Select Committee Report Precis 12.3.15

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The release of the Select Committee report is very welcome. It reflects the oral evidence hearing at Portcullis House and substantiates much of what we already knew from months of research. Ruth  #votemanston2015

The Select Committee Report on Manston Airport 

Ann Gloag

Manston Skyport contested RiverOak’s claim that it had offered £7 million to purchase Manston airport.54 RiverOak later provided documentary evidence to back up this claim.55

If Ann Gloag’s motivation was to run Manston as an airport, accepting RiverOak’s £7 million offer would have allowed her to correct her initial error in purchasing the airport and left her with a generous profit.

RiverOak has maintained its interest in purchasing Manston and operating it as an airport.

TDC

We welcome Councillor Johnston’s commitment to due diligence. We agree that risks should, so far as is possible, be transferred to the private sector to protect the interests of council taxpayers. However, we question whether a small district council has sufficient funds or legal and financial expertise to handle a case of this magnitude. For example, TDC told us that it spent £26,000 on legal advice in relation to the proposed CPO.68 That sum was unlikely to provide TDC with adequate advice in relation to indemnification by a US company or to allow it to understand RiverOak’s business plan and operating model.

Recommendations; We expect higher-tier local government bodies to fulfil their strategic oversight functions by supporting local planning authorities in resolving one-off, complex cases involving nationally significant transport assets.

Kent County Council

  1. Kent County Council (KCC) is the local transport authority for Kent, which means it has strategic oversight of aviation in the county. On 17 July 2014, KCC considered the case of Manston airport. County councillors agreed the following motion by 82 votes to nil:

 

That Kent County Council supports the actions taken so far by Thanet District Council to retain Manston as a regional airport. We recognise the value that a regional airport brings to East Kent and are disappointed at its closure. Kent County Council will explore with Thanet District Council ways in which it can support proposals to retain Manston as an airport.69

Paul Carter, Leader, KCC, attended and voted at that meeting.

  1. In September 2014, Paul Carter commented on the sale of Manston to Chris Musgrave and Trevor Cartner:

 

Chris Musgrave and Trevor Cartner have a fantastic track record in taking over large and difficult sites following the demise of earlier uses, and regenerating them to create jobs and bring economic benefits to the wider area. Their team has done this at Wynyard Park in Billingham, where they have created 2,000 jobs and attracted £200 million of private investment, and at Discovery Park here in Kent where more than 1,000 new jobs have been added to the 600 that Pfizer left behind. I have every confidence that they can do even more at Manston.70

Paul Carter’s remarks in September 2014 were inconsistent with the motion agreed by KCC on 17 July 2014.

  1. We asked Paul Carter to explain his position. He told us that “the motion that was supported unanimously by the county council said we would be prepared to support Thanet district council in a CPO process at Manston, provided a viable and thriving airport could be delivered at Manston.”71 He subsequently admitted that there was no such caveat to the KCC motion.72 He also reiterated his enthusiasm for the redevelopment of the Manston site rather than its operating as an airport.73 We asked him whether Trevor Cartner or Chris Musgrave had shown him detailed plans for the redevelopment. He replied, “They showed me nothing.”
  2. Recommendations; Kent County Council has the legal and financial resources to assess complex CPO cases. Despite having agreed a motion to support Thanet District Council, it failed to deploy those assets. In failing to support Thanet District Council’s scrutiny of the proposed CPO at Manston, Kent County Council also failed to fulfil its strategic oversight function as the local transport authority.

Role of the DfT

  1. The DfT interceded in the Manston case following TDC’s decision not to proceed with a compulsory purchase order. In December 2014, the Minister of State, DfT, John Hayes MP, chaired a meeting with interested parties and agreed to co-ordinate work across Government to explore all options to secure the airport’s future. That the DfT judged it necessary to intervene in the Manston case shows the extent to which Kent County Council failed to fulfil its strategic oversight role.
  2. In February 2015, more than two months after the DfT intervened, we asked the Under-Secretary of State, DfT, Robert Goodwill MP, what progress had been made. He told us that the DfT was doing “everything we can to facilitate a rescue deal so that aviation can continue at Manston, if that be possible”.75
  3. We asked the Minister to explain the nature of the DfT’s intervention over the past two months. He explained that

Thanet council supplied the Department for Transport with the papers they considered in reaching their decision that RiverOak were not a suitable indemnity party for the compulsory purchase process. A review of the papers supplied to the Department by Thanet council is one of a number of options being considered.76

On 5 March 2015, the DfT announced that it will “appoint a consultant to review the process so far on decisions about the future of Manston airport.”

