Sections 47 and 48: Accounting provisions

44.     Section 47 deals with certain accounting and valuation matters with regard to transfer schemes. Its principal purpose is to specify rules to determine the value of any asset or liability transferred to a company under a scheme, for the purposes of the opening accounts of that company. Section 48 defines certain terms used in section 47.

Sections 49 to 51: Ownership of transferee companies

45.     Section 49 applies where property, rights or liabilities are transferred by a transfer scheme and permits the Secretary of State to require certain companies receiving the property to issue securities to any person listed in section 49(5). The securities must be issued at such times and on such terms as the Secretary of State directs. Section 50 allows the Treasury (or the Secretary of State with the Treasury's consent), to acquire securities of a transferee company falling within section 50(1) and to acquire options to acquire or dispose of those securities.

46.     Section 51 requires the Secretary of State not to dispose of more than 51% of the shares in the designated company, and to ensure that the Crown's holding in the company is not diluted below 25%. The Crown must also not dispose of any of its shares unless it is satisfied that plans are in place which will ensure the completion of certain major projects.

47.     The section also requires the Crown to hold a special share in the designated company which is to be provided for in the company's articles of association. The Crown must not alter the special share arrangements without the consent of Parliament. The provisions of this section can only be amended or repealed by order with the approval of Parliament (see section 103(6)).

Sections 52 to 56: Transferee companies: other provisions

48.     Section 52 enables the Secretary of State, with the Treasury's approval, to make loans from the National Loans Fund to transferee companies listed in section 52(3), while they are still owned by the CAA or the Crown. Loan repayments and accrued interest must be paid into the National Loans Fund (see section 278(3)). The Secretary of State must produce an account to the Comptroller and Auditor General of sums issued and received, and how he has disposed of them. Section 53 provides a power for the Treasury or the Secretary of State to guarantee the discharge of any financial obligation of a transferee provided that the guarantee is given when the transferee is a company falling within those listed under section 53(3). Section 54 provides a power for the Secretary of State, with the approval of the Treasury, to make grants to a transferee falling within subsection (3), of such amounts, at such times and in such a manner as he sees fit. These provisions will allow the Secretary of State to offer such a transferee a range of financial assistance while it is in public ownership.

49.     Section 55 has the effect of disapplying certain provisions in the Trustee Investments Act 1961, which restrict a trustee's ability to invest in certain securities where dividends have not been paid in the five years prior to the proposed investment. The purpose of disapplying these provisions is to ensure that if any shares of a transferee company listed in subsection (2) are included in the Official List of The Stock Exchange, they are not subject to the investment restrictions imposed by the Trustee Investments Act 1961.

50.     Section 56 provides that for the purposes of specified sections of the Companies Act 1985 or the Companies (Northern Ireland) Order 1986, Ministers of the Crown, Northern Ireland Minister, their nominees and Northern Ireland Departments are not to be regarded as shadow directors of certain transferees or of any company associated with such transferee at a time when the condition set out in section 56(3) is satisfied.

Sections 57 to 59: Extinguishment of liabilities

51.     Section 57 enables the Secretary of State, with the Treasury's consent, to extinguish the debts to the CAA of a company wholly owned by the CAA. The Secretary of State may direct the CAA to release such a company from its debt to the CAA. He may also, by order, extinguish the CAA's corresponding liability to him in respect of this debt, and the assets of the National Loans Fund would be reduced accordingly by a corresponding amount.

52.     Section 58 provides for the issue, at the direction of the Secretary of State, of new equity or debt securities by the specified companies to the persons set out in subsection (4). The purpose of this section is to enable the Government to alter the ratio of equity capital to debt of companies in the air traffic service provider group as part of the reorganisation. Section 59 provides for certain accounting and valuation principles to be applied to securities and debentures issued under sections 49 or 58.

Sections 60 to 64: Miscellaneous

53.     Section 60 provides that where a transferor or transferee is required by a transfer scheme to execute an instrument or enter into an agreement, a person in whose favour such an instrument or agreement is made can ensure that obligations created by it are enforceable in the courts. Section 61 provides that certain specified rights affecting land are not to operate or become exercisable as a result of a transfer of land under a transfer scheme and provides for compensation to be paid (determined, if necessary, by arbitration) to a person whose rights are, as a result, made ineffective. Section 62 permits the Treasury, or the Secretary of State with the Treasury's consent, to appoint a person to act as its nominee for the purposes of sections 49, 50 or 58. A person holding any securities as a nominee of the Treasury or the Secretary of State must hold and deal with them as directed by the Treasury or the Secretary of State.

