2000 Chapter 38

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These notes refer to the Transport Act 2000
which received Royal Assent on 30 November 2000 (c.38)

TRANSPORT ACT 2000

EXPLANATORY NOTES

1.     These Explanatory Notes relate to the Transport Act 2000. They have been prepared by the Department of the Environment, Transport and the Regions in order to assist the reader in understanding the Act. They do not form part of the Act, and have not been endorsed by Parliament.

2.     The Notes need to be read in conjunction with the Act. They are not, and are not meant to be, a comprehensive description of the Act. So where a section or part of a section does not seem to require any explanation or comment, none is given.

SUMMARY

3.     The Act contains measures to create a more integrated transport system and provide for a public-private partnership for National Air Traffic Services Ltd ("NATS"). The Act aims to improve local passenger transport services, and reduce road congestion and pollution. The use of railways will be promoted through the Strategic Rail Authority.

Air Traffic Services

4.     The provisions will enable the Government to establish a public-private partnership with a strategic partner from the private sector to deliver air traffic services provided by NATS.

5.     The Act allows for the transfer of the ownership of NATS (the UK's major provider of air traffic services) from the Civil Aviation Authority ("the CAA") to the ownership of the Secretary of State, the strategic partner and NATS employees. In doing so it will make possible a clear separation between the regulation of safety, which will remain the responsibility of the CAA, and the provision of the services.

6.     The CAA will remain the single regulator for aviation with responsibility for safety regulation, economic regulation and air navigation. Air navigation is concerned, inter alia, with the safe and effective use of airspace by commercial, military and leisure users.

7.     The Secretary of State for the Environment, Transport and the Regions ("the Secretary of State") will have powers to issue directions to a licence holder in the interests of national security or international relations and in times of war or great national emergency. Provision is also made for a special administration regime in the event of a serious and sustained breach of one of the duties in section 8 or of a licence condition by a licensed provider, and in the event of its insolvency.

8.     Section 3 will make it an offence for a person to provide air traffic services (as defined in section 98) unless he is authorised to do so by an exemption or by a licence granted either by the Secretary of State or by the CAA with the consent of the Secretary of State.

9.     It is the Government's intention to grant a licence for the provision of "en route" air traffic services, that is to say instructions provided to aircraft, to guide them and to maintain safe separation from other aircraft, after they have left the control of the airport from which they have departed and prior to their coming under the control of their destination airport. The Government intends to grant exemptions to providers of other air traffic services, including air traffic control at airports.

Local Transport

10.     The Act defines authorities which are to be local transport authorities and imposes a duty on those authorities to prepare and publish a local transport plan setting out their policies for the promotion of safe, integrated, efficient and economic transport facilities in their area, and to develop a bus strategy for carrying out their bus functions.

11.     The Act provides for a statutory form of "Quality Partnerships schemes" between bus operators and local transport authorities in the interests of promoting quality public transport, helping limit traffic congestion and improving air quality. The Act will enable local transport authorities to require bus operators to co-operate in the provision of joint ticketing, and will place a duty on local transport authorities to secure the provision of bus passenger information in their area. Local authorities will have the power (subject to the Secretary of State's consent) to enter into "Quality Contracts schemes", whereby they specify bus services in a particular area and let contracts for their provision to bus operators.

12.     The Act introduces a national concessionary fare. Elderly and disabled people will have the right to half-price local bus fares upon production of a bus pass to be obtained free of charge from their local authority. The Act also gives a more flexible power for the traffic commissioners to impose a financial penalty on bus operators who run unreliably, and it makes various other financial provisions.

Road User Charging and Workplace Parking Levy

13.     The Act enables local traffic authorities outside London to introduce road user charges and workplace parking levies to help tackle congestion as part of a local transport plan and requires spending of revenues on measures for improving local transport. It also allows for joint schemes, including ones involving London authorities. It also enables the Secretary of State, and the National Assembly for Wales ("NAW"), to introduce charges on trunk roads complementary to a local authority charging scheme, at the request of the local authority. The Secretary of State and the National Assembly for Wales also have the power to charge on trunk road bridges and tunnels of at least 600 metres in length.

Railways

14.     The Act establishes the Strategic Rail Authority ("the Authority") and abolishes the Office of the Director of Passenger Rail Franchising and the British Railways Board. Provision is made for the transfer to the Authority of the functions, rights and liabilities of the Franchising Director and the residual functions, rights and liabilities of the British Railways Board (including responsibility for the British Transport Police). The Act sets out the objectives and functions of the Authority. The Act also makes provision for the better regulation of the railway industry.

BACKGROUND

15.     The aim of the Act is to give effect to the Government's strategy for an integrated transport policy set out in the White Paper "A New Deal for Transport: Better for Everyone" (Cm 3950) published in July 1998. The White Paper also set out the principal reasons for a public private partnership for air traffic services.

