earlier debate, the Secretary of State referred to a document that has just been published. I have not seen it because it is not in the Library. As the right hon. Gentleman referred to it, I should be grateful if he let us see its contents. On 10 February, in Standing Committee, the Secretary of State referred to schedule 8 in respect of the unique relationship between our defence air traffic controllers and the civil controllers at NATS. That relationship is quite different from that in any other country. We run our airspace in a way that is very efficient compared with America or France which have corridors dedicated to their military airspace and separate their military controllers from the civil controllers, with all the difficulties that that entails. As the RAF do not have corridors and their controllers work cheek by jowl with their civil counterparts, they make efficient use of the airspace. Their unique relationship is both efficient and ensures greater safety within the running of the service, so it has a peculiar extra dimension. That close relationship relies on a significant amount of trust—an awful lot is not written down, but has always operated in a certain way and works well. For example, if the RAF says that it needs certain airspace, or if for reasons of national security it wishes to block out sections of airspace for a particular time, it is agreed very quickly with NATS, with hardly any interrogation and the RAF gets the airspace that it requires without much quibbling. My concern is that any private company that takes over the running of NATS will have a different relationship with the RAF. The relationship will, by necessity, change. The new company may be under foreign ownership. It is clear from what my hon. Friend the Member for North Essex said earlier that that is certainly a possibility. In any case it will be affected by who owns it, regardless of whether it is a foreign company or a British one. The private company will come under increasing pressure to use the available airspace for commercial purposes. It follows, therefore, that it is unlikely that the relationship with the RAF will remain the same as at times, the RAF requirements will conflict with the commercial usage of that airspace. Our amendments to clauses 38 and 81 and new clause 5 arise from the fact that the Government will be under increasing pressure to invoke the powers granted to them under those provisions more often than they anticipate. No doubt that is why the Government drafted them. Our amendment goes to the heart of the issue: how effective such clauses are likely to be and whether they address the relevant circumstances. The first aspect that needs to be investigated is whether the clauses really do run foul of the interpretation of existing European law and whether the Government will find it difficult to invoke them successfully over the next few years. Unless an amendment such as that tabled by my hon. Friends is accepted by the Government—or even addressed—they will open themselves to a progressive series of challenges in the commercial domain from companies that disagree with the application of the clauses. I do not believe that the term "national security" will hold any particular power over the controlling company—it will still challenge where it believes it to be necessary. The Minister referred to the detailed rebuttal that he gave in Committee. Therefore, it is necessary to ask why he believes that he successfully rebutted the arguments of my hon. Friend the Member for North Essex. These concerns in particular were raised in Committee. The Government rested their position, and their objection to our concerns about the functioning of the Bill under European law on their belief that, as the Minister said, national security is protected under European law. The Minister referred to a judgment made on 26 October 1999 by the European Court of Justice in the case of Angela Maria Sirdar and the Army Board, Secretary of State for Defence. I do not want to go into details; I know that the hon. Gentleman has been round this fence a few times. However, when he partially referred to paragraph 17 of that judgment, he did himself a disservice. He said that the concept of public security covers both a member state's internal security and its external security. On that, he rested the view that that judgment had made it clear that national security was enough to block off any further challenges through the European Court of Justice. I believe that he was fundamentally wrong. It was in that particular case that the European Court of Justice made a clear statement, for the first time, that it had a right to rule on issues of national security. It prepared itself the position to say that simply saying national security is no longer good enough. The Minister failed to show in Committee that the court no longer considers that any member nation has a general treaty exception for reasons of public security. In paragraph 16 of the judgment, the court said: To recognise the existence of such an exception, regardless of the specific requirements laid down by the Treaty, might impair the binding nature of Community law and its uniform application … Furthermore, exceptions on the nature of public security are based in this case on derogations of four particular articles. The court has taken a progressively narrow view, over the years, on the way in which derogations should apply, especially if they run counter to the ethos of the market place or the single market. It is interesting that the Minister should use that case to show that the court did not take a decision against the British Government because of the derogation. In fact, the court made it clear that it considered that it had a full right to revisit these exemptions as and when it saw fit. That is borne out by a judgment on 11 January 2000 in the case of Tanja Kreil and the Bundesrepublik Deutschland. There, the court ruled against the German Government, who had defended a position that they were taking in front of the court for reasons of national security. On this, the court was quite clear. It said: the question is therefore whether, in the circumstances of the present case, the measures taken by the national authorities, in the exercise of the discretion which they are recognised to enjoy, do in fact have the purpose of guaranteeing public security and whether they are appropriate and necessary to achieve that aim. Furthermore, the court moved on the issue of derogations by showing that it would allow the use of derogation in this field only if that provision was interpreted strictly. Thus, in a matter of weeks, the European Court of Justice first established the right to rule on concepts of national security and then went on to use the same basis subsequently to reject the German Government's position. The British Government, in the form of the Minister, used the Sirdar case, so I think it fair to continue down that road and use the next case up. I deliberately referred to these two cases, because the Minister, in his justification for the Government's position that the new clause, and the clauses already in the Bill, will succeed, prayed in aid the Sirdar case.

Bill Cash (Conservative, Stone)

My hon. Friend makes an honourable case. Given the uncertainties, the vagueness, conflicts and contradictions that are contained under the case law to which he has referred and the enormous number of variations that can occur, could anyone imagine any consistent policy emerging under new clause 5? That provision would apply in any time of actual or imminent hostilities or of severe international tension or of great national emergency. One would have to go through a quagmire of legalised contradiction. Would not British national interests and national security be severely prejudiced as a result?

Iain Duncan Smith (Conservative, Chingford and Woodford Green)

If my hon. Friend will bear with me, we shall deal with that argument later on. I agree with him, but I shall cover the point more powerfully in another part of my speech. In Committee, the Minister prayed in aid the Sirdar case for the success of his provisions. I was concerned by another of his comments. Perhaps under advice from an official—although not, I hope, one who had studied European law—the Minister quoted article 297 of the treaty as the defining moment showing that our concerns and worries were wrong. The Minister said that the exercise of powers under clause 81 would be entirely consistent with the treaty—in other words, that national security and thus the exercise of derogations, and so on, were sacrosanct in the eyes of the Court. However, I have taken advice on the matter and article 297 means the opposite of that. It is important to re-read the article. It is about how a clash with the ECJ and the acquis communautaire would be remedied. The article states: Member states shall consult each other with a view to taking together the steps needed to prevent the functioning of the common market being affected by measures which a Member State may be called upon to take in the event of serious internal disturbances affecting the maintenance of law and order, in the event of war, serious international tension constituting a threat of war, or in order to carry out obligations it has accepted for the purpose of maintaining peace and international security. In effect, it states that one cannot act without consulting all parties within the EU—including the Commission—and adjusting one's actions accordingly. if the Minister had read on, he would have seen that article 298 kills his argument completely. Article 298 makes it clear that, if the Commission takes the view that the Government have acted in a way that distorts the marketplace, it can take the Government to the ECJ on an accelerated proposal. The treaty takes a view about a member state making what the treaty determines and the Court then decides is improper use of legislation. The Minister's firm ground in Committee is now very shaky indeed. If the Government felt it necessary to use these provisions to protect national security, there are serious doubts that they would succeed, and that they would not have an injunction placed on them. They need to face up to that problem. The Government must also face up to some other difficulties presented by their provisions. Their stance is not absolute. There is a progressive process that is likely to give a private company the reason and opportunity to challenge the Government's interpretation of national security—not in great moments of crisis and conflict but, when there is a military requirement for airspace, they may find themselves in some difficulty. Let us move on to other aspects of the clauses. What will happen if, for example, the Government have security concerns about an employee or employees of the future privatised company? Those concerns might not necessarily arise during a conflict, but in a normal working year when the Government do not have a specific conflict in mind. Clause 38 does not deal with that point even though it should. The Government may decide that certain people pose a security risk to the running of the company, particularly given its relationship with military controllers, but the clause gives them or the company no powers to insist that those people are not employed for security reasons. In Committee, my hon. Friend the Member for North Essex referred to the security difficulties of the Kosovo operation. I cite a more obvious example. The French take a different view on the use of our military in Iraq and there may be differences that could lead the Government to decide that a person employed may cause a security breach or lapse as a result of his close connection with the military on the control of airspace. The Government should have addressed that problem in clause 38, but they have not done so. I urge them to think carefully about it and, if necessary, to table further amendments. At present, the clause is flawed. Even if the Government want to use another device to stop someone being employed, they will face difficulties. The European security and defence identity process will mean that anyone from the Commission to the European Court will take the view that, because we are in a common defence position, it is difficult to say that a security risk arises in relation to any other member of the European Union. Because the Government have not addressed the problem in clause 38, they have no hook on which to hang that objection. That will create a huge problem for them in the future. Why does clause 38 not refer to compensation if the Government intend to use the devices available to them? What will happen if there is no compensation provision? Clause 81 and new clause 5 contain such a provision, but if a private company is aggrieved by the provisions employed in clause 38, it will want to take redress in legal processes.

Nick Raynsford (Labour, Greenwich and Woolwich)

It might help if I point out to the hon. Gentleman that he has misread clause 38, which is about giving directions. He will surely understand from what I said earlier that there is a distinction between new clause 5, which allows for powers to seize assets and where compensation is clearly appropriate, and the provisions that give directions to the licence holder to act in a certain way. He must recognise that, if there is a fear about the security rating of an individual, that matter can be well covered by the provisions in clause 38(2).

Iain Duncan Smith (Conservative, Chingford and Woodford Green)

I hear what the Minister says. On compensation, the directions to which he referred could, and are likely to, lead to claims for compensation because the directions might result in changes of operation. As a result of that, the company might claim that there is problem. The Minister dismisses all the arguments as though the Government have arrived with a tablet of stone that cannot be changed. I simply point to a problem. I do not think that the Minister's other point about whether it is possible to dismiss someone is covered by the clause. He should take serious legal advice, because a company is bound to challenge the provisions. Under the combinations of events that I have described, a private company is more likely to make a challenge over the issue of national security. The vagueness of some of the wording will, I suspect, lead to further challenges to the Government in the European Court. Clause 81(2)(e) says that the Government may give directions to a person who owns or operates a relevant asset. That phrase is so vague that any decision made under the clause in that respect will almost automatically be challenged. I return to paragraph 26 of the Sirdar judgment that the Government were so keen to pray in aid in Committee. When the issue of national security is invoked, the court states: That principle requires that derogations remain within the limits of what is appropriate and necessary. I have genuine and serious concerns about the Government's overall position on national security. This is not an argument for or against privatisation. However, by the Bill, the Government have opened the door to an issue that was not necessarily questioned previously. It is not enough for the Government, without any serious comment or explanation about our relationship with the European Union, to say that they rest on their own strange belief that all will be well because everyone will trust the Government's judgment. I sat on the Government Benches when the Conservative Government were in office. I remember Conservative Ministers often saying exactly the same thing. There was almost deja vu when I read some of the Minister's comments in Committee and set them against those made by some of his predecessors within the Conservative party when they were in government. In so many cases they found themselves eating their words two, three or four years later. In each instance they said that they could not have anticipated that the court would move in a particular direction. The Minister should take note of that. Unless he finds his own words an excellent diet, he should be prepared to find himself in deep difficulties in a few years' time. There is a unique relationship that I would wish to see replicated if a private company is to take over the running of our airspace. That is unlikely as long as the Government fail to accept our amendments or fail to recognise that there is an issue which poses the question, "Who controls our airspace?" That is the key. Throughout consideration of the Bill in Committee the Government failed to answer that question. If they do not do so tonight, the issue of national security remains live and may yet pose huge problems for the implementation of the Bill when it is enacted. When the Government need the legislation, it will not be there. I am deeply concerned.

