CAB 01 Written evidence from the Department for Transport (CAB 01) This is to let you know that I am publishing my draft Civil Aviation Bill today. We spoke about this when we met on 1 November, and our officials have since met to discuss how the Transport Committee can best contribute to the Bill's development given that the timetable has been accelerated. I am grateful to your officials for the work they have put in alongside my officials to deliver Pre‐Legislative Scrutiny. The proposals are designed to modernise key elements of the regulatory framework for civil aviation in the UK, to enable the sector to make a full contribution to economic growth without compromising high standards. This draft Bill offers a package of reforms to make both regulation and the sanctions which support it flexible, proportionate, targeted and effective. It proposes removing unnecessary regulation and unnecessary intervention by central government. It devolves more responsibility to the independent specialist regulator, the Civil Aviation Authority (CAA), while ensuring that the CAA is accountable and weighs the costs and benefits of its decisions. The draft Bill proposes that certain costs of regulating aviation should be moved from general taxation to the aviation industry. Above all the draft Bill puts the consumer first. In the economic regulation of airports with substantial market power the CAA's primary duty will be to consumers; that is passengers and owners of cargo now and in the future. In addition the Bill gives the CAA a role in promoting better public information about airline and airport performance and about the environmental effects of aviation and measures taken to mitigate adverse effects. The Government wants to see a successful and competitive aviation industry, We are taking forward the work of the South East Airports Taskforce to improve our major airports within the constraints of existing runways. In the longer term, we have committed to producing a sustainable framework for UK aviation by 2013 which supports economic growth and addresses aviation's environmental impacts. The draft Bill complements these policies. It is in three parts: • reforming the framework for airport economic regulation, following my predecessor's statements to the House on 3 March 2011 and 21 July 2010. • modernising the framework and functions of the aviation regulator, the CAA. Some of these measures stem from the independent strategic review of the CM by Sir Joseph Pilling in 2008 and a consultation launched by the previous Government in 2009. • transferring certain operational aviation security functions to the CAA as part of wider work to improve aviation security regulation and deliver savings to general taxation. This proposal, mentioned in the July 2011 consultation document "Better Regulation for Aviation Security", would create a single regulator for aviation safety and security, funded by the industry. The Secretary of State would remain responsible for aviation security policy and issuing aviation security Directions to the industry. CAB 01 As you know, the Government had previously announced that legislation to implement airport economic regulation reforms would be introduced early in the next Parliamentary session. An opportunity has now arisen to introduce a Civil Aviation Bill into Parliament near the beginning of 2012. This would help ensure that the CM does not have to set airport price controls for the 5‐year period 2014‐2019 under the existing system. I therefore intend to take up this opportunity. It is possible that the scope of the Bill may be extended before it is introduced. One area which could be included is the reform of the Air Travel Organisers' Licence (ATOL), following the recently finished consultation on measures to protect consumers better in the 21st century holiday market and help create a more level regulatory playing field for businesses. I know that the Committee will wish to take a close interest in the draft Bill and my Department stands ready to assist in that process. November 2011 CAB 02 Written evidence from the Trade Union Side (CAB 02) 1. I am writing to you on behalf of the unions that have members working in DfT aviation security. Summary Of Our Views 2. We limit our comments to those parts of the bill that propose a transfer of aviation security functions to the CAA whilst the Secretary of State remains responsible for aviation security policy. 3. We believe that this proposed transfer is misguided. 4. In reality the government is proposing that the industry pay for security regulations and compliance. The transfer of functions to the CAA is just a consequence of that decision to “tax” the industry. 5. We think that the precautionary principle should apply and that unless a compelling case can be made for the proposed changes then aviation security functions should remain with DfT. 6. We think that the proposed division of labour between the CAA and DfT is a recipe for confusion and added complexity. It also runs the risk that matters will fall between the CAA and DfT stools. The Real Reason For The Proposed Changes 7. The principal driver for the proposed transfer is the supposed cost savings that could be made. In the policy paper accompanying the draft bill, at 2.54, it claims: The transfer of aviation security regulation functions is expected to deliver general taxation savings estimated at £24.6m in present value terms over ten years. This cost, if transferred to the passenger, would equate to approximately £0.02 per passenger movement per year, based on the 211 million passengers who moved through UK airports in 2010. 8. Whilst the impact appears to be minimal, it is still not clear how the charging regime will be fairly spread across all aviation entities to properly reflect the level of compliance activity undertaken. At present, the compliance monitoring is not restricted to airports and airlines, there is also a significant regime to look at regulated air cargo agents and suppliers of in‐flight catering. 9. In the Impact Assessment associated with the draft bill, it states on page 1: “Reduce the costs to the taxpayer in line with SR commitments by introducing the user pays principle”. And on page 2 of the assessment: “The benefits relate to savings to the taxpayer from no longer funding the aviation security regulation and compliance functions, which are currently provided free to airports and airlines”. 10. In other words there are no efficiencies which “could be gained through having a single regulator for all UK civil aviation specific responsibilities (2.53 of the policy paper)”. The savings claimed are because costs for security regulations and compliance are to be put onto the industry. CAB 02 11. As the CAA already levy charges on the industry, the “security tax” can just be added on. It is for that accountancy reason that security functions are being transferred to the CAA. 12. Therefore we think that the real discussion is whether the industry should in essence be “taxed” for being security checked. 13. Now we don’t believe that the “user pays principle” is applicable to security compliance any more than it would be for law enforcement. 14. That said, if the Committee did believe this principle applied we do not understand why its application necessitates a transfer of security functions to the CAA. If the industry has to be “taxed” then DfT could levy charges just as readily as CAA. If It Ain't Broke, Don't Fix It. 15. Since Lockerbie, the current aviation security arrangements have prevented further outrages. Consequently to consider moving away from a tried and tested system that works, to an untested one, there has be compelling evidence/reasons to show that the proposed new arrangements would be as safe, if not safer, than the existing ones. 16. Unfortunately no such evidence/reasons have been given. No safety case has been made for the changes: that of course is because the real reason for the changes relates to money, as we mention above. 17. Security is too important to be so casually treated. Added Complexity 18. This is a variant of the “If It Ain't Broke, Don't Fix It” argument made above. The current system works and is well understood by the industry. 19. Now it is proposed that the CAA will be the single regulator for all UK civil aviation specific responsibilities. In reality this will not be true as the Secretary of State remains responsible for aviation security policy. The Secretary of State cannot hope to believe that hiving off compliance to the CAA will some how insulate DfT from getting involved in compliance matters. Experience has shown (e.g. UKBA compliance with entry checks and Teresa May) that in the real world the division between policy and compliance is not a clean divide; the one impacts on the other. 20. We think that the proposed division of labour between the CAA and DfT is a recipe for confusion and added complexity. There is a real danger that the added complexity that will be introduced by separating the regulation and compliance teams from the policy makers in DfT will lead to a reduced level of compliance within industry and could result in aviation being put under increased risk from a terrorist attack. It also runs the risk that matters will fall between the CAA and DfT stools. Furthermore, the policy makers would be further removed from the industry that they are regulating and there is an increased risk of policy being created without a proper understanding of the effect for the aviation industry and passengers. Oral Evidence CAB 02 21. Whilst we accept the bulk of the draft bill is concerned with non aviation security matters we do think that the transfer of security functions to the CAA is a major issue.