16.     Subsequent consultation and policy documents included "A Public Private Partnership for National Air Traffic Services Ltd (NATS)", which was published in October 1998. The Government's response to the consultation exercise was published on 27 July 1999. "A New Deal for the Railways" (Cm 4024) was published in July 1998. "From Workhorse to Thoroughbred: A better role for bus travel" was published in March 1999. "Breaking the Logjam: The Government's consultation paper on fighting traffic congestion and pollution through road user and workplace parking charges" was published in December 1998. The Government's response to "Breaking the Logjam" was published in February 2000.

THE ACT

17.     The Act consists of five parts:

Part I          - Air Traffic

Part II          - Local Transport

Part III          - Road User Charging and Workplace Parking Levy

Part IV          - Railways

Part V          - Miscellaneous and Supplementary.

COMMENTARY ON SECTIONS

PART I: AIR TRAFFIC

18.     The Air Traffic provisions are in six Chapters. These are:

Chapter I - Air Traffic Services

Chapter II - Transfer Schemes

Chapter III - Air Navigation

Chapter IV - Charges for Air Traffic Services

Chapter V - Competition

Chapter VI - Miscellaneous and General.

CHAPTER I: AIR TRAFFIC SERVICES

19.     Currently en route air traffic services, and air traffic services at some airports, are provided by NATS, a company which is wholly owned by the CAA. The air traffic provisions in this Act will enable NATS to be transferred to a company owned partly by the public sector, partly by the private sector and partly by NATS employees. This new company will continue to provide the services currently provided by NATS. En route services will be provided under a licence issued by the Secretary of State, and will be subject to statutory economic regulation by the CAA. All air traffic services, whether provided by NATS or other providers will remain subject to statutory safety regulation by the CAA, who will also have responsibility for airspace policy

Sections 1 and 2: General Duties

20.     Sections 1 and 2 set out the general duties of the Secretary of State and the CAA. The Secretary of State must exercise his functions under Chapter 1 so as to maintain a high standard of safety in the provision of air traffic services. The safety duty has priority over any other function. The Secretary of State is also required to exercise his functions under chapter 1 in the manner he thinks best calculated to achieve the purposes set out in subsection 2. These purposes include furthering the interests of airlines, their passengers and freight customers, and airports, including furthering those interests through promoting competition, where appropriate. Section 2 imposes similar obligations on the CAA. In section 2, subsection (5) disapplies section 4 of the Civil Aviation Act 1982 ("the 1982 Act") when the CAA is performing its functions under Chapter I. Section 4 of the 1982 Act makes it the duty of the CAA to perform its functions in a manner best calculated to achieve objectives which relate to air transport services and users. This duty is not limited to functions under the 1982 Act and, if not disapplied, would apply to functions under this Act.

Section 3: Restrictions on providing services

21.     Section 3 makes it an offence for a person to provide air traffic services in respect of a managed area unless he is authorised to do so by a licence or an exemption. "Air traffic services" means:

• providing instructions, information or advice with a view to preventing aircraft colliding with other aircraft or with other obstructions;

• providing instructions, information or advice with a view to securing safe and efficient flying;

• managing the flow of air traffic with a view to ensuring the most efficient use of airspace;

• providing facilities for communicating with aircraft and for the navigation and surveillance of aircraft;

• and notifying organisations of aircraft needing search and rescue facilities and assisting organisations to provide such facilities.

22.     "Managed areas" are the United Kingdom and any area which is outside the United Kingdom but in respect of which the United Kingdom has undertaken under international arrangements to provide air traffic services.

23.     Air traffic services provided by or on behalf of the armed forces are not to require an exemption or a licence. Nor are air traffic services provided by the CAA in pursuance of directions under section 66(1).

Section 4: Exemptions

24.     Section 4 allows the Secretary of State to grant an exemption enabling a person to provide air traffic services. It is proposed to grant exemptions to persons who are not en route air traffic service providers (eg companies which provide airport air traffic control).

Sections 5 to 7: Licences

25.     Sections 5 to 7 make provision for the grant of a licence to provide air traffic services. The purpose of the licence will be to enable the CAA to carry out economic regulation of the licensed activities. A licence may be granted by the Secretary of State after consultation with the CAA, or by the CAA with the consent of the Secretary of State. It is envisaged that only the initial licence will be granted by the Secretary of State. Section 5 makes provision for the content of licences including what a licence may be granted for, as well as to whom it may be granted and the period it may remain in force. Section 6 deals with procedures for the application, grant and refusal of licences. Section 7 deals with provisions which may be included in a licence, including provisions for the payment of fees. A provision of a licence may be identified as a condition (see section 40(6)) in which case that provision can be modified and it can be enforced (sections 11 to 19 and 20 to 25).