Brian H Donohoe (Labour, Cunninghame South)

I shall speak to amendment No. 147, which stands in my name. I shall be brief in asking my hon. Friend the Minister two specific questions. First, the Government have introduced a provision that suggests that ownership can be taken down to 25 per cent. If what I have learned in the Select Committee on the Environment, Transport and Regional Affairs is anything to go by, a foreign company is almost certain to be the successful bidder. I am concerned about national security. The Government talked originally about a public-private partnership, and I want to know why the Government would accept a 25 per cent. shareholding. Surely this must have a major effect on national security. I want to have some assurances that that is not the position. During the discussions of the Select Committee, one of the most interesting episodes was a meeting with the senior management of National Air Traffic Services. We talked about expansion and they said that our technology was potentially at the leading edge. They added that that would lead to the possibility of us participating in foreign air traffic control. I believe that there could be problems if the Government were to have any shareholding in air traffic control. Let us say that the Government maintain their 49 or 46 per cent. holding, a private company is taking control and it decides that it will invest in, for example, Russian air traffic control. There is always the potential for a problem in that airspace. Were there to be a major incident with two airliners crashing, what would be the political and diplomatic implications of such an investment? In those circumstances, the British Government could be under an A-bomb if there were such an incident in foreign climes. I did not receive a reasonable response on that until the directors of NATS told me that they could not foresee NATS making foreign investments while it had even a single share in publicly owned companies in this country. 9.15 pm Is that the case? Have we been debating the inevitability of privatisation and are we moving down the road to full-scale privatisation? The technology that we have been told will come on stream at Swanwick and, I assume, Prestwick, could not be used abroad under the auspices of shareholdings still maintained by the public sector and the Government. I would be obliged if my hon. Friend the Minister would reply to that in his summing up.

Bill Cash (Conservative, Stone)

We are debating a transport Bill, but at the heart of this evening's debate is new clause 5, which deals with the defence of the United Kingdom. Let us imagine going back to, say, 9 May 1940. Tomorrow happens to be my birthday, and it is also the anniversary of the day that Churchill became Prime Minister and, unfortunately, the day on which the Germans invaded the Lowlands. The RAF obtained its first Victoria Cross when Maastricht was invaded on 10 May 1940. [Interruption.] If the Minister would be good enough to listen to my speech for a couple of minutes, which he is obviously incapable of doing—

Nick Raynsford (Labour, Greenwich and Woolwich)

The hon. Gentleman has been a Member of Parliament for a long time, so he will know that it is perfectly possible for Ministers to pay attention to the debate and, at the same time, have brief discussions with Whips on matters relating to complex procedures such as those being followed tonight. I hope that he will be less offensive in future.

Bill Cash (Conservative, Stone)

I have no intention of being any less offensive.

Michael Lord (Deputy Speaker, Central Suffolk and North Ipswich)

Order. Perhaps the hon. Gentleman would return to the subject that we are debating.

Bill Cash (Conservative, Stone)

Would the Minister be good enough to tell me what I have just said?

Nick Raynsford (Labour, Greenwich and Woolwich)

indicated dissent.

Bill Cash (Conservative, Stone)

Obviously he was not listening, as it seems that he has not the faintest idea of what I was talking about. I have therefore made my point. The new clause concerns the inherent contradictions between the defence of the realm and the Bill's provisions. The Minister referred to our obligations. Subsection (4) of the new clause, which I mentioned earlier, refers to the duty imposed by the Secretary of State. However, if the Minister refers to the European Communities Act 1972, he will see that section 2 clearly states: in the exercise of any statutory power or duty, including any power to give directions, or to legislate by means of orders— to which new clause 5 relates— rules, regulations or other subordinate instrument, the person entrusted— meaning the Minister himself, if only he would listen— with the power or duty may have regard to the objects of the Communities and to any such obligation or rights as aforesaid. I heard the Minister say that my hon. Friends on the Front Bench were living in a fantasy world. However, the provisions that he will introduce in the new clause are mirrored in the provisions of section 2 of the 1972 Act. The fact is that there is no absolute requirement with respect to duties, but there is a reference to powers. That is why, in an intervention, I asked the Minister, who obviously could not answer, why the Government chose to refer to duties rather than functions. The Minister may not understand the provisions that he is introducing, but the fact is that the word "duty" is carefully chosen, because the word "functions" would include "powers". With that, we enter the arena of the provisions of title V of the Amsterdam treaty. The Minister can shake his head, but he cannot avoid the reality that everything I am saying will happen in due course. I do not need to go into the details, because they are as clear as daylight. The interaction between the provisions of the Amsterdam treaty, of clauses 38 and 81 and of new clause 5 will reveal that they are inherently contradictory. There is no possibility that anyone will be able, in the defence of the realm, to know exactly what is going on. As my hon. Friend the Member for Chingford and Woodford Green (Mr. Duncan Smith) said, there is no way, in the event of imminent hostilities or a great national emergency, that anyone will have the opportunity to plough through all the case law and the requirements that have been laid down. The Minister did not listen when I spoke about incidents that occurred 60 years ago, almost to the day. In those days, we were able to send Spitfires and Hurricanes to defeat an enemy. If new clause 5 is to have any credibility, it must be able to deal with situations of the sort that I described—if it cannot, why bother to introduce it? If there is no reason for concern about national security or the defence of the realm, there is no need to bother with new clause 5—it is irrelevant. The fact that the Government have introduced the new clause, albeit at the end of our proceedings on the Bill, is an admission that the defence of the realm does matter. It follows that all the provisions must be workable. The Minister shakes his head and in so doing tells the House and the nation that he is not perturbed in the slightest by the fact that there might be contradictions between various provisions of the Bill. However, I believe that the time will come when those deficiencies and contradictions emerge. If they do not become obvious, it will only be owing to the Minister's good luck. The bottom line is that there are huge contradictions. It would take far more time than is available to me tonight to go through them all. I only hope that the Minister and his advisers are prepared to look again at the provisions to establish whether or not they are right. The question of whether I am right or they are right is secondary to that of the national interest. We are dealing with defence of the realm. The Bill's many other important provisions relating to transport will pale into insignificance if the clauses that we are dealing with now go wrong. The Government's new clause states: This section applies in any time of actual or imminent hostilities or of severe international tension or of great national emergency. It is impossible that the need for such a provision was not anticipated when the Bill was first drafted. Why, then, is it being introduced at the tail end of proceedings, by way of a Government new clause? I should like to add, on a conciliatory note—

James Gray (Conservative, North Wiltshire)

Do not get carried away.

Bill Cash (Conservative, Stone)

I shall not. While I do not want to be offensive, I want to be direct. That the Minister is not a Defence Minister is not his fault, but I have to tell him that, if the new clause was drafted in consultation with the Ministry of Defence, he has not done the job properly. if the Minister looked—it would take far too long to go through it—at the research paper published by the House of Commons Library international affairs and defence section on 21 February this year, "European Defence: From Pörtschach to Helsinki", he would note that there is now a new EU military structure. That structure clearly identifies the roles of the commander-in-chief and the extent to which—this might come as a surprise to the Minister, who is not in the MOD—it is anticipated that our potential adversaries have weapons of mass destruction. Therefore, under the confines of title V of the Amsterdam treaty, which was passed by this Government, there is a defence dimension. [Interruption.] If the Minister thinks that that is funny, the matter will haunt him if and when things go wrong. I am amazed by the Minister's reaction to the proposal because his new clause does not stand up. Has he consulted the MOD?

Nick Raynsford (Labour, Greenwich and Woolwich)

Yes.

Bill Cash (Conservative, Stone)

Has the Minister read or understood title V of the Amsterdam treaty? Can he reconcile the provisions of new clause 5, and clauses 81 and 38 to the extent that the people of this country will be satisfied that, if the lights go out, they will be properly defended and not simply left at risk as a result of this confused, vague, contradictory Bill?

John Wilkinson (Conservative, Ruislip - Northwood)

I am most grateful—I think that the whole House will have been—to my hon. Friend the Member for Chingford and Woodford Green (Mr. Duncan Smith) for taking part in the debate on new clauses 5 and 27 and relevant amendments that deal with national security. I will not follow all the detailed arguments that he adumbrated, but I stress that the Government have done well, even at this late stage, to introduce, under new clause 5, powers of requisition in time of national emergency or war of aerodromes, aircraft and relevant equipment. That is entirely appropriate but insufficient without the provisions of new clause 27. The acquis communautaire is viewed as something in the past and static, but we are legislating for many years to come. The acquis communautaire is always growing; to my knowledge, there are no examples of it receding. The competence of the European Union in matters relating to civil air transport and aviation are clearly growing. The evidence is plain. Let us consider recent examples. There is the question of bilateral air service agreements. Previously, they were always a matter entirely of national competence—and rightly so. Let us consider questions of capacity on routes, frequencies of service and gateways to or from which those services are operated. Let us consider the matter of slots. The issue of frequency of operation at airports and the facility for airlines to operate from an airport at certain intervals have been jealously guarded, and in this country normally regulated by voluntary mechanisms at individual airports. The European Commission now wishes to take that over, and that has great significance. My hon. Friend the shadow spokesman and, obliquely, the Minister, spoke about the EU' s ambition to take over Eurocontrol. Eurocontrol would in essence become an agency of the European Union, rather than, as hitherto, a mechanism for mutual co-operation between sovereign, independent nation states in the whole of Europe, to facilitate the efficient management of air transport through the crowded and congested airspace of our continent. 9.30 pm There is a huge difference between the new concept and the system that we operated in the past, which, despite differences of specification and equipment between nations, the requirements of the military and so on, has worked reasonably well. There has always been a need for improvement. At holiday times, the congestion on the airways can be severe, and Eurocontrol has much work to do, but it should be done in co-operation with national Governments, voluntarily. The issue is technical, rather than political. Then there is the matter of joint airworthiness requirements. Aircraft are now built to European standards of certification, and aircraft imported into our continent are validated to European standards—joint airworthiness requirements. Flight crew licensing is a controversial issue, on which we have had debates. The European Civil Aviation Conference has imposed new continentwide regulations which it is eager to impose on flight crew in this country. Those are costly and less effective than the simpler and more straightforward regulations under which air crew have been licensed in the past in the UK. It is clear from all that that the European Union has hegemonistic aspirations in airspace management. To imagine otherwise is to be blind to the way in which the EU has developed in recent years. The Government would therefore be wise willingly to incorporate new clause 27 into the Bill. Under clause 81(4)(a), the Secretary of State would have powers to give directions to regulate or prohibit (absolutely or subject to conditions) the navigation of all or any descriptions of aircraft over the United Kingdom. If that were challenged by the European Union, as it probably would be, it could cause our Government great difficulty unless we made it plain that British law had precedence over European law in this matter.

Iain Duncan Smith (Conservative, Chingford and Woodford Green)

My hon. Friend makes a good point, which I had hoped to raise with the Minister, and I shall do so now. If the measure were challenged under article 298 of the European Union consolidated treaties, it would not be a defence for the Government to invoke the concept of national security and claim that they are unable to define the requirement exactly because of national security, as article 298 states: The Court of Justice shall give its ruling in camera. That means that the court will require detail of the reason, which the MOD may not wish to give.