We welcome the DfT’s decision to appoint a consultant to examine the Manston case.

The uncertainty faced by the public and other interested parties could have been reduced if it had not taken three months before the DfT acted.

The DfT should set out clear terms of reference for the consultant who is contracted to examine the Manston decision-making process and place them in the public domain. Those terms of reference should include (a) an explicit requirement to assess whether RiverOak is an appropriate indemnity partner for Thanet District Council; (b) a deadline for the consultant to report back to the DfT; and (c) an expeditious timescale for subsequent DfT decision making. To ensure that similar cases are handled promptly and effectively in future, the Government should clarify precisely how (a) central Government and (b) higher-tier local authorities are responsible for supporting lower-tier planning authorities in cases where a strategic transport asset is subject to a proposed compulsory purchase order.

  1. We asked the Minister which powers the DfT had used to intervene in the Manston case. He said that he did “not think that the United Kingdom Government, unlike maybe the Scottish or the Welsh Government, are in the position of wanting to intervene directly to take over operations of an airport.”78 We agree that there is no general case for the Government to purchase airports, including Manston.

We questioned whether the DfT has any other powers short of nationalisation in cases where a strategic transport asset might be at risk. The Minister told us that “we have the powers that we need, for example, to work with the CAA … It is very important indeed that we explore all the avenues we can and ensure that whatever powers we have in terms of the Government can be used to their fullest effect.”79 The DfT should review what powers it has to intervene in cases where strategic transport assets are at risk and whether those powers are fit for purpose.

Conclusions and recommendations of the case study: Manston Airport

  1. We recommend that Ann Gloag places the joint venture agreement between herself, Chris Musgrave and Trevor Cartner to redevelop Manston in the public domain to make it clear who would benefit from the proposed redevelopment of Manston and to repudiate allegations of asset-stripping. We would be happy to publish this document on our website. (Paragraph 46)
  2. We expect higher-tier local government bodies to fulfil their strategic oversight functions by supporting local planning authorities in resolving one-off, complex cases involving nationally significant transport assets.
  3. Kent County Council has the legal and financial resources to assess complex CPO

cases. Despite having agreed a motion to support Thanet District Council, it failed to

deploy those assets. In failing to support Thanet District Council’s scrutiny of the

proposed CPO at Manston, Kent County Council also failed to fulfil its strategic

oversight function as the local transport authority.

That the DfT judged it necessary to intervene in the Manston case shows the extent

to which Kent County Council failed to fulfil its strategic oversight role.

We welcome the DfT’s decision to appoint a consultant to examine the Manston

case. The uncertainty faced by the public and other interested parties could have

been reduced if it had not taken three months before the DfT acted.

The DfT should set out clear terms of reference for the consultant who is contracted to examine the Manston decision-making process and place them in the public domain.        Those terms of reference should include

(a) an explicit requirement to assess whether RiverOak is an appropriate indemnity partner for Thanet District Council;

(b) a deadline for the consultant to report back to the DfT;

(c) an expeditious timescale for subsequent DfT decision making.

To ensure that similar cases are handled promptly and effectively in future, the Government should clarify precisely how (a) central Government and (b) higher-tier local authorities are responsible for supporting lower-tier planning authorities in cases where a strategic transport asset is subject to a proposed compulsory purchase order.

We agree that there is no general case for the Government to purchase airports,

including Manston. (Paragraph 56)

The DfT should review what powers it has to intervene in cases where strategic

transport assets are at risk and whether those powers are fit for purpose.

In addition

Airports Commission – General

  1. The whole country will be able to share in the economic benefits of an expanded hub airport in the south-east only if that expansion entails airlines securing sufficient slots to maintain services to smaller airports in the English regions, Scotland, Wales and Northern Ireland. The way in which new slots at an expanded hub airport in the south-east might be allocated is currently opaque. The DfT should assess (a) how new slots might be allocated; (b) whether some of those slots could be ring-fenced for domestic services to smaller airports; (c) whether the Public Service Obligation mechanism could be applied to new services using any such new slots; and (d) what proportion of new slots would need to be allocated to flights to UK smaller airports to support regional connectivity effectively. (Paragraph 35)
  2. We recognise that the Airports Commission has carefully defined the scope of its inquiry. Nevertheless, we note that it has on occasion considered the role of smaller airports. We encourage the Airports Commission to reflect on the role of smaller airports in its final report. In particular, it should consider how new slots at an expanded hub airport in the south-east might be allocated to services to smaller airports in the UK. (Paragraph 36)