Section 8: Duties of licence holders

26.     Section 8 imposes general duties on a licence holder to ensure that a safe, efficient and co-ordinated system for the provision of the air traffic services authorised in his licence is provided, maintained and developed for the future and that the demand for authorised air traffic services in his licensed area is met. Section 9 allows the CAA to relieve a licence holder of his section 8 duties for services which he is not providing. Section 10 provides that no legal proceedings may be brought for a failure by a licence holder to perform a duty imposed by section 8 or a condition of a licence. This provision does not however affect a right of action in respect of an act or omission which takes place in the course of the provision of air traffic services and neither does it affect the enforcement mechanisms specifically provided in the Act.

Sections 11 to 19: Modification of licences

27.     Sections 11 to 19 deal with circumstances where the conditions of licences may be modified. Various circumstances, including system developments and new technology may require or result in marked changes in the way in which air traffic services are provided, and there may be circumstances where licences need to be modified to reflect this. Section 11 allows the CAA to modify the conditions of the licence with the agreement of the licence holder, and allows the Secretary of State to veto any such modification. Sections 12 and 13 allow the CAA to refer to the Competition Commission matters relating to the provision of air traffic services by a licence holder which operate against the public interest. The Commission is required to investigate and report on whether modifications to the conditions of the licence are necessary. Section 14 requires that where the Commission's report concludes that any matter specified in the reference operates, or is likely to operate, against the public interest and specifies modifications to the conditions of the licence, the CAA must make such modifications as it thinks are needed. Section 15 gives the Commission powers to direct the CAA not to make licence modifications proposed by the CAA in response to the Commission's recommendations where the Commission considers that those modifications would not provide a remedy. Sections 16 - 18, set out the procedure for the Commission to propose modifications of its own. Section 19 also allows the Secretary of State to modify the conditions of the licence to such extent as he thinks is necessary or expedient when he is, by order, exercising certain powers under the Fair Trading Act 1973 relating to monopolies and mergers.

Sections 20 to 25: Enforcement

28.     These sections require the CAA to make orders that will be binding on a licence holder where the licence holder is contravening, or is likely to contravene, a duty under section 8 or a licence condition. Section 20 requires the CAA, subject to the exceptions in section 21, to make a provisional order when it appears to it that there is or is likely to be a contravention of a duty under section 8 or a licence condition, and to make a final order, or to confirm a provisional order, where it is satisfied that there is or is likely to be a contravention of a duty under section 8 or a licence condition. Section 21 gives the CAA a discretion to make or confirm a provisional order or confirm a final order, if it thinks appropriate in certain circumstances. Section 22 sets out the procedural requirements to be observed before making a final order or confirming a provisional order. If the licence holder wishes to question the validity of a final or provisional order relating to it, it may do so under section 23. Section 24 requires any licence holder to which a final or provisional order relates to comply with it. This duty to comply with the order is owed to any person who may be affected by a contravention of the order and breach of the duty is actionable by him.

29.     Section 25 provides the CAA with a power to obtain information in cases where it appears to the CAA that a licence holder may have contravened, may be contravening, or is likely to contravene a licence condition.

Sections 26 to 33 and Schedules 1, 2 and 3: Administration orders etc

30.     Sections 26 to 33 and Schedules 1, 2 and 3 are concerned with the powers available and procedures to be followed where the continuity of a licence holder's air traffic services may be at risk. (In these sections and Schedules, a licence holder is referred to as a licence company.) Continuity of the services may be at risk as a result of a licence holder failing to comply with a condition of its licence or a section 8 duty, or becoming insolvent or otherwise being in a position where a winding up order would normally be made. Section 26 provides licence holders with certain protections as follows:

• they may not be wound up voluntarily;

• no administration order made under Part II of the Insolvency Act may be made against them; and

• no step may be taken by any person to take control over the property of a licence company without first giving 14 days' notice to the Secretary of State and the CAA.

31.     Section 27 provides that if an application is made to a court for a winding up order in respect of a licence holder, the court must not make a winding up order or appoint a provisional liquidator. If, however, the court is satisfied that, but for this provision, it would be appropriate to make a winding up order, it must make an air traffic administration order instead. In those circumstances the Secretary of State and the CAA may nominate the person to manage the company whilst the Order is in effect. Section 28 lists circumstances under which a court may make an air traffic administration order following an application by the Secretary of State or, with the consent of the Secretary of State, by the CAA. In summary these are:

• that the company is, or is likely to be, unable to pay its debts;

• that, if it were not for section 27, it would be just and equitable for the licence holder to be wound up;

• that there has been, or is likely to be, a serious contravention by the licence holder of a section 8 duty;

• that a final or provisional order has been made, which has not been challenged by the licence holder, and there has been or is likely to be a serious contravention of the order.