John Wilkinson (Conservative, Ruislip - Northwood)

I am grateful to my hon. Friend, who puts flesh on the bones of my argument. Under subsection (4)(b), the Secretary of State would also have powers to give directions to regulate or prohibit (absolutely or subject to conditions) the use, building, maintenance or establishment of aerodromes or flying schools or of any description of aerodrome or flying school. Those are commercial or industrial matters, and again the European Union could understandably claim that its industrial policy should have precedence over our national considerations of sovereignty and independence. I urge the Government, even at this late hour, to think again. We are not being fanciful. We are not having flights of wild imagination. We are not carried away with Europhobia or anything of the kind. Our arguments are intensely realistic. The Minister is a reasonable man, who has a great grasp of detail. I hope that he appreciates that our arguments have force, and that he will accept them.

Nick Raynsford (Labour, Greenwich and Woolwich)

We have had an interesting debate, punctuated by Opposition Members' anxieties about the imagined impact of European Union obligations on national security. Perhaps it would help if I summarised the basic thinking behind the amendment. We have not tabled the new clause at such a late stage simply because of an oversight; we believed that it was necessary to add a further provision in addition to clauses 38 and 81. As I explained earlier, we believed that it was appropriate to grant the Government direct powers of intervention rather than depending on directions, for which clause 38 provides. I hope that we have made a convincing case for the importance of quick action by Government in times of national emergency. New clause 5 would facilitate that.

Bernard Jenkin (Conservative, North Essex)

I want to pursue a point that my hon. Friend the Member for Stone (Mr. Cash) made. New clause 5(4) states: A person must comply with an order under this section notwithstanding any other duty, however arising. What other duties does the Minister envisage?

Nick Raynsford (Labour, Greenwich and Woolwich)

The new clause is clear. It states "notwithstanding any other duty". That is a clear and firm statement of intent. As I explained earlier in response to the interventions of the hon. Member for Stone (Mr. Cash), we believe that the Secretary of State should be able to act without fear of challenge from a party that would try to use the courts to frustrate the Government's action. The Bill includes provisions to enable the Secretary of State to act decisively and to make it clear that no other duties will override that for which the Bill provides.

Bernard Jenkin (Conservative, North Essex)

Let us suppose that our fantasies are realised and a duty to comply with a contractual obligation arose under European legislation. Would that duty be set aside under new clause 5? Does the new clause apply to any duty under European Community law?

Nick Raynsford (Labour, Greenwich and Woolwich)

I shall have to repeat my response. I am sorry if it is becoming tedious for my hon. Friends, but it is clear that Conservative Members are finding the point difficult to grasp. We are satisfied that our measures are entirely compatible with our treaty obligations. We do not accept Conservative Members' analysis—or fantasy—about a perceived or real conflict between European treaty obligations and the Bill. I shall consider that point in detail later.

Bill Cash (Conservative, Stone)

If the Minister would be kind enough to consider title V of the Amsterdam treaty, perhaps he would concede that it provides that we "shall" comply with a range of provisions, but that in the case of a common action plan, we "may" have to comply with specific provisions, subject to qualified majority voting. We are considering not only duties but powers. I therefore asked the Minister why the new clause did not refer to "functions", which include powers and duties, instead of merely to duties.

Nick Raynsford (Labour, Greenwich and Woolwich)

In the nicest possible way, I tell the hon. Gentleman, who is becoming a little tedious, that the Bill is drafted with a view to achieving clarity rather than indulging the fantasies of hon. Members who spend their time immersed in textual analysis of obscure European provisions. To come to the point, we have introduced the provisions to ensure that the protection of the national interest and national security is unequivocal. The hon. Member for Chingford and Woodford Green (Mr. Duncan Smith) asked whether the change of ownership could prejudice joint civil and military operations. He mentioned the Joint Air Navigation Services Council document, to which my right hon. Friend the Deputy Prime Minister referred. I shall pass him a copy, but I assure him that it makes it clear that that body believes that the new arrangement will preserve the successful civil/military relationship that currently exists between NATS and the MOD and ensure that air traffic services are sustained on a joint and integrated basis, post PPP. The MOD has been closely involved in the preparation of the provisions and is fully content that under the PPP its joint working arrangements with NATS will be maintained effectively and that national security will not be compromised. I make it clear that the choice of strategic partner will depend on several factors, one of which will be the ability to demonstrate an appropriate security culture. Under the terms of the licence, we shall be able to prevent unacceptable changes in the control of NATS on national security grounds. The hon. Gentleman asked who would control our airspace. I make it absolutely clear that UK airspace remains under UK control regardless of who is the strategic partner. Air traffic services will be provided under a licence, which may be revoked, or the special administration regime may be triggered if the licence conditions or the statutory duties, including safety duties, are breached. The other main thrust of the hon. Gentleman's remarks relate to the competence of the European Commission and the European Union. The Commission has seen the Bill's text and has not suggested that there is any conflict between any of its provisions and the requirements of the treaty. Of course, I do not expect Conservative Members to accept that.

Iain Duncan Smith (Conservative, Chingford and Woodford Green)

rose—

Nick Raynsford (Labour, Greenwich and Woolwich)

I will give way in a moment, if the hon. Gentleman restrains himself. Conservative Members demonise the Commission, so the idea that it can have had a sensible and intelligent discussion with us about the provisions is completely alien to their nature, but if they return from fantasy land to the real world, they will realise that that is the reality.

Iain Duncan Smith (Conservative, Chingford and Woodford Green)

The hon. Gentleman says that we demonise the Commission, but if I were part of the Commission, I would have exactly that opinion. It falls in with our argument—the Commission is content because the provision lays the Government open to the future policies that we have discussed. I ask the Minister a simple question. He mentioned the action that the Government may take under new clause 5, or under clauses 38 or 81, but especially under new clause 5(4), which includes the words: notwithstanding any other duty, however arising. He said that in the clear belief that no other duty will matter, because the derogation on national security is absolute, but he should remind himself that the derogation exists for only four articles of the treaty of Rome. There is no derogation on any other article. Beyond those four, the Government will face a clash of duty, and the duty will be to European law.

Nick Raynsford (Labour, Greenwich and Woolwich)

Despite the hon. Gentleman's continued attempt to muddy the waters by suggesting that the EU will have competence in matters beyond those in which it already has competence, it cannot rule on matters that are outside its treaty competence, and a court cannot provide competences that do not exist. The treaty does not confer competence with regard to national security and defence. We have exhausted that issue, and I shall not spend much of my time fruitlessly reading documents that the Conservative party has consistently misinterpreted year on year—a fact that explains its curious position on Europe.

Bernard Jenkin (Conservative, North Essex)

Would it be legal to invoke the golden share on grounds of national security?

Nick Raynsford (Labour, Greenwich and Woolwich)

The golden share is there to preserve a number of national interests, and can be used in respect of national security issues as well as other matters. We have dealt with the issue of the power of the golden share, and that of the potential suspected European challenge to the golden share, which Opposition Members raised in Committee, and we are satisfied that the golden share is compatible with our European treaty obligations. My hon. Friend the Member for Cunninghame, South (Mr. Donohoe) asked about the implications of Government shareholding for the future expansion of NATS overseas. I assure him that NATS will engage in future activities abroad as a private company, and that the Government's shareholding will not play a role. The Government will not be involved in any direct contractual relationship with overseas Governments. As I have said, we expect NATS—as a public-private partnership with a solid share structure—to be able to thrive in overseas markets, subject to the laws of the jurisdictions in which they operate.

Brian H Donohoe (Labour, Cunninghame South)

Can the Minister answer a simple question? Why was an amendment tabled in Committee to reduce the Government's shareholding to 25 per cent?

Nick Raynsford (Labour, Greenwich and Woolwich)

As I explained in some detail then, the provision is intended to deal with a dilution of the share capital. That might happen for a number of reasons. It might be considered appropriate to raise additional finance, or it might be considered appropriate to enter into joint ventures with other parties. In such circumstances, it might seem right to dilute the share capital, and to allow the Government's shareholding to fall to, but not below, 25 per cent. That in no way compromises all the powers and safeguards that are in place, to which my right hon. Friend the Deputy Prime Minister referred earlier. The golden share remains, the partnership shareholders retain their role and their power, the shareholders' agreement with the strategic partner remains in force, and all the existing safeguards will continue irrespective of that possibility. It is simply a provision to allow for a possible commercial eventuality, which should not be seen as a cause for concern. The hon. Member for Stone described the Bill in terms that reminded me of himself. He spoke of a confused, vague, contradictory and repetitive Bill, and I do not think that he added much to the debate. The hon. Member for Ruislip-Northwood (Mr. Wilkinson) spoke of the hegemonistic aspirations of the European Union. That merely reinforced my fear that the Opposition were being driven by a particular view of Europe that was clouding their judgment. These are sensible, practical provisions, which will enable us to look after the interests of national security in a practical, common-sense way. They are far removed from the Opposition's motivation, which is clearly conditioned by their negative view of Europe. We would prefer to be engaged positively with Europe in building a better future for air traffic control systems in this country and throughout Europe.

Bernard Jenkin (Conservative, North Essex)

The position can be summarised in this way: the Government are in complete denial about the fact that national security issues are justiciable by the European Court, and that the derogations allowed to member states that wish to act on grounds of national security are very limited. Let me ask the Minister, for example, whether the golden share could be invoked on grounds of national security. The opinion from the Commission makes the answer absolutely clear. Article 223 of the relevant treaty—the old treaty, that is; according to the new numbering, it is article 296—allows Member states to take measures they consider necessary for the protection of … their security which are connected with the defence sector. However, the Court of Justice pointed out that Article 223 covers only exceptional and clearly defined cases. Because of its limited character, this article does not lend itself to a wide interpretation and it is not possible to infer from it that there is inherent in the Treaty a general proviso covering all measures taken for reasons of public security. That absolutely lays it down. It is why the Germans lost the Kreil case. [Interruption.] It does not matter whether internal or external security is involved. That provision means that, although the Minister has obviously been advised in good faith that there is an exemption for all invocations of public security, the general blanket exemption does not exist. It is in the treaties. For example, article 36—I am looking at the old treaty again—says: The provisions of Articles 28 and 29 shall not preclude prohibitions or restrictions on imports, exports or goods in transit justified on grounds of public morality, public policy or public security. There is the exemption, but it is prescribed that prohibitions or restrictions shall not, however, constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States. Therefore, every invocation of public security that Ministers may make will have to be justified. What is more, it will have to be justified in terms of articles 297 and 298, which can require the European Court of Justice to require the member state to give reasons in camera in court. Therefore, the Ministry of Defence will have to go to the European Court of Justice in secret session to justify why the Government should inflict an obligation on the private company running National Air Traffic Services. It is all spelled out. If the Government cannot accept it, we will have to press our amendment to new clause 5 to a vote.

EXCEPTIONS

DIRECTIONS RELATING TO THE ENVIRONMENT

CAA's 1973 ACT FUNCTIONS

CAA's 1998 ACT FUNCTIONS

COMMISSION'S POWER TO GIVE direction

POSITION WHERE COMMISSION GIVES direction

DIRECTIONS: FURTHER PROVISION

INFORMATION FOR PURPOSES OF CHAPTER III

GENERAL DUTY

INTERPRETATION

SECRETARY OF STATE'S GENERAL DUTY

CAA's GENERAL DUTY

RESTRICTIONS ON PROVIDING SERVICES

LICENCES: GRANT

DUTIES OF LICENCE HOLDERS

BREACH OF DUTIES OR CONDITIONS

REFERENCES TO COMPETITION COMMISSION

MODIFICATION FOLLOWING REPORT

MODIFICATION BY ORDER UNDER OTHER ENACTMENTS

ORDERS FOR SECURING COMPLIANCE

PROCEDURAL REQUIREMENTS

VALIDITY OF ORDERS

EFFECT OF ORDERS

POWER TO OBTAIN INFORMATION

ENFORCEMENT BY CAA

ORDERS FOR SECURING COMPLIANCE

PROCEDURAL REQUIREMENTS

VALIDITY OF ORDERS

POWER TO OBTAIN INFORMATION

DUTY TO MAKE ORDER

POWER TO MAKE ORDER

PETITIONS AND ORDERS: SUPPLEMENTARY

REGISTER

DIRECTIONS IN INTERESTS OF NATIONAL SECURITY ETC.