54.     Section 63 introduces Schedule 6 which contains detailed provisions about transfer schemes, including the identification and allocation of property, rights and liabilities to be transferred, the discharge of functions by parties and transfers by agreement. It also includes provision as to documents of title, foreign properties, rights and liabilities, certificates, restrictions on dealings with land, the construction of agreements, proceedings and third parties.

55.     Section 64 introduces Schedule 7 which contains provisions regulating the tax treatment of transfers which take place under transfer schemes. The main purpose of the Schedule is to ensure that the reorganisation of business operations and capital structure which takes place prior to the establishment of the public-private partnership will be largely tax neutral.

CHAPTER III: AIR NAVIGATION

Sections 66 to 72: Air navigation directions

56.     Section 66 allows the Secretary of State to give the CAA duties and powers in connection with air navigation- essentially those functions currently carried out by the Director of Airspace Policy and which are to be transferred to the CAA. Directions will require the CAA among other things to develop and implement a policy for the use of airspace which meets, so far as practicable, the needs of all users; to promote and facilitate the continued operation of an integrated air traffic service provision; to establish a consultative forum inter alia for the reconciliation of civil and military interests in airspace use; and to meet relevant objectives, for example in relation to the environment.

57.     Section 67 gives the right of appeal on national security issues to a member of the CAA to be nominated by the Secretary of State for Defence.

58.     Section 68 provides broad guidelines on the areas which Directions under section 66(1) may cover, such as consultation and provision for referring matters to the Secretary of State or seeking his approval.

59.     Section 69 contains supplementary provisions relating to the directions and provides that these directions take precedence over all other enactment or instruments with the exception of directions under section 93 (Hostilities) or an order under section 94 (Orders for possessions of aerodromes etc,) made in times of actual or imminent hostilities, or of severe international tension or great national emergency.

60.     Section 70 details the CAA's general duties when exercising its air navigation functions and specifies how any possible conflict in the application of these provisions is to be resolved. The section disapplies the CAA's general objectives under section 4 of the 1982 Act from the CAA's performance of its functions under this Chapter. These relate to the provision of air transport services by British airlines and furthering the interests of users of air transport services and are not appropriate here.

61.     Section 71 allows the CAA in connection with its air navigation functions to serve a notice, on a person who provides air traffic services, specifying documents or information to be produced. A person commits an offence if they fail to provide the documents or information without reasonable excuse as defined in subsection (3). Penalties for these offences are set out in subsections (4) and (5). If a person makes default in complying with a notice the CAA may apply to a court for an order requiring the default to be made good. Section 72 defines terms used for the purposes of the Chapter.

CHAPTER IV: CHARGES FOR AIR SERVICES

Sections 73 to 80: Charges

62.     Under section 73(1) of the Civil Aviation Act 1982, the Secretary of State currently makes regulations, requiring the payment to him or specified others of amounts calculated by reference to tariffs specified in those regulations. A regulation, once made, is the source of the obligation to pay, in addition to being the means of identifying by and to whom the charges are payable, at what rate and in respect of what airspace.

63.     A similar system of charging and charge recovery is to be retained under the PPP but the CAA, as part of its responsibilities as the economic regulator, will in future specify the charges in a published notice. Section 73(3) imposes a duty to pay the specified charges. The CAA will continue to have statutory powers to detain and sell aircraft in respect of unpaid charges.

64.     Section 73 allows for the CAA to specify the charges payable for chargeable air services and to stipulate conditions in relation to the payment of those specified charges. Section 74 places a duty on the CAA to publish notices containing the charges specified under section 73 and any stipulation to those charges and similarly to publish notice of any amendment to, or revocation of, those specifications or stipulations. The CAA is obliged to exercise its powers under this section in the manner it thinks best calculated to take account of international agreements to which the UK is party.

65.     Section 75 allows the CAA to specify different charges in respect of different descriptions of services, aircraft or circumstances of their use. The section also requires the CAA to take account of tariffs approved or likely to be approved under international agreements when specifying the charges.