32.     Section 29 describes the purpose and effect of an air traffic administration order. The main effect of the order is that whilst it is in force a person appointed by the court will manage the licence holder's affairs, business and property in a manner which protects the interests of its members and creditors and for the achievement of the following two purposes:

• to transfer as a going concern so much of its undertaking as is necessary to ensure the licensed activities are properly carried out (transfers of the undertaking may either be to a single company, or in parts to more than one company); and

• to ensure, pending such a transfer, the continuity of the licensed activities.

33.     Section 30 and Schedule 1 apply various provisions of the Insolvency Act 1986 relating to administration orders to air traffic administration orders with certain modifications. Schedule 2 deals with the making of transfer schemes following the making of an air traffic administration order.

34.     The Government may need to support the provision of services during the period in which an air traffic administration order is in force. Sections 31 and 32 provide a power and set out the procedures for the Secretary of State to make such grants, loans or other financial arrangements as he considers appropriate in respect of a company which is subject to an air traffic administration order.

35.     Section 33 and Schedule 3 apply the air traffic administration provisions to Northern Ireland.

Sections 34 and 35: Investigations and register

36.     Section 34 requires the CAA to investigate alleged or apprehended contraventions of licence conditions where these are reported to it by interested third parties (so long as the report does not appear to be frivolous or vexatious). Section 35 provides for a public register to be compiled and maintained by the CAA. The register will contain copies of all licences and related matters listed in subsection 35(3), and will be available for public inspection. Sections 35(5) and section 35(6) provide for material to be excluded from the register if, in the opinion of the CAA, it would prejudicially affect a person's interests or if the Secretary of State instructs the CAA not to enter information, because, in his opinion, it would be against the public interest or any person's commercial interests to enter it in the register.

Sections 36 and 37 and Schedules 4 and 5: Land and statutory undertakers

37.     Section 36 gives effect to Schedule 4 which amends the 1982 Act to give licence holders powers in relation to land when they are carrying out activities authorised by their licences. Section 37 introduces Schedule 5 which provides that licence holders are to be treated as statutory undertakers for certain purposes.

Section 38: Directions in interests of national security etc

38.     Section 38 gives the Secretary of State powers to issue directions to licence holders (either individually or generally) of a general character in the interests of national security or in the interests of encouraging or maintaining the UK's relations with another country or territory. The Secretary of State may also give a licence holder specific direction in the interests of national security or a direction in connection with fulfilling an international obligation laid on the United Kingdom. Failure to comply with a direction is an offence. The penalties for committing an offence under this section range from a fine not exceeding the statutory maximum on summary conviction, to a fine or imprisonment on conviction on indictment.

Section 39: Directions relating to the environment

39.     Section 39 allows the Secretary of State to give directions relating to the environment. The power of direction is essentially a replacement for section 6(2)(f) and, in part, section 72(2) of the 1982 Act as they currently operate. Directions currently given to the CAA are taken to extend to NATS. Post PPP it is to be possible for NATS to be a direct recipient of environmental directions, together with other licence holders as well as persons authorised by exemption to provide civil air traffic services. Persons authorised by exemption will include owners or operators of aerodromes and other companies, including NATS, which provide air traffic services on their behalf. It is considered that all air traffic service providers should be susceptible to direction since provision of such services affects the environment regardless of who is the provider.

Section 40 defines certain expressions for the purposes of chapter 1of Part 1

CHAPTER II: TRANSFER SCHEMES

Sections 41 and 42: Introduction

40.     Transfer schemes are the means by which shares in the current air traffic services provider will be transferred out of the CAA's ownership and into Crown ownership, in readiness for partial sale. The transfer of ownership is the means by which the objective of separating the CAA's regulatory functions from the provision of services is achieved. The transfer scheme provisions also allow the corporate structure of the air traffic service provider's business to be reorganised in light of the new licensing regime and the proposed public private partnership.

41.     Section 41 deals with the meaning of a transfer scheme, and describes the parties between whom transfers can be made. Section 42 contains supplementary provisions detailing what a transfer scheme may do.

Sections 43 and 44: CAA's schemes

42.     Transfer schemes can be made by either the CAA or the Secretary of State. Sections 43 and 44 provide the Secretary of State with powers to approve and to control the content and timetable of transfer schemes made by the CAA; but no schemes can be made until a period of three months from the date of enactment has elapsed.

Sections 45 and 46: Secretary of State's schemes

43.     Section 45 provides a power for the Secretary of State to make a transfer scheme where either the CAA fails to make a scheme, or the Secretary of State does not agree with the CAA's proposals. No scheme can be made until a period of three months from the date of enactment has elapsed. Where the Secretary of State does make a scheme, section 46 gives him the power to direct interested bodies (listed in subsections (2)(a) to (d)), to provide such information as he may require.