INTERPRETATION

MEANING OF TRANSFER SCHEMES

EFFECT OF SCHEME MADE BY CAA

ACCOUNTING PROVISIONS

ACCOUNTING PROVISIONS: INTERPRETATION

ISSUE OF SECURITIES

GOVERNMENT INVESTMENT IN SECURITIES

CROWN SHAREHOLDING

GUARANTEES

SHADOW DIRECTORS

SECURITIES TO BE ISSUED

SECURITIES: OTHER PROVISIONS

AIR NAVIGATION: DIRECTIONS

DIRECTIONS: SUPPLEMENTARY

CHARGES FOR SERVICES

PUBLICATION, COMMENCEMENT, AMENDMENT AND REVOCATION

SPECIFICATIONS: SUPPLEMENTARY

CHARGEABLE AIR TRAFFIC SERVICES

RECORDS

DETENTION AND SALE

INTERPRETATION

CONTROL IN TIME OF HOSTILITIES ETC.

SECTION 81: INTERPRETATION

ORDERS AND REGULATIONS

EXTENSION OUTSIDE UNITED KINGDOM

AIR TRAFFIC ADMINISTRATION ORDERS: GENERAL

AIR TRAFFIC ADMINISTRATION ORDERS: SCHEMES

AIR TRAFFIC ADMINISTRATION ORDERS: NORTHERN IRELAND

TRANSFER SCHEMES

TRANSFER SCHEMES: TAX

'Agreements

AMENDMENTS ABOUT AIR TRAFFIC

AIR QUALITY

Don Foster (Liberal Democrat, Bath)

I beg to move, That the clause be read a Second time. After the excitement of discussing the future of National Air Traffic Services and then the future of national security, we come to the important issue of air quality. All hon. Members will be aware of the concern in many quarters about the quality of our air. Some estimates, not least from the British Medical Association, tell us that as many as 24,000 people die unnecessarily each year because of air pollution caused predominantly by the exhaust fumes from vehicles on our roads. Air quality and its improvement are of considerable importance in the effort not only to reduce the number of lives lost but to improve the quality of life for those millions of people who suffer from asthma, which is again associated very directly with fumes from vehicle exhausts. In Committee, we were delighted that some positive announcements were made by the Government, not least by the Under-Secretary of State for the Environment, Transport and the Regions, the hon. Member for Streatham (Mr. Hill)—or "St. Reatham", as we came to know him. However, I was disappointed that he did not accept some of our amendments in respect of low emission zones or vehicle emission testing. New clause 6 is another attempt to persuade the Government to move a little further. It would give local authorities a more direct way of getting the compliance of the Highways Agency in measures to reduce air pollution. It would allow a local authority to apply to the Secretary of State to direct the Highways Agency to take any measures that the local authority considered to be effective in reducing air pollution from roads in its area that were administered by the Highways Agency. In Committee, the Minister was quite positive about the broad principle of improving air quality, but there are a number of matters on which we seek further commitments. I have three questions of which I have given the Minister some advance notice, so I hope that he will respond positively. The first relates specifically to the work that local authorities have to do in developing their local transport plans. Hon. Members will be aware that the plans have to be completed by the end of June. However, when local authorities draw up their plans they do not know whether the Government will require them to declare air quality management areas. As the Minister knows only too well, the deadline for those is not until October. If the Government subsequently require local authorities to introduce air quality management areas that might include a low emissions zone or roadside emission testing procedures, can the Minister confirm that the enforcement activities that will be required will be considered to be consistent with the aims of the local transport plan that will have to have been produced within the next few days? Secondly, the Minister agreed that there would be some merit in extending the powers of traffic wardens so that they would have the ability to stop vehicles and require them to have their emissions tested. The Minister thought that that was a good idea in principle, but said that he did not want to agree to it without further consultation, particularly with the Motorists Forum. The Minister will be aware that that consultation has now been completed and that the forum has sent him a detailed report, so I hope that he can tell us when he expects to make a decision on whether to extend the powers of traffic wardens. In that regard, how will local authorities be expected to pay for emissions testing? In Committee, the Minister helpfully agreed to extend the possible uses of moneys raised by congestion charging or workplace parking charging to offset some of the costs of emissions testing. However, some local authorities may choose not to use the powers in the Bill to introduce such charging. What assistance will the Government give to local authorities that wish to introduce more stringent emissions testing, but not the additional powers? 10.15 pm On a number of occasions in Committee, Labour Members raised the point that when a local authority is required to develop strategies to reduce air pollution in its area, some of the measures that it would like to take are outside its control, not least because there is clear evidence that many emissions are likely to come from roads that are outside the local authority's control, especially trunk roads and motorways. If a local authority is required to reduce air pollution in its area, and yet has no control over the activities that take place on trunk roads or motorways, it is powerless to achieve the very objectives that the Government are rightly setting it. What can the local authority do about that? The obvious step is to work in conjunction with the Highways Agency, which is in a position to do something. The agency has said that it is anxious to work with local authorities in developing local transport plans and other strategies to reduce pollution and congestion. One would think that everything in the garden was rosy, and that the local authority could say to the Highways Agency, "We have a lot of problems with pollution from your roads. Will you do something about it?" One would hope that the answer would always be yes. The sad truth is that that is not always the case. I know that the Minister is very well briefed on the problem in Sheffield. The local authority wanted to reduce pollution in the Tinsley area of Sheffield, but the main concern was pollution from the M 1. Sheffield council asked the Highways Agency for help in reducing the speed limit on that section of the motorway. The evidence is that such a move would reduce pollution and, as a by-product, reduce congestion. As the Minister knows, despite all the evidence of speed limit reductions on the M21 reducing congestion and pollution, the Highways Agency was unwilling to accede to Sheffield council's request. The new clause would ensure that the local authority could at least say to the Secretary of State, "If you agree with our proposals, will you make it a requirement on the Highways Agency to enact them?" In that way, we would have joined-up thinking between local government, central Government and the Highways Agency. They would all work together with the aim of reducing congestion and air pollution. The Government, and in particular the Minister, have given helpful indications of their intention to take this further. However, it is about time that the Government showed a real commitment to the issue by including in the Bill measures that would make this proposal a reality, rather than promising that that will happen at some time in the future. I hope that the Government are prepared to accept the new clause.

Keith Hill (Labour, Streatham)

I would like to make a few general observations about the new clause, moved so eloquently by the hon. Member for Bath (Mr. Foster), before dealing with his specific questions. The new clause would allow the Secretary of State to direct the Highways Agency—which I shall refer to as the HA—to take specific measures, such as reducing speed limits on trunk roads and motorways, with the aim of reducing air pollution within air quality management areas—which I shall refer to as AQMAs. Those are areas identified by the local authority where the air quality objectives, as prescribed in the air quality regulations 2000, are unlikely to be met. Where an AQMA has been designated, the local authority has to draw up an action plan setting out the measures it intends to take in pursuit of air quality objectives. Where the actions needed to improve air quality in an AQMA are outside the local authority's responsibility, such as the case cited by the hon. Gentleman—the reduction of pollution from a trunk road and motorway—the local authority's plan would have to show what action would need to be taken by the HA. I can fully understand the principles behind the new clause. Local authorities will no doubt have concerns about working towards achieving the air quality objectives in their areas, especially where the action required is outside their control. I also agree that it is important for local authorities to have the full support of the HA when they designate their AQMAs and draw up action plans. However, the provision is unnecessary. It would allow the Secretary of State to direct the HA to take action, including imposing slower speed limits on trunk roads or motorways within an air quality management area. However, the Secretary of State already has powers, under the Road Traffic Regulation Act 1984, to regulate speed on trunk roads and motorways; that is carried out by the HA. The HA already has a role to play within the local air quality management—or LAQM—process. First, it is a statutory consultee under schedule 11 of the Environment Act 1995. Local authorities therefore have to consult the agency on their air quality reviews and assessments, their proposals for AQMAs and their AQMA action plans. The HA has also provided a technical advice document for local authorities to use when carrying out the review and assessment process. Secondly, the HA will have to work alongside those local authorities that designate air quality management areas covering trunk roads and motorways where traffic levels are the main contributors to local air pollution problems. The HA is committed to working with local authorities, and is encouraging local authorities to set up small working parties, which would include the relevant HA area and route managers, to identify any possible HA measures that may be taken in pursuit of the air quality objectives. The HA could take several measures in pursuit of the air quality objectives in AQMAs. For example, better use could be made of the existing messaging service on motorway gantries, such as an advanced warning system of incidents on motorways. The HA is also working with transport operators to encourage people to use public transport. On the specific issue of introducing slower speed limits on motorways, the HA is not opposed to that in principle, but would want to consider each case on its merits. In considering any such measures on its roads, the HA would have to have regard to the following criteria: safety; economy; integration; environment and accessibility. All new trunk roads are now subject to environmental impact assessment in accordance with an EU Directive. That assessment includes considering air quality impacts evaluated under the air quality strategy. Local authorities are always consulted on any such proposals. It is evident that the HA is already fully involved in the LAQM process; it will be working closely with local authorities during the action plan stage to identify action that it can take, bearing in mind the cost-effectiveness of those measures. Furthermore, should local authorities experience any difficulties in liaising with the HA, we would encourage them to approach my Department for further advice. I therefore hope that the House will agree that, although the principles behind the new clause are to be welcomed, it would not be appropriate to accept it for the reasons that I have outlined. However, before I urge the hon. Gentleman to withdraw it, I shall deal with the questions that he raised. I am grateful for the notice that he has given me of the questions. That reflects the extremely close working relationship that we developed in Committee over many hours and months and the singular experience that he and I had in a lonely Westminster radio studio in the middle of the night on Thursday 4 May and Friday 5 May. First, the hon. Gentleman asked whether I could confirm that, where air quality management areas are declared, enforcement activities will be considered to be consistent with the objectives of the authority's local transport plan. We acknowledge the fact that local authorities are having to complete their local transport plans before they have completed their reviews and assessments. The majority, however, should by now have a clear view of any major local air quality problems and their likely causes. In our revised local air quality management statutory guidance entitled, "Air Quality and Transport", which was issued to local authorities on 6 March 2000, we have advised local authorities to ensure that their local transport plans contain all the air quality information that is available at the time, even if it is only provisional. Where possible, they should also reflect the likely designation of any AQMAs. It is important for local authorities to make sure that the LAQM is closely linked into the local transport process, particularly because the plans will be judged by their links to air quality issues. Secondly, the hon. Gentleman asked about authorities that declare air quality management areas, which they are under a statutory obligation to do. He asked whether I would make additional funds available to authorities to fund the designation of AQMAs and the development and enforcement of statutory air quality action plans. We recognise that local authorities' air quality management duties have financial implications. Since 1997–98, we have made provision in the annual revenue support grant settlement to assist the running costs associated with those duties, including undertaking the air quality reviews and assessments, designating any air quality management areas, drawing up action plans and undertaking public consultation exercises. At the same time, we introduced a programme of supplementary credit approvals—that is to say additional borrowing powers—to support the necessary capital expenditure on air quality reviews and assessments. More than £12 million has been awarded so far. Letters inviting SCA bids for expenditure in 2000–01 were sent to authorities in February. On the development and enforcement of AQMA action plans, let me say that local authorities can use their existing powers and controls, such as local air pollution control, domestic smoke control, transport and land use planning, to implement their action plans for achieving the air quality objectives. Authorities may also, for example, wish to use the local transport plan process to bid for funding for transport projects that aim to reduce transport-related emissions and improve air quality. Local authorities declaring smoke control areas may apply for SCAs to cover the necessary costs of conversions in domestic premises.