66.     Section 76 establishes the liability to pay charges required to be paid under section 73(3). The liability arises regardless of the place of registration of the aircraft, its location and from where the service is provided. This section also provides that section 73 charges are recoverable in the UK and that a court in any part of the UK has jurisdiction to hear a claim. Section 77 defines chargeable air services for the purposes of this Chapter and as well as providing for the Secretary of State to amend the definition by order, allows a designation of aerodromes whereby air traffic services provided on behalf of the owner or manager thereof are not to be excepted from the definition of "chargeable air services". Section 78 allows the CAA to recover the costs of specification and publishing of charges in the amount of the charge in certain circumstances

Sections 81 to 84: Miscellaneous

67.     Section 81 provides a power for the Secretary of State to make regulations in order to facilitate the assessment and collection of charges payable under section 73. The regulations may require records of aircraft movements to be kept by operators or owners of aircraft and aerodromes and to be produced on request. These requirements may be imposed regardless of whether or not an aircraft is registered in the UK, is in the UK when the service is provided, or whether or not the relevant services are provided from a place in the UK.

68.     Section 82 provides that a person commits an offence if he fails to comply with regulations made under section 82, including where he gives false information. A person also commits an offence if he is in possession of information obtained under the regulations and he discloses it other than in the ways described in subsection (2). Penalties for these offences are set out in subsections (4), (5) and (6) and range from a fine not exceeding the statutory maximum to both a fine and imprisonment of up to two years.

69.     Section 83 provides that the Secretary of State may make regulations containing provisions which authorise the detention of, or the sale of detained, aircraft. Where there is default in paying a charge payable under section 73, regulations can provide for the detention and sale of any aircraft in respect of which the charge was incurred or any aircraft operated by the defaulter. Where there is default in complying with a requirement imposed by regulations under section 81, regulations can provide for the detention and sale of any aircraft by the defaulter. Section 84 contains definitions for the purpose of this Chapter.

CHAPTER V: COMPETITION

Sections 85 to 89: Competition

70.     These sections give the CAA, as economic regulator, concurrent powers with the Director General of Fair Trading ("the DGFT") under competition legislation in relation to the supply of air traffic services. This is consistent with the powers granted to other utility regulators (telecoms, gas, electricity, water and railway services). Section 85 contains definitions. Section 86 empowers the CAA to exercise concurrently the listed functions exercised by the DGFT under the Fair Trading Act 1973 (so far as they relate to monopoly situations in relation to the supply of air traffic services) and the Competition Act 1998 (so far as they relate to agreements or conduct relating to the supply of air traffic services). Section 87 requires the CAA to have regard to its general duties under this Act when exercising concurrent functions under the Fair Trading Act 1973 and disapplies its general duties under section 4 of the Civil Aviation Act 1982. Section 88 allows the CAA to have regard to its general duties under this Act when exercising concurrent functions under the Competition Act 1998.

71.     Section 89 creates procedures for the exercise of concurrent powers by the CAA and DGFT. This is to avoid duplication of regulatory activity. These procedures are also designed to ensure that any action is taken by the most appropriate authority. If the CAA makes a reference to the Competition Commission it must help the Commission with its investigations by providing any relevant information that it has in its possession.

CHAPTER VI: MISCELLANEOUS AND GENERAL

Sections 90 to 97: Miscellaneous

72.     Sections 90 to 97 deal with the collection and publication of information by the CAA under these provisions, the Secretary of State's general powers to issue directions to the CAA, control in time of hostilities and the Civil Aviation Authority Pension Scheme.

73.     Section 90 provides for the CAA to publish information which it thinks could be useful or appropriate to users or potential users of air traffic services in the UK. Section 91 requires the CAA to keep the provision of all air traffic services (in the UK and elsewhere) under review, and collect information about them. And in reviewing the provision of services it is to take account of the Secretary of State's directions as to what considerations are to affect priorities under this duty.

74.     Section 92 gives the Secretary of State a general power to direct the CAA as to whether and how it should exercise its various functions under Part I of this Act.

75.     Section 93 gives the Secretary of State the power to give directions to a wide range of persons engaged in aviation and related activities (including the holder of a licence under Chapter I) in times of severe international tension, great national emergency or actual or imminent hostilities (whether or not there has been a formal declaration of war). These powers are broadly similar to those in the 1982 Act which this Act repeals. It is an offence to contravene or fail to comply with a direction. Compensation is payable by the Secretary of State for direct injury or loss arising from compliance with a direction. The penalties for committing an offence under this section range from a fine not exceeding the statutory maximum on summary conviction, to up to two years imprisonment and a fine on conviction on indictment.

