Sandra Osborne

Labour Party | Ayr, Carrick & Cumnock

Air Traffic Control

Save our skies

Someone once wrote "Campaign in poetry, govern in prose.' Labour in opposition opposed the privatisation of Air Traffic Control with the campaign 'Save our Skies- Don't Privatise!" Why does Labour in government then intend to place 51% of NATS with the private sector?

Before the General Election, the then Shadow Chancellor, Gordon Brown announced that privatisation of National Air Traffic Services (NATS) could not be ruled out. This was in direct response to the black hole in the government's Red Book which would appear without the receipts from theprivatisation of NATS already pencilled in by the Conservative Government.

This may not be relevant now over 18 months on, but the government's proposed Public/Private Partnership (PPP) is in part to raise the receiptwhich can then be invested in other transport needs. It is this preferred option of a PPP which is now subject to public consultation until January31 1999.

Lack of progress

An important backdrop to this whole issue is the history of the new en-route centre commissioned at Swanwick in Hampshire. The timescale for this washopelessly optimistic from the start and right up to January 1997 we had the then Chief Executive of NATS assuring the Transport Select Committee thatSwanwick would be operational by March 1998 - it could now be 2002.

The Select Committee recently concluded that the apparent complacency of the Conservative Government on the lack of progress at Swanwick over a number of years is 'astonishing' They even went so far as to say that considerationshould be given to scrapping the software system at NERC (Swanwick) and starting over again.

However, the Swanwick nightmare could be coming to an end now that the government-commissioned DERA audit has reached completion. As the MP for Ayr my first priority is to ensure that the New Scottish Centre at Prestwick goes ahead as part of the two centre strategy.

The last government excelled at time wasting and loss of initiative as it reviewed the two centre strategy; turned a blind eye to the reality of the Swanwick delays and attempted a series of failed stabs at privatisation. No wonder there is a residue of public scepticism that the New Scottish Centre will go ahead under the proposed PPP.

Unwavering commitment

However, the government's commitment to the Prestwick Centre has been unwavering. The Prime Minister himself, in answering my direct question to him in Parliament reaffirmed that " contract negotiations for a new air traffic control centre at Prestwick to replace the existing centre are underway between NATS and Sky Solutions, the preferred bidder".

The Prestwick contract has now been to both NATS and the Civil Aviation Authority Boards and is now back with the government for the final go ahead to being signed. One result of the ongoing delay to the New Scottish Centre is that the original costs have spiralled leading to the airlines questioning their costs.

NATS were never happy with the PFI whichthey saw as an expensive option but they had to take the whole package presented by the preferred bidder. And the new government went along with itas negotiations were so far advanced. However there is an opportunity to change from PFI further down the line if this is required. All this makes itall the more urgent that the contract is signed as soon as possible.

Safety in the skies

Another strand to the NATS argument is the issue of safety through the pressure of increasing traffic levels. The matter has been taken up by thetransport select committee and NATS have givenassurances that if demands exceed the present capacity of the system this would result in increased delays not compromised safety standards.

The Unions (PCS and IPMS) agreed that there were no immediate safety concerns but stressed the mounting pressure on Air Traffic Controllers coping with increased traffic on outmoded equipment. However, less optimistic views on safety have been expressed informally to members of the select committee by Air Traffic Controllers.

These are all crucial strands to achieving the main objective which is to provide a safe, high quality air traffic service. The public sector including NATS has suffered a severe curtailment of funds for investment over recent years under the previous government.

Investment required

There is no dispute whatsoever that NATS urgently requires investment of £100 million per annum over the next decade if it is to maintain and improve service quality. At present government does not allow publicly owned companies to borrowcommercially as this would be underwritten by the taxpayer. The mechanism for control is the Public Sector Borrowing Requirement (PSBR) This is thereason why the Prestwick Centre, for instance, is to be financed under the Private Finance Initiative (PFI) a preferred means of securing project finance.

The previous government made five abortive attempts to sell the privatisation option. They failed against a background of widespread opposition on such grounds as air safety; threat to jobs and conditions; delays and absence of precedents elsewhere. The proposed PPP has the samequestions to answer. It can only increase profit for shareholders by reducing running costs since charges are governed by commercial contractsand international agreements well into the future - and the obvious way to achieve this would be by increasing throughput of traffic with fewer staff.

Labour stood on a manifesto to prioritise resources for hospitals and schools. The outcome of the Comprehensive Spending Review has reflected that and it is therefore undeniable that the Transport Team would welcome the receipt from NATS to enhance their stretched Roads Budget. But the long term future funding of NATS should not be decided on the basis of the government making a short term gain for roads.

Borrowing to invest

We need to put NATS indisputable funding needs into perspective. The present system works on the basis of the Treasury lending money to NATS for investment and NATS recouping it at a profit from the airlines (borrowing to invest according to Gordon Brown's 'Golden Rule').

But the government has an inconsistent and narrow view of the operation of the PSBR, and. in the case of NATS, there is no reason why they could not borrow outside of it. In June 1998,for example, the government announced a £3bn rescue package to a private company to underwrite the Channel Tunnel Rail Link which will not count against the PSBR.

The Transport Select Committee urged consideration of other options already used in other countries as alternatives to PPP. Why has this not been done and why are they not part of the consultation?

The other options include:

• Various Trust models: Nav Canada is a good example of a 'non share capital corporation' which owns, manages, operates, maintains and develops the system financed by debt raised from a syndicate of banks.
• Corporatised models: These are the favoured models elsewhere including Germany, Netherlands and New Zealand. These are government owned and operate as if in the private sector but with 'a sense of social responsibility' (New Zealand model) although they would require a change in the PSBR rules and would be seen as a precedent by other parts of the public sector.
• Chartered Independent Publicly Owned Company (IPOC): The Charter is the means by which the strategic direction of the company is determined. The Government is not the only 'stakeholder' - in the case of NATS these could include the CAA, ATC customers, Ministry of Defence, DETR, the unions - and would involve the charter being renewed periodically through negotiation. There would be no privatisation receipt but borrowing would be outwith the government's PSBR rules.

The government has made it clear that safety will be paramount in any decision about the future of air traffic services. Major concerns have been raised about the current arrangements whereby the CAA is responsible for both the provision of air traffic services through NATS and for regulating the safety of these services. The government is committed to ensuring that air safety regulation is conducted independently of NATS but that does not depend on any one model and could be achieved even within the status quo.

Supporting jobs

There is no doubt that the future of Air Traffic Services requires serious consideration of the available options.

My first priority as the MP for Ayr is to ensure that the Scottish Centre goes ahead. It is not only crucial to the future of Air Traffic Services, it is also vital for the future of the Ayrshire economy. At present Prestwick employs 650 people -due to rise by another 200 with the Scottish Centre.

Prestwick also supports many more related jobs and generates approximately £27 million a year for the local economy.*

Labour's manifesto said, "we will ensure that self financing commercial organisations within the public sector are given greater commercial freedomto make the most of new opportunities" The government has ensured continued public confidence in the Post Office by standing firm on this manifesto commitment, keeping the Post Office in the public sector while granting it the greater commercial freedom it needs. What they are doing for the Post Office could also be achieved for NATS.

* The Government accepted Sandra's amendment to the Transport Bill writing the new Scottish Centre into the legislation.