Michael Jack (Conservative, Fylde)

I have listened carefully to the Minister's arguments about the powers of local authorities. Will he help me on a point of detail? Do local authorities have any powers to promote public awareness about the nature of the difference between old and new vehicles and about the contribution that newer vehicles with newer technology can make to improving overall air quality in a particular location?

Keith Hill (Labour, Streatham)

I shall be entirely candid with the right hon. Gentleman. I am not sure that specific funding lines are available for that purpose, but every local authority has ample local financial resources. As the right hon. Gentleman knows, being a resident of Lambeth during his sojourn in the capital, many local authorities produce a range of publications in which they raise such issues with the public. I am grateful to the right hon. Gentleman for drawing attention to such publicity. 10.30 pm On funding for AQMAs, it is up to local authorities to ensure that the measures proposed in their plans are proportionate and cost-effective. Some of the actions needed to improve air quality may lie outside the local authority's responsibility, and it will have to work closely with other bodies, such as the Environment and Highways Agencies. I turn now to the query of the hon. Member for Bath about the timing of conclusions on the Motorists' Forum's recommendations and the possible consultations on extending emissions tests and additional powers. I am grateful to the Motorists' Forum, which represents a broad range of interests, for its work on this matter. We are actively considering its recommendations and will announce our decisions in due course. My Home Office colleagues and I propose to consider additional powers. The hon. Member for Bath raised the interesting case of Sheffield, where, last Thursday, Labour increased its share of the vote, but the Liberal Democrats increased their number of seats on the council. That is a consequence of the first-past-the-post system which the hon. Gentleman may not wholly deprecate. I shall correct the version of events in Sheffield that the hon. Gentleman related to the House. Sheffield city council suggested to the Highways Agency that it should impose a 50 mph speed limit on the M1 where it passes through the Meadowhall area, which colleagues assure me is called Tinsley. Sheffield had calculated that if speed limits on the motorway were reduced from 80 mph to 50 mph where it passed through the city, there would be a significant reduction in pollution. The optimum speed for fuel consumption and emissions is at a constant speed between 40 and 50 mph.

Don Foster (Liberal Democrat, Bath)

Lest it be thought that a Transport Minister is not aware of the motorway speed limit, I give the hon. Gentleman the opportunity to correct the record immediately because I am sure that when he said that the speed limit was 80 mph, he meant 70 mph.

Keith Hill (Labour, Streatham)

It is a matter of public record that I am not a driver and have never learned to drive a car, so these matters are not always at the forefront of my mind, but I willingly accept the hon. Gentleman's correction. I shall now proceed to correct his version of events in Sheffield. Contrary to the reports, the council's suggestion was not refused by the Highways Agency without consideration. However, the issue was not taken forward after the agency pointed out that due to the severe congestion on the M1 in that area at peak periods, speeds were already down to less than 50 mph. If speed reduction measures were to be introduced, we would need to be sure that the benefits of improved air quality would outweigh the economic impact of lower speed limits on journey times. Emissions from vehicles on the trunk road network are usually more significant for air quality in urban areas. Traffic on such roads is unlikely to be travelling at the legal speed limit—the point raised by the hon. Gentleman—and, especially in congested areas, will cause far more damage to the environment in terms of emissions than if it were travelling at the legal speed limit. With those explanations and responses, I invite the hon. Gentleman to withdraw the motion.

David Madel (Conservative, South West Bedfordshire)

Following on from the remarks made by the hon. Member for Bath (Mr. Foster) and the Minister's saying that, if district councils or town councils want advice on how to interpret the air quality rules, he will be happy to provide it, I rise to raise a specific case in my constituency: that of the extremely congested A5 route through the centre of Dunstable. The Minister will be aware of our lengthy campaign to get a bypass. As long as there is no bypass, air quality worsens. An additional cause for urgency is that the Secretary of State for the Environment, Transport and the Regions has designated Luton and Dunstable as a growth area for housing; therefore, more people will be affected if the problem continues. Furthermore, without the provision of the bypass, 11 Dunstable schools, with hundreds of children, that lie close to the A5 will continue to endure the massive pollution generated by crawling, stop-start traffic. Similarly, many houses are affected by the problem. The benefit equation is, therefore, massively in favour of the bypass being built. We have campaigned for many years to get the bypass built. I hope that the Minister will give a favourable hearing to councils if, following Thursday's elections, they approach him asking for advice on whether they can use air quality rules to hasten the building of the bypass. The Minister might wonder what last Thursday has to do with the new clause. The fact is that, during the district and town council elections in Dunstable, only the Conservative party campaigned for a full bypass; Labour and the Liberal Democrats have always been uncertain, even wobbly, on the issue. The result of Thursday's poll was that every single ward in Dunstable returned a Conservative district councillor; and a town council comprising 17 Labour and three Conservative councillors was transformed into one comprising 17 Conservatives and three Labour representatives. The people of Dunstable have given a clear and massive endorsement to an early start being made to the bypass, not least on grounds of air quality. I make those points to the Minister in the hope that my words, and the council's representations, will cause him to look most favourably on starting a public inquiry into the bypass—not least after what has been said during this important debate about people being badly affected by poor air quality resulting from massive traffic congestion, which we certainly have in Dunstable.

Stephen O'Brien (Conservative, Eddisbury)

Conditions in my constituency are not untypical of those in many shire county constituencies. There is no motorway, but many arterial routes and trunk roads traverse the constituency, and many of my constituents are affected by the traffic passing along those routes. The Minister will be familiar with the case, as, on behalf of my constituents, I have been a prolific letter writer on the subjects of speed and safety on the A41, the A49 and the A51, along with the less fast, but tighter and more difficult to negotiate green route that enters my constituency through Audlem in the southernmost part. There is some debate about maps and whether many continental drivers of articulated lorries see on the map the green route, which appears to be the most direct route, and so come through my constituency, causing road congestion problems. However, my argument tonight focuses on the relationship between speed, air quality and new regulations that will permit lorry weights to be increased from 40 to 44 tonnes. There is real concern centring on arterial routes, such as the A49. Lorry drivers are equipped with mobile communications equipment, so by the time they go over the Thelwall viaduct on the M6 coming south, they know whether there is congestion around Birmingham. If there is, they leave the M6 and come down the A49. through Warrington and through the constituency of the hon. Member for Weaver Vale (Mr. Hall), before entering my constituency. The lorries then plough through my constituency before joining the M54. The lorries do not follow direct motorway routes and, as we well know, air quality relates to lorries getting up to speed. On a non-motorway route, there are many bends and hills and, especially on the A49, sharp bends to negotiate. Lorries slow down, particularly owing to their added weight. They then have to get back up to speed; they are keen to travel, when possible, at the maximum speed permitted. I hope that the Minister will take into account that issue in assessing the impact of the increase in lorry weights, given the nature of the roads on which lorries habitually travel partly because of congestion, particularly around Birmingham on the M6 leading up to the junction with the M5. As the many letters that the Minister and I have exchanged will testify, that has a real impact on my constituents. I am not sure that the new clause would address the problem, but I listened carefully to the Minister. In assessing air quality measures relating to the speed and routing of lorries, it will be important to take into account measurements on lorries' ability to maintain speed. That in itself can lead to many more air pollutant quotas—however one measures it. I urge the Minister to consider incentives for lorries once again to travel on the main motorway network, as that would address many of the concerns and alleviate many of the serious and legitimate worries of my constituents, many of whom live on those routes. Owing to the position of the original tracks, the houses are perilously close to the road, resulting in concern and danger.

Don Foster (Liberal Democrat, Bath)

If the hon. Member for Eddisbury (Mr. O'Brien) studied new clause 6 closely, he would see that it would bring him a great deal of comfort. It would enable his local authority to feel confident that it could work closely with the Highways Agency to consider the issues of speed on motorways in his area. If the Highways Agency were not prepared so to work with the local authority, there would be an opportunity to apply to the Secretary of State to direct that close co-operation. I am absolutely delighted with the Minister's introductory remarks. I welcome his description of my remarks as eloquent. I was slightly taken aback by his description of our alleged close working relationship and somewhat surprised that he was prepared to refer to the time that we spent together late at night in a radio studio. He spent two hours defending the indefensible as further election disasters befell the party that he represents, while I was able to celebrate the success of my new and welcome hon. Friend the Member for Romsey (Sandra Gidley). The Minister acknowledged my generosity in giving him advance notice of some of the questions that I would ask and, indeed, some of the points that I would raise, including reference to the situation in Sheffield. It was clear that he was not even aware of the speed limits on motorways, let alone the part of Sheffield to which we referred—Tinsley. The Minister was not as thoroughly briefed as one might have hoped because he suggested that the Highways Agency did not want to introduce the speed limit proposed by the council because of congestion in the area at peak times. I hope that, when he checks the information with which he was provided, he will note that Sheffield council suggested to the Highways Agency a variable speed limit, as on the M25, to take into account that very concern. The problem is that, despite the fact that Sheffield council has made that proposition, there is still not an opportunity for it and the Highways Agency to work together. The council has nobody to whom it can turn to resolve that dispute, and that is why the new clause is so important. In his response, the Minister chose to adopt the technique of using acronyms. I do not blame him for that, as it speeds up the debate. I am well aware that, when an LA is working on its LAQM, which of course is part of the Government's NAQS and, as the Minister rightly said, is related to the LA's LTP, and could include the option of an LEZ, although the Minister has not yet given approval for LEZs, the LA must have the full support of the HA, as the Minister said, not least if the LA goes on to develop an AQMA. Without new clause 6, there is no guarantee that the LA will get the full support of the HA. The Minister suggested that, if the LA is unhappy, it should seek advice from the DETR. However, it is unlikely that anything will happen, as the case in Sheffield demonstrates so eloquently.

Peter Atkinson (Conservative, Hexham)

rose—

Don Foster (Liberal Democrat, Bath)

I give way to the hon. Gentleman, but time is pressing.

Peter Atkinson (Conservative, Hexham)

I am grateful to the hon. Gentleman, who produced a tour de force of acronyms. How would the new clause help constituents of mine, who live on a trunk road with a village on either side? The local authority wants a bypass there. If the local authority declares it a special air quality management area, what will the Highways Agency do? Will it be forced to build the bypass, which it otherwise would not?

Don Foster (Liberal Democrat, Bath)

The hon. Gentleman refers to an AQMA, as I am sure that he knows. One way of improving his chances of success would be to turn it into an LEZ. He makes a fair point. There will be occasions when a local authority wants to achieve certain aims and wishes to get the support of the Highways Agency, but the Highways Agency disagrees. The new clause would allow the local authority to see whether the Secretary of State was willing to support it in that endeavour and, if so, to apply to him to instruct the Highways Agency to carry out the necessary work. In the hon. Gentleman's example, it is unlikely that, even if the local authority wanted a bypass, the Secretary of State would give his approval and make it a requirement on the Highways Agency. However, there are many other cases—I gave one example in the Tinsley area of Sheffield—where the joint working of the local authority and the Highways Agency could have been strengthened by the new clause. I am disappointed that the Minister is not prepared to write it into the Bill. It is an important measure, and I hope that the House will not object too much if I press the motion to a Division.

