Lord Hendy of Richmond Hill (Lab)

I thank your Lordships for the debate on this group regarding economic impacts and competition, and I thank the noble Lord, Lord Harper, in particular for his amendments. I turn first to his amendment on the impact of business rates revaluation. At the Budget, the Valuation Office Agency announced updated property values from the 2026 revaluation. This revaluation is the first since the pandemic to result in significant increases in rateable value for some property, which includes some airports. The Government recognise the impact that these changes can have. We have considered this carefully and have put in place measures to ensure that the effects are manageable. We are delivering a support package worth £4.3 billion over the next three years, including a £3.2 billion transitional relief scheme. That provides more generous support to the largest ratepayers, including airports. It caps increases in airport bills arising from revaluations to just over double by 2028-29, before any supplements and reliefs are applied, preventing the much larger increases they otherwise would have seen. The Government believe these arrangements strike the right balance, reflecting updated property values while ensuring a smooth and manageable adjustment for airports. Looking ahead, however, the Government recognise that businesses with decades-long capital cycles need stability and predictability to deliver capital investment plans. To provide this, the Government published a call for evidence around the receipts and expenditure valuation methodology and its impacts on long-term, high-value investments. This will allow the Government to work constructively with airports and other ratepayers ahead of the 2029 revaluation. I should also note that if an airport, or indeed any business, disagrees with their business rates valuation, they may challenge it with the Valuation Office Agency and, if that fails to produce a satisfactory outcome, the affected party may escalate the case to the independent Valuation Tribunal. As a result, I hope the noble Lord feels able to withdraw this amendment. I turn to Amendment 116. The Government agree that effective competition, where it can be delivered, plays an important role in improving outcomes for passengers, airlines and the wider sector. The CAA already has a clear statutory role in economic regulation and a duty to further the interests of air passengers, both of which it actively applies. The Civil Aviation Act 2012 provides a well-established framework designed to give the Civil Aviation Authority clear focus on furthering the interests of passengers. The framework ensures that competition is properly considered as a means of furthering those interests, while allowing the regulator to take a balanced and proportionate approach in markets where competition may not always be effective. It is important that the CAA continues to have discretion in how it regulates airports, including by balancing the promotion of competition with other ways to further the interests of consumers where those are more appropriate. Although the CAA’s competition remit is targeted, the Competition and Markets Authority is able to intervene when wider competition issues arise. We recognise that there are arguments for looking more broadly at the CAA’s role in relation to competition, but so far we have seen no evidence that the current framework is not working effectively, although we will continue to keep it under review. If we consider it necessary, we will, indeed, as the noble Lord, Lord Harper, suggested, add competition to the next letter to the Civil Aviation Authority chair. Changes in this space could have wide-ranging implications for investment, passenger costs and regulatory independence, so it is important that those impacts are fully considered before any changes are made. Amendment 116 does not address those broader questions, and it risks cutting across a more considered approach. The proposed reporting requirement is unlikely to add significant value, given the CAA’s existing transparency and reporting obligations. For those reasons, I hope the noble Lord feels able not to press his amendment. Finally, Amendment 117 seeks to enable the CAA to impose pro-competition remedies at Heathrow. As noted, the CAA already has a well-established framework of powers relating to economic competition. These enable it to act where competition is not working effectively. It can impose and enforce licence conditions on dominant airports and has concurrent competition powers alongside the CMA. In short, the tools to act are already in place, and competition consideration is already embedded in the statutory duties. We note, as the noble Lord did, that the CAA is currently consulting on aspects of the future regulatory framework at Heathrow, including options, as he mentioned, that relate to competition and the delivery of airport infrastructure. In answer to his question, the CAA does not believe it needs further powers if it chooses a more radical option. On his second question, about whether the Government will take a view on the CAA’s choices, I cannot say at the moment, but since the Heathrow expansion national policy statement has been launched, we will no doubt be able to in due course. I have no doubt that the noble Lord is engaging with those processes and, for that reason, we do not believe that this amendment is necessary. The noble Lord asked on Tuesday about the department’s role in reducing the administrative burden of regulation on business by 25% in this Parliament. I can confirm that the department is working closely with regulators and with the Department for Business and Trade to identify legislative and practical changes to deliver that. We have already made progress: for example, changes to rules for large vehicle licence holders with diabetes, which reduce costs by several million pounds a year; and there are some examples of Civil Aviation Authority initiatives that contribute to a reduction in the administrative burden incurred by businesses, including investment in systems modernisation, the recent update to the Airspace Coordination and Obstacle Management Service, and the general aviation licensing and training simplification programme. I am very happy to write to him further, and I will do so.