76.     Section 94 is a provision that enables the Secretary of State, by order made by statutory instrument (but not subject to Parliamentary procedure), to provide for the taking into possession of and use by or for the purposes of the armed forces of the Crown, any aerodrome, or any aircraft or other things found in or on an aerodrome. This may be done in the event of actual or imminent hostilities or of severe international tension or of great national emergency. The section allows for flexibility in the choice of action that may be taken at such times. Section 95 defines expressions used in sections 93 and 94.

77.     .Section 96 enables the Secretary of State to make an order providing for the allocation of assets, rights, liabilities or obligations between different sections of the Civil Aviation Authority Pension Scheme. Under section 103 (12) the Scheme Trustees must be consulted before any order is made. The Secretary of State is bound to secure that individual pension arrangements are at least as good after the order is made as before.

78.     Section 97 introduces Schedule 8 which makes consequential amendments to various Acts

Section 98 and 99: General interpretation.

79.     Section 98 defines air traffic services for the purpose of Part 1 of the Act. Section 99 defines the CAA.

Sections 100 to 107: Other general provisions

80.     Section 100 details the rules regarding the service of a document under this Part of the Act.

81.     Section 101 makes it an offence for a person knowingly to give false information or make a false statement in connection with this Part of the Act. A person may be subject to a fine not exceeding the statutory maximum on summary conviction, or a fine on indictment for committing an offence under this section.

82.     Section 102 introduces Schedule 9 which prohibits the disclosure of information gained under this Part of the Act save with the consent of the person to whom it relates or where otherwise permitted. Disclosure in contravention of the schedule is an offence. A person who discloses information in contravention of the schedule is liable to a fine not exceeding the statutory maximum on summary conviction, or a fine on indictment for committing an offence under this section.

83.     Section 103 enables the Secretary of State to exercise a power to make an order or regulations under this part of the Act differently in relation to different cases, and makes other provisions in relation to the making of orders, regulations and Orders in Council.

84.     Section 104 requires a person given a direction under this Part of the Act to comply with it. Directions may be varied or revoked

85.     Section 105 and 106 apply relevant sections of Part 1 of the Act to the Crown.

86.     Section 107 provides for the extension of specified provisions to the Channel Islands, the Isle of Man or any colony.

PART II: LOCAL TRANSPORT

Sections 108 to 113: Local Transport Plans and Bus Strategies

87.     Sections 108 to 113 provide a statutory basis for local transport plans and bus strategies in England and Wales outside London. London has its own transport planning system under the Greater London Authority Act 1999 ("the 1999 Act"). Local transport plans already exist in a non-statutory form as the basis for the Department's allocation of capital funds for local transport expenditure, but the Act puts them on a statutory basis for the first time.

88.     Section 108 and 109 impose a duty on each "local transport authority" (defined in section 108(4)) as councils of counties and unitary authorities in England, principal councils in Wales and passenger transport authorities ("PTAs"), to formulate transport policies and publish them as a local transport plan. The policies must promote 'safe, integrated, efficient and economic transport' and must have regard in particular to the needs of the elderly and people with mobility problems. They must also provide a framework for, inter alia, the promotion of improvements to bus services under the powers of Part II and the introduction of charging regimes under Part III. Section 99 further provides that plans must be kept under review and altered if necessary and in any event must last no longer than five years.

89.     Section 109(5) and (6) exempt a local transport authority from producing such a plan where before the date when section 108 comes into force they have already prepared a document in a form and manner equivalent to that required under the Act for local transport plans. That document is treated as a local transport plan but it must be replaced no later than 31st March 2006, in England or a date prescribed by the National Assembly for Wales (the "NAW"), in Wales.

90.     Section 110 requires local transport authorities to prepare, as part of their local transport plans, a bus strategy containing policies as to how best to carry out their various functions in order to secure the provision of appropriate bus services in their area. The functions in question are largely contained either in the Act or in the Transport Acts of 1968 ("the 1968 Act") and 1985 ("the 1985 Act") as amended by the Act.

91.     Section 109(3) and (4) and 111 impose requirements as to consultation during the preparation of plans and bus strategies and as to the publication of plans and strategies and requires authorities to make copies available at no more than cost. Section 112 requires them to have regard both to guidance issued by the Secretary of State or NAW and to the needs of the elderly and people with mobility problems.