COMPETITION TEST FOR EXERCISE OF BUS FUNCTIONS

Keith Hill (Labour, Streatham)

I beg to move, That the clause be read a Second time.

Michael Martin (Deputy Speaker, Glasgow Springburn)

With this it will be convenient to discuss the following: Government amendment No. 301.

Keith Hill (Labour, Streatham)

New clause 14 brings us to a topic that has excited many commentators in connection with our bus policy proposals, and occupied the Standing Committee more than once: competition. We undertook to table amendments on Report to deal with competition issues as they affect the three key local authority functions introduced or enhanced by the Bill: quality partnerships, ticketing schemes and bus subsidy contracts, including frequency enhancements. The new clause and amendments were prepared in full consultation with the competition authorities, the Office of Fair Trading and the Department of Trade and Industry. I am sorry not to have been able to give the House a little more time to consider them, but they do what we said they would do. The new clause and amendments achieve three things. First, they provide a special tailor-made regime for the exercise of such powers—rather than the Competition Act 1998, in case that Act might be thought to apply. I think that that concerned Members at an earlier stage. Secondly, they allow a bus operator, for example, to go to the Director General of Fair Trading if that operator thinks that the local authority's powers have been used unfairly. Thirdly—this is, perhaps, the most important point— they require the Office of Fair Trading to consider not just any effect that there might be on competition but the wider public interest, including not only bus users but the community in general. For that purpose, we have included special public interest provisions tailored to the circumstances of bus operations, and the sort of benefits that local authorities will legitimately want to achieve through their use of bus powers. Those include better vehicles or facilities, service improvements and reducing or limiting traffic congestion, noise or air pollution. I hope that hon. Members will agree that those special provisions are much more appropriate and helpful to local authorities and to the public than anything in the Competition Act.

Valerie Davey (Labour, Bristol West)

Does my hon. Friend agree that the specific new amendments and the way in which the Government are now handling the matter are of particular value in a situation such as that in Bristol, where the bus company has a virtual monopoly, where the public good, as he has indicated, is of special concern to the local authority and the strengthening of local authority's power is to the benefit of the passenger?

Keith Hill (Labour, Streatham)

I understand my hon. Friend's broad point, but the thrust of the new provisions is not precisely in the direction that she has described. They are designed to deal with possible allegations or suspicions of anti-competitive practices—for example, when ticketing arrangements are introduced—and to create some protection for the public interest where those measures are introduced, so I do not think that they quite attain the objectives that she may hope they do. The provisions that I have outlined are in paragraph 2 of the new schedule. That paragraph is the most important part of the provision; otherwise, the schedule is essentially procedural. It provides for local authorities or bus operators to apply to the OFT for a decision—the OFT is, of course, the Office of Fair Trading, but I think that that is a reasonably familiar acronym, which I propose to persist with—or the OFT can look at a case itself if it sees fit. The OFT must publish any decisions, with reasons, so that people know where they stand. Properly, the OFT is required to consult interested parties before finalising a decision if it thinks that the competition test is not met. The OFT has powers of direction once a decision has been made, although I am sure that in the vast majority of cases any necessary solutions will be worked out voluntarily. The schedule contains provisions for the OFT to obtain information. It merely echoes provisions in other such legislation and contains confidentiality safeguards. Again, I would be surprised if those were much needed in practice, but I hope that the House will agree that it would not be right if bus operators were able to get together at the expense of the public and to frustrate OFT inquiries. In addition to the schedule, there are some other amendments. They are mostly technical, but also helpful. For example, amendments Nos. 301 and 304 provide that reducing traffic congestion can be a valid reason for a local authority to bring forward a quality partnership scheme, or to subsidise a bus service. That ensures consistency with the wording of the competition test in paragraph 3 of the new schedule. Amendment No. 303 provides that a local authority can vary a ticketing scheme, rather than simply revoke it, as in the Bill at present. Amendments Nos. 305 and 306 are consequential drafting changes to provisions in the Transport Act 1985 to make "economy, efficiency and effectiveness"—the best value criteria—the factors that local authorities must take into account in promoting the use of public transport generally in their areas, thus ensuring consistency with their obligations in reaction to bus subsidies in clause 131. Opposition amendment No. 143 seeks to make bus services provided under quality contract schemes exempt from the Competition Act. It is substantially the same as an amendment that was debated in Committee. As we made clear on that occasion, the amendment seems to be wholly unnecessary. Once a quality contract scheme has been introduced, there is by definition no longer a competitive situation for bus operations. All local services within the quality contract area, unless exempted, will be operated under contract to the local authority. The Competition Act will therefore not apply. We further made the point that, if a quality contract were otherwise caught by section 2 of the Competition Act, it would be excluded by virtue of paragraph 5 of schedule 3 to the Act, which states that conduct engaged in to comply with a legal requirement is exempted from the Competition Act. Either way, therefore, we see no need to make further provision. I hope that my explanation of the Government amendments is helpful to the House. I hope, too, that hon. Members will feel that these promised amendments will help all concerned by providing a special competition regime that also takes proper account of the public interest objectives that local authorities can—indeed, should—have in the use of their powers. I know that competition legislation has been of concern to many hon. Members. It may therefore also help the House if I add that, yesterday, the OFT sent out consultation drafts of the block exemption. The covering letter was sent to the rail industry as well as to the bus industry trade association and local government and underlined the point that the proposed block exemption will apply to multi-modal schemes, not only to the bus industry. We believe that that is good news, and I am sure that it will be welcomed by many hon. Members, including my hon. Friend the Member for Wythenshawe and Sale, East (Mr. Goggins), who has already made representations on behalf of the Manchester passenger transport executive. As I predicted in Committee, the OFT is taking forward a block exemption for bus and train ticketing schemes under the 1998 Act. The OFT has listened to representations. I hope that the House will find that reassuring.

Robert Syms (Conservative, Poole)

In Committee, we spent considerable time discussing competition law. We did so because, if we do not get that matter right, the Bill's entire section on buses will not work. Representations on the Bill have been made by the bus companies, which are concerned that they will have to contend with both a competition regime—particularly under the Competition Act 1998, which came into force on 1 March and made things difficult for them—and the Transport Bill. The companies essentially felt that they were being caught between the Department of Trade and Industry and the Department of the Environment, Transport and the Regions. The situation in Committee was not a happy one, primarily because we felt that the legislation would not work. I believe that the proposed regime will be helpful, and therefore welcome the Government's new clause, new schedule and amendments in this group. Nevertheless, the previous muddle was of the Government's own making, with two Departments going in two slightly different directions. The Local Government Association was very concerned about that muddle and made representations on it to the DETR. The Opposition would like to see the quality partnership schemes work. For most people in the United Kingdom, buses are their only public transport alternative. The new regime will improve their chance of having such an alternative. New clause 14 has been tabled at a relatively late stage in our consideration of the Bill. Have the bus companies been consulted on it? If so, did they have any comments? I am not an expert on buses—although I am a transport spokesman—but I am sure that the bus companies, particularly many of the major ones, have lawyers. As the 1998 Act provides for quite draconian ways in which company directors can be fined if they are anticompetitive, I am perfectly sure that those companies will wish to be consulted on the provision and have their views considered. If they have not been consulted, I hope that the Minister will reassure us that they will be before the Bill is sent to the other place. They should be consulted. Have local authorities who have raised the competition issue directly with the Government been consulted on the proposed regime? Local authorities and bus companies are vital to operation of the Government's proposed regime. If they are happy with it, we would be happy. 11.15 pm New clause 14 is sensible, and I am sure that the comprehensive new schedule I will meet the task. However, because of the conflict between two Departments, we have—as the Minister said—a tailor-made regime which I hope is robust. The Minister said that the Office of Fair Trading has issued guidance on block exemptions. He said also that bus operators could go to the Director General of Fair Trading for directions, but there was no mention of the cost of doing so. Will there be such a cost on a company? If so, the House ought to be told today. We welcome the Government's proposals and hope that there is the widest possible consultation. Bus operators must feel that they can move forward with quality partnerships and quality contracts in the knowledge that the regime will work and is robust. We wish the Government well on this because the travelling public want better services. The industry and local government want a degree of certainty that the new regime will work.

Don Foster (Liberal Democrat, Bath)

Like the hon. Member for Poole (Mr. Syms), I welcome the Government's proposals. The House will be aware that our amendment No. 143 would have much the same effect as the one proposed by the Government, but it is considerably less comprehensive. I am disappointed that it has taken such a long time for the Government to come forward with proposals. In Committee on 29 February, the Minister told us that parliamentary counsel was busily drafting amendments in this regard. It has taken two and a half months for parliamentary counsel to bring this forward. I hope that time will show that it was worth the wait. I am delighted that, at long last, we will begin to have a solution to a problem that was raised by many members of the Committee. The Minister was unwilling to accept a Liberal Democrat proposal that fares and frequency should be included in quality partnerships and quality contracts. The Minister agreed that it would be possible for a local authority working with transport companies in its area to produce an agreement on fares and frequencies, but that that would have to lie outside, but alongside, the statutory quality partnership or quality contract. I understand that these amendments refer specifically to new quality partnerships and quality contracts, and do not refer to the non-statutory arrangements that may be made by local authorities with their various transport providers in the area. The Minister was asked about those non-statutory arrangements between a local authority and the transport providers in an area, and whether or not they could fall foul of the Competition Act. He said: I cannot give…that assurance. Such timetable agreements may or may not be in breach of the competition rules, but it is for the OFT to make inquiries into that and to come to its own decisions. Since such agreements do not form part of the Bill, it is hardly for me to make a judgment on them.—[Official Report, Standing Committee E, 29 February 2000; c. 794.] I am sure that the House will recognise that a large number of the measures that a local authority may wish to take with transport providers in its area will refer specifically to fares and frequency. Indeed, on many occasions in Committee reference was made to the competition in some parts of the country whereby one bus company operates a particular timetable and another bus company introduces a service just a few minutes earlier to try to grab the passengers from the first company. Yet we know from experience that when two bus companies have agreed a timetable—one going on the hour and the other going on the half hour, for example—they have fallen foul of the Competition Act and the current work of the OFT. We hoped that the Minister would table an amendment that brought some comfort to local authorities and bus companies that any such arrangements that they sought to introduce to the benefit of passengers in a particular area would not fall foul of the Competition Act. I seek some reassurance from the Minister that the provisions in the amendment, the new clause and the new schedule will ensure that arrangements in respect of fares and frequency will be treated in the same way as the other matters covered by the proposed provisions. I am delighted that we are making progress, but I am not convinced that all the issues have yet been covered. Finally, in some parts of the country, including my constituency, local authorities wish to develop voluntary agreements with bus companies without introducing a quality partnership agreement. In some circumstances, particularly when fares and frequency are central issues, it is better to have a voluntary agreement that covers fares and frequency among other issues, rather than making them part of the statutory quality partnership. Again, I would be grateful if the Minister could give some comfort to local authorities such as Bath and North East Somerset council, which is trying to develop a partnership in respect of that dreadful subject that we discussed in Committee—tour buses—that there will be some exemptions from the draconian approach adopted by the Office of Fair Trading.