92.     Section 113 makes special provision for the duties of local authorities in metropolitan counties, specifying which duties must be discharged jointly by the PTA and the metropolitan district council and which are to be separate responsibilities for each.

Sections 114 to 123: Bus Services: Quality Partnership schemes

93.     Sections 114 to 123 empower local transport authorities, either alone or jointly, to set up Quality Partnership (QP) schemes as part of the process of implementation of their current bus strategy. A QP scheme entails the authority providing special facilities, and setting standards to be observed by bus operators as a condition of using the facilities. A scheme must implement the bus strategy and be aimed at improving local bus services for the benefit of bus users or at improving the environment. "Local services" are defined in section 162(3) by reference to the 1985 Act. In essence they are bus services with stopping places less than 15 miles apart (section 2 of the 1985 Act).

94.     Similar schemes currently exist as voluntary arrangements in over 100 towns and cities in England and Wales, where local authorities have agreed to exercise their functions (especially as regards traffic management) in particular ways and operators in return have agreed to provide improved bus services with the aim of promoting bus use. The principal difference between these and schemes created under the Act is that the latter will be enforceable at law.

95.     Section 114 specifies the nature of a QP scheme. The facilities to be provided under a scheme must include facilities (such as bus lanes and shelters) at specific locations along bus routes (or where appropriate prospective bus routes) which bus operators can use; they may include other ancillary facilities also. Information facilities may not be included if the authority has determined that these must be provided throughout their area under section 139 (which is mentioned at paragraph 114 below). Standards which may be imposed on operators under a statutory QP scheme do not extend to service frequency or timing, since separate provision is made for this by the service subsidy provisions of section 9A of the 1968 Act and section 63 of the 1985 Act and a comprehensive local authority approach to determining timetables is provided for in the separate Quality Contracts sections (paragraphs 102 to 109 below). Both the facilities and the new standards must in themselves improve the quality of local services in the relevant area. The Act does not prevent authorities and operators from making voluntary arrangements as at present.

96.     Section 114(8) to (10) require QP schemes to be made jointly by the local transport authority and the traffic authority where facilities cannot be provided without the making of a traffic regulation order for a road or roads for which the local transport authority is not the traffic authority. Traffic authorities in England and Wales (outside London) are the Secretary of State or NAW in the case of trunk roads and the non-metropolitan county councils and metropolitan district councils in the case of other roads. "Traffic regulation order" is defined in section 162(1).

97.     A scheme may not be made without prior consultation with bodies specified in section 115, including bus operators, representatives of bus users and other local authorities. Sections 116 and 117 provide for the making (as proposed or with modifications) and the postponement of schemes. In particular there is provision for excluding certain services from schemes where this is considered appropriate (for example a community bus service acting as a feeder to a main bus route). The Secretary of State or the NAW may issue guidance on QPs and make regulations about detailed matters under sections 122 and 123.

98.     Once a scheme is in operation, it must remain so for at least 5 years (section 116(2)) and duties are placed:

• on the authority to provide the necessary facilities (section 118(1));

• on the bus operators to meet the necessary standards if they use the facilities (section 118(4)),

except where any of them is temporarily unable to do so because of circumstances beyond its control.

99.     Compliance by the operators will be secured under the existing registration system for local bus services. Paragraphs 10 and 22 of Schedule 11 amend sections 26 and 111 of the 1985 Act to empower traffic commissioners to take enforcement action if an operator is in breach of his duty under section 118(4).

100.     Section 119 enables the Secretary of State or NAW to make special provision by regulations covering cases where a QP scheme incorporates facilities which already exist.

101.     Section 120 makes provision for the variation and revocation of QP schemes and section 121 specifies which authorities are responsible for the making of the variation and the implementation and subsequent variation or revocation of a scheme which has been varied. In the case where the Secretary of State or NAW, as a trunk road authority, jointly responsible for a scheme, wishes to remove scheme facilities from a trunk road, he or it may do so using powers to revoke traffic regulation orders under paragraph 27 of Schedule 9 to the Road Traffic Regulation Act 1984. However, by virtue of an amendment to that paragraph made by paragraph 8 of Schedule 11, this may be done only after consultation with other responsible authorities. A trunk road authority is then relieved of any further responsibilities for those facilities under the scheme (section 118(3)).