Stephen O'Brien (Conservative, Eddisbury)

I join my hon. Friend the Member for Poole (Mr. Syms) and other hon. Members in welcoming the Government's proposals. It might be helpful if I put in context my own experience of the operation of competition. Before being elected to the House I was, for my sins—I have many sins—the compliance officer in a large public company in the construction industry. I am conscious of the presence of the Minister for Housing and Planning, who is equally familiar with the construction industry, which is an important example of where the statutory competition provisions bite and are effective or not effective and which shows their effect on businesses and the directors of companies. It is well known that in respect of a commodity product where one competitor is indistinguishable from another, there is every incentive—and good commercial reasons—to try to create a monopoly, albeit a small one in terms of the commercial market. That is the only way to secure the proper reward by price against the investment that has been put in. Of course, the market and consumers are always anxious for that not to happen. A prime example is the ready-mixed concrete industry, with which I am very familiar. There might be three ready-mixed concrete plants in towns in England, Wales, Scotland or Northern Ireland, each desperately trying to occupy the five-mile radius—much further, and the stuff would set in the back of lorry—and create some form of commanding market presence to justify itself. I am talking about radial monopolies. There was an incentive, at times—wholly to be condemned—to carve up the market. There have been court cases demonstrating that. This proposal is a way of derogating from the application of the recently introduced statutory requirements on competition, which I fully support—we shall wait to see how they work out in practice, having so recently been implemented. This is lineal monopoly behaviour. If we combine radial and lineal monopolies, this is a first in terms of the way in which competition and marketplace domination are defined. As I said, I welcome the Government's approach to quality partnerships, contracts and the need to address through routes and ticketing so that we can provide for all our constituents a proper public service recognition, while at the same time encouraging the investment that follows a proper commercial base for bus services. I was concerned, however, when the Minister referred to a special competition regime that can be used by local authorities. Would that one day extend to taxi services? Given the way in which the Post Office has harnessed some of the quasi-bus services, to what extent does that potential derogation apply? It is important to have that clarified. There is an element of wanting to have it both ways. The Government talk about joined-up government, but they are conscious that what the Department of Trade and Industry is producing is not quite so joined-up, as far as the Bill is concerned, as they might like. Directors face enormous difficulties and anxieties if they are accused of anti-competitive behaviour under increasingly rigorous statutory requirements. I fully understand the derogation that is sought, and the way in which the Government want to test it through the new schedule. However, I am not reassured, given where such provisions might lead in other areas of commercial activity, and I look to the Minister for reassurance. There is a special public interest provision in the new schedule. Many areas, as well as buses and trains, might be considered a special public interest. For instance, if the Ministry of Defence commissioned a new structure for its service, that would clearly be in the public interest. When it comes to the ready-mixed concrete to be supplied, under this potential precedent, would the Competition Act 1998, implemented on 1 March this year, be prayed in aid in order to seek a derogation? Of course, I am postulating. This is hypothetical. It is none the less important, not least because I do not claim to be an expert in this field, other than through experience. However, we all know that an army of lawyers is out there, ready to charge horrendous fees for giving advice. That is a major cost on businesses, which feeds through to the consumer. Therefore, we have an interest in seeking to bring forward relevant and appropriate legislation. My concern is that this provision—even though it is well intentioned—could be prayed in aid and used as a precedent in relation to unforeseen activities in other commercial marketplaces. I worry that it would undermine the 1998 Act and measures introduced by another Department.

Peter Snape (Labour, West Bromwich East)

I declare an interest: I am the chairman of a bus company—Travel West Midlands, part of the National Express group. The hon. Member for Eddisbury (Mr. O'Brien) must forgive me for not following him down the interesting path that he took. The Standing Committee might have benefited from his expertise; our proceedings would have been considerably enlivened by a debate on the difference between a radial and a linear monopoly. The hon. Member for Bath (Mr. Foster) and I would have immediately bowed out of that discussion on the grounds of lack of technical knowledge. However, the hon. Member for Eddisbury made a relevant point on a matter that gave rise to much debate in Committee—as the hon. Member for Bath pointed out. The fundamental problem is that competition and integration do not make easy bedfellows. Although we all applaud the Government's intention of trying to integrate transport services in general and bus services in particular, it would be all too easy—as the hon. Member for Eddisbury reminds us—for that intention to fall foul of the Competition Act 1998. That point deserves the attention of my hon. Friend the Under-Secretary of State for the Environment, Transport and the Regions, and I know that he will approach it with his customary courtesy and diligence. We need to know exactly where bus companies and local authorities stand vis-a-vis the 1998 Act, if we are to achieve the genuine integration that the Government want. I suspect that the Conservatives are quite relaxed about that matter these days. The hon. Member for Poole (Mr. Syms), who spoke for the Opposition, was certainly extremely relaxed on the matter in Committee—as he was this evening. When we discussed in Committee co-operation between local authorities and bus companies, I pointed out that we all want such voluntary agreements to be established and to work. The bus industry as a whole did not want fares and frequencies—for example—to become part of any statutory partnership. The industry feels that such fundamental matters, which have a direct, bottom-line impact, are best decided by the companies, although they—especially my own company—would seek agreement with the relevant local authority. However, we need some reassurance that, having sought such agreement, we should not be hauled off to the authorities under the Competition Act. As the hon. Member for Eddisbury reminds us, the penalties faced by directors are—rightly—somewhat draconian. I declare another interest: I have no particular desire to be dragged off and arraigned if we came to a voluntary agreement with the local authorities and it fell foul of the Act. The question is relevant and well worth debate. Furthermore, if my hon. Friend the Under-Secretary can answer that other question—on the difference between a linear and a radial monopoly—the House will be grateful to him. If we had held such a debate in Committee, not only might our deliberations have been enlivened, but our knowledge of such matters would have been considerably enhanced by the guidance of the hon. Member for Eddisbury on what is, I am sure, an enormously important difference—albeit one that I have never heard put to the test. From my long experience of working with my hon. Friend, I know that he is extraordinarily well educated, so he is in a better position than any other Member here to answer that vital question.

Peter Luff (Conservative, Mid Worcestershire)

I have no interest to declare except to say that, for three happy years from 1982 to 1985, I advised the Confederation of British Road Passenger Transport, which subsequently became known as the Bus and Coach Council. At that time, we agonised about many of the issues that have been debated tonight. I shall speak to new schedule 1 and amendment No. 306. I listened carefully to the Minister's remarks, but I did not hear him address amendment No. 306. If he did and I missed it, I apologise to him. The amendment inevitably caught my eye because it would amend section 63(7) of the Transport Act 1985 by replacing the words from "so to conduct" to the end of the subsection with the words to have regard to a combination of economy, efficiency and effectiveness. I thought that our whole political lives were designed to have regard to a combination of economy, efficiency and effectiveness so the amendment is motherhood and apple pie written into statute law. I can think of many clichés with which one would wish to amend Acts of Parliament. Will the Minister explain exactly what the amendment will do? It looks splendid, impossible to argue with—and therefore, I am afraid, profoundly suspicious. My hon. Friend the Member for Poole (Mr. Syms) was charitable to the Government about new schedule 1. It is longer than many Acts of Parliament; it is a huge provision that contains many fascinating and surprising ideas. They are not necessarily wrong, but they are surprising. Paragraph 16(1) of the new schedule states: The Director may charge fees in connection with the exercise by him of any of his functions under this Schedule. What are those fees and how much will they involve? My hon. Friend's points were germane. What consultation has taken place? Why does paragraph 15 give the Director General of Fair Trading such an absolute defence on defamation? That provision appears to be very generous. Why does paragraph 9 exempt information made for the purpose of facilitating the performance of any function of the European Commission in respect of Community law about competition? That is extraordinary enough, but why does paragraph 4 need to spell it out. It says: In determining an application made under paragraph 3, the Director must take into account any representations made to him about the application. I thought that he would always take into account such representations. It is a long and complex new schedule.

Peter Atkinson (Conservative, Hexham)

Has my hon. Friend seen paragraph 13 of the new schedule, which gives the director general the extraordinary power to take an authority that fails to comply with his orders "without reasonable excuse"—whatever that may mean—to the High Court? Presumably, if the authority fails to appear, it could be in contempt of the High Court. That is draconian at the very least.

Peter Luff (Conservative, Mid Worcestershire)

I agree strongly with my hon. Friend. The new schedule may meet with the approval of the industry, local authorities and all those involved, but it is an exceptionally long schedule to put into an exceptionally long Bill at this late stage. The Minister will need to reassure us that the consultations that I hope he has had with those who will be affected by the new schedule have produced a favourable result.

Keith Hill (Labour, Streatham)

I take it that there are no more bidders in the debate. I express my gratitude to the hon. Member for Poole (Mr. Syms) for his warm welcome for new clause 14 and to the official spokesman for the Liberal Democrats, the hon. Member for Bath (Mr. Foster), for what was, I suspect, his slightly less warm welcome. All the offers made were appreciated. The hon. Member for Poole asked two questions. First, he asked about consultation with bus operators and local authorities. The new clause and the amendments will do what we said in Committee that they would do. It goes without saying that we keep in touch with the bus industry and local government. I was careful to explain our intentions at some length in Committee, so that the industry and local authorities could make representations if they so wished. We have certainly explained our intentions to the bus industry. The hon. Gentleman also pressed me on the issue of fees for applications for decisions on the new competition test. Paragraph 16 of the new schedule gives the director general a power to charge fees in connection with the exercise of any of his new powers. That would include, for example, a fee for an application made to him under paragraph 3 of the schedule about whether the new competition test was met in any given case. The schedule contains no special procedure for setting fees. Any fees charged will be at the director general's discretion, and it will be open to him to choose not to set a fee in particular cases if he considers it appropriate. I turn now to the remarks of the hon. Member for Mid-Worcestershire (Mr. Luff). I nearly called him the hon. Member for Wyre Piddle because of his proper obsession with that place—I shall return to the issue of obsessions later. He also referred to fees set by the director general. I imagine that they would be set at a level that takes into account the resources involved in determining a particular case. He made one or two suggestions and complained about the length of the new schedule. We have tried to make it as comprehensive as possible, and we are being damned for its length, but I dare say that if it had been short, we would have been damned for its brevity. I shall, in due course, return to other points made by the hon. Gentleman. The hon. Member for Bath raised the status of fare and frequency arrangements that are not included in the quality partnerships. In Committee, we took to describing those arrangements as non-statutory codicils to quality partnerships. This point was also raised by my hon. Friend, and guru, the Member for West Bromwich, East (Mr. Snape). The hon. Member for Bath is correct: the new schedule does not apply to non-statutory agreements. The position is as I have stated it before, but I know that the Office of Fair Trading is always willing to talk constructively to anybody who wants to put proposals to it. It is not for me to speculate on particular cases. I fear that the hon. Gentleman also mentioned quality partnership arrangements in connection with tour buses. I thought that we would be lucky if we got through the proceedings without a reference to tour buses or Eurocontrol. We have heard enough of both, particularly the latter, this evening. I say to the hon. Gentleman and his local authority of Bath and North East Somerset that we should remember that many non-statutory quality partnerships have already been successfully established, and the OFT has not objected. The track record is by no means completely unhappy. If Bath and North East Somerset council is in doubt, I offer it the advice, via the hon. Gentleman, that the OFT is always ready to talk.

Don Foster (Liberal Democrat, Bath)

The Minister is being helpful, but the point is that in new schedule 1 the Government argue that it must be demonstrated that non-statutory partnerships would secure benefits to the service users, and reduce or limit congestion and noise or air pollution. If similar benefits accrue from a non-statutory quality partnership, does the Minister expect that the OFT will be likely to approve such an arrangement?

Keith Hill (Labour, Streatham)

I understand the thrust of the hon. Gentleman's point, but I have to tell him that it is not appropriate for me to speculate at the Dispatch Box on a matter of that nature. It is a sensitive matter and Ministers have to be wary; it is certainly not a subject that I intend to explore, especially at this late stage in our proceedings. The hon. Member for Eddisbury, who is indeed a most prolific correspondent on behalf of his constituents, warned of the dangers and temptations of monopolies, both linear and radial. As he acknowledged, the new clause is designed to enable us to strike a delicate balance between best value in transport provision and competition requirements. Again, it is not for me to speculate about the extent to which these provisions might act as a precedent for other arrangements. At one point, he spoke about the Ministry of Defence and about poured concrete—a subject of which I confess complete ignorance. The hon. Gentleman asked whether the special competition regime would apply to taxi services. The short answer is no; the new clause is solely about buses. The slightly longer answer is that in certain circumstances, a taxi can run as a bus service; however, I shall spare the hon. Gentleman an exposition of taxi law—a subject of immense complexity with which I have to wrestle constantly. The amendment is deliberately designed to address bus issues alone, and I make no apology for its exclusivity, even in respect of ready-mixed concrete. I do not accept that the proposals pose any threat to the Competition Act 1998. My hon. Friend the Member for West Bromwich, East raised the question of agreements between companies. As I have said, the most important thing is to consult the OFT. The key issue is the consumer: in consumers' interests, the OFT—indeed, all of us—should be wary of cosy deals between operators, which might be to their advantage and not to that of passengers. I am sure that my hon. Friend would not countenance such deals, but we must not forget the possibility of their arising and we must always remember that the consumer has priority.

Peter Snape (Labour, West Bromwich East)

Will my hon. Friend not utter a word of encouragement? I understand the dilemma in which he finds himself: on the one hand, the Government want to encourage local authorities and bus operators to come to voluntary agreements; on the other hand, he appears to want to wash his hands of the consequences of such agreements. However, what about saying to the OFT that such agreements should be encouraged, if they are in the interests of the consumer? If no such action is taken, bus companies are likely not to bother with such agreements, lest they become mired in difficulties.

Keith Hill (Labour, Streatham)

It is not unreasonable to suggest that the bus companies might take an initiative in the matter. Having said that, I am sure that those in the OFT will read very carefully my hon. Friend's remarks in Hansard and reflect on them.

Don Foster (Liberal Democrat, Bath)

The hon. Member for West Bromwich, East (Mr. Snape) has got the Minister on the ropes. The Minister must respond to him. It cannot be right for the Minister to ask the House to support him, please, in the amendments that get round the Competition Act because, by referring to statutory quality partnerships and quality contracts, they will ensure benefits for service users and will limit congestion, noise or air pollution, yet when people want to do so on a voluntary, non-statutory basis, for him to say, "It's nothing to do with me, Guy. That is dangerous territory; I shouldn't enter into it." Why should he not enter such territory?

Keith Hill (Labour, Streatham)

I am reminded of my oft-quoted remark that there is nothing more deadly than the friendly intervention. I shall not be tempted along that path. We should not forget that the Competition Act has a public interest provision—if I can call it that—albeit in more general, less tailor-made terms than the proposed new schedule. Section 9 is an example.

Bernard Jenkin (Conservative, North Essex)

Will the Minister give way?

Keith Hill (Labour, Streatham)

Aha—the hon. Gentleman, who is not notorious for his interest in bus matters, obviously spots a potential vulnerability and leaps to his feet.

Bernard Jenkin (Conservative, North Essex)

I am most interested in these bus matters. I just wanted to inquire, on an entirely friendly basis, how happy the Minister's colleagues at the Department of Trade and Industry are with the proposed arrangements.

Keith Hill (Labour, Streatham)

That is an easy one. I am most grateful to the hon. Gentleman for a genuinely friendly intervention. I assure him that these novel and important provisions have been drawn up in complete consultation and collaboration with the DTI, which is entirely happy with them. I hasten on to deal with the points raised by the hon. Member for Mid-Worcestershire. He talked about special provisions in what he complained was a long and complex new schedule, but the powers in the new schedule are less dramatic than they seem. It is a matter simply of getting the procedures right; they have precedents. The OFT needs fall-back powers in the event of people obstructing it, but we very much doubt whether they will be needed. We hope that they will not, but it is right for legislation to cover a wide range of circumstances. There is protection, for example, for commercially sensitive information in paragraphs (8) and (9). The hon. Member for Mid-Worcestershire referred to amendment No. 306. Although I mentioned it in my opening remarks, I can imagine that the general interest in my speech was so intense that he did not entirely pick up my comments. Amendments Nos. 305 and 306 ensure consistency with clause 131(2). Amendment No. 306 introduces the best value test of economy, efficiency and effectiveness, which reads across to the generality of local government legislation. It offers alternative wording to the phrase "not to inhibit competition" in the Transport Act 1985, which is felt to be less helpful than the new formulation. It essentially links current thinking about the criteria that ought to be adopted by local authorities in their policies. With that very comprehensive response to the debate, I commend the new clause to the House

POWER TO OBTAIN INFORMATION ABOUT LOCAL SERVICES

Keith Hill (Labour, Streatham)

I beg to move, That the clause be read a Second time. The new clause was tabled in response to a matter that we discussed in Committee on 17 February on a Liberal Democrat amendment aimed at allowing access by local authorities to reasonable statistical information held by bus operators. We expressed sympathy with the aims of the amendment and undertook to introduce a suitably worded new clause, which I am happy to do. The new clause should meet all the points raised in Committee. It will give a local transport authority, in the exercise of any of its public transport functions, power to require bus operators to supply information that they hold. The information may relate to passenger journeys, bus mileage and fare structures in respect of journeys throughout the area or part of the area. It may be requested in any form, subject to a test of reasonableness, and it may not be disclosed, other than with consent or in connection with civil or criminal proceedings, contravention being subject to a fine of up to level 5 on the standard scale. I hope that the House will agree that the new clause is a welcome improvement to the Bill. It will ensure that authorities, in support of their functions relating to local transport plans and bus strategies, but also more generally—for example, in the context of reporting on bus services under the local government best value regime—have access to appropriate statistical information held by bus operators. It will also safeguard matters of commercial confidentiality.

Michael Moore (Liberal Democrat, Tweeddale, Ettrick and Lauderdale)

I do not think that any of us had expected to reach the new clause, but after the Minister has so generously responded to serious concerns raised by Liberal Democrats in Committee, it would be churlish of us not to acknowledge the major steps forward that he has taken. The habit of the Committee was for members to write home to their mother or wife on the occasion of such a minor triumph. We have had the pen ready and the postage stamp prepared, and we will send that letter off tonight.

VARIATIONS: SUPPLEMENTARY

PLANS AND STRATEGIES: SUPPLEMENTARY

FURTHER PROVISION ABOUT PLANS

BUS STRATEGIES

CONSULTATION AND PUBLICITY ABOUT BUS STRATEGIES

ROLE OF METROPOLITAN DISTRICT COUNCILS

QUALITY PARTNERSHIP SCHEMES

NOTICE AND CONSULTATION REQUIREMENTS

EFFECT OF SCHEME

VARIATION OR REVOCATION OF SCHEME

QUALITY CONTRACTS SCHEMES

NOTICE AND CONSULTATION REQUIREMENTS

APPROVAL OF PROPOSED SCHEME

MAKING OF A SCHEME

TENDERING FOR QUALITY CONTRACTS

VARIATION OR REVOCATION OF SCHEME

JOINT AND THROUGH TICKETING SCHEMES FOR BUSES

NOTICE AND CONSULTATION REQUIREMENTS

MAKING OF SCHEME

INFORMATION ABOUT BUS SERVICES

MANDATORY CONCESSIONS OUTSIDE GREATER LONDON

Bernard Jenkin (Conservative, North Essex)

I beg to move amendment No. 300, in page 72, line 33, at end insert— 'or that he will receive discretionary travel concessions which are at least equivalent to the concessions provided for under subsection (1).'.

Bernard Jenkin (Conservative, North Essex)

At this late hour, I shall explain the purpose of amendment No. 300, which amends clause 124(3). The clause contains the necessary technical definitions and regulation-making powers so that the price of the bus pass can be altered in a concessionary fares scheme. Subsection (3) states: A person may agree with the travel concession authority that he is not entitled to be provided with concessions under subsection (1) for a period in return for being entitled during that period to receive travel concessions under a scheme under section 93 of the Transport Act 1985. I confess that I have not made a detailed study of section 93 of the Transport Act 1985, but the amendment would add to the end of clause 124 the words, or that he will receive discretionary travel concessions which are at least equivalent to the concessions provided for under subsection (1). 12 midnight The amendment's importance is immediately apparent. When a person benefits from a non-statutory concessionary travel scheme, the local authority should be released from its obligation to provide that person with statutory concessions under the Bill. Groups of local transport authorities that offer non-statutory concessionary travel schemes, should not need to offer a statutory discretionary fare scheme under the Bill. I hope that the Minister realises that several transport authorities have made representations on the matter. I hope that he will accept the amendment or undertake to accept a similar amendment at a later stage.

Michael Moore (Liberal Democrat, Tweeddale, Ettrick and Lauderdale)

As the hon. Member for North Essex (Mr. Jenkin) said, the hour is late and the fluidity of our discussions is not what it might be, not least since our earlier exchange of acronyms. Amendment No. 146 strikes at the heart of major discrimination in the Bill on concessionary fare schemes. My hon. Friend the Member for Bath (Mr. Foster) believes that it would be unwise for him to speak about the amendment because he might have to declare an interest: under our proposal, he would qualify for a concessionary bus pass in 2007; under the Government's provisions, he would have to wait until 2012. As we get closer to 2007, the matter worries him greatly.

Nick Raynsford (Labour, Greenwich and Woolwich)

When will the hon. Gentleman qualify?

Michael Moore (Liberal Democrat, Tweeddale, Ettrick and Lauderdale)

In my case, it does not matter which scheme is implemented. If I am spared, it will be a wee while before I qualify. [Interruption.] I am glad that my hon. Friend the Member for Bath has rejoined us to hear us fight the case for an earlier bus pass for him. In Committee, the Minister did not tackle the fundamental point and identify the reason for the discrimination. He hid behind the fact that pensions legislation refers to equalisation by 2020. That is a long time to wait, and many organisations, including Parity, Age Concern and the National Federation of Post Office and British Telecom Pensioners, fail to understand the reasons for the discrimination. The European courts, especially in the Atkins case, have failed to back the proposal that the amendment presents and have supported the Government's position. However, in case the Minister is tempted to hide behind that defence again, the Government won the case because the issue was further confused by others, not least young people, who were entitled to concessionary fares. In Committee, the hon. Member for West Bromwich, East (Mr. Snape) tried to clarify the cost of the amendment. He is a diligent Member and he contributed greatly to those proceedings. In his own way, he hoped to back the broad principle that we support and said: I do not look forward to being issued with a bus pass, but it will at least qualify me as a pensioner to sit in the pub, twang my braces, bemoan the fate of modern society and comment on every subject under the sun.—[Official Report, Standing Committee E, 29 February 2000; c. 811.] We all denied that he was up to that already. Our amendment has broad cross-party support so we hope that the Minister has changed his mind in the weeks that he has had to consider it and sees fit to support us.

Peter Snape (Labour, West Bromwich East)

I hope to follow the hon. Member for Tweeddale, Ettrick and Lauderdale (Mr. Moore) without repeating anything that I said in Committee, except that asked the Liberal party how much the proposal would cost. Answer came there none, and answer came there none tonight. I hate to inject a controversial note, but I voted against it, as did my hon. Friends, on the ground that it represented a dash of cheap populism—not that that is common, of course.

The rest of the debate is in Hansard.