1.1 The sponsorship statement: The purpose of this document is to set out the relationship between the Secretary of State and the CAA; the framework within which the CAA will operate; any financial conditions and other guidance relevant to the exercise of its functions; and how the CAA will be held to account for these. It has been drawn up by the Department for Transport (the Department) in consultation with the Civil Aviation Authority (CAA).
1.2 Status: For administrative purposes the CAA is classified by the Agencies and Public Bodies Team, Cabinet Office, as a public corporation. In the national accounts the CAA is classified as a public corporation in the public sector. While the CAA's functions are conferred by Act of Parliament, it is sponsored by the Department and the Secretary of State is accountable to Parliament for the CAA's proper discharge of its duties. In law, the Board of the CAA is fully responsible for all of the CAA's activities.
1.3 Legislation: The continuation of the CAA as a body corporate was confirmed by the Civil Aviation Act 1982. The legislative provisions governing its constitution and functions are contained in the Civil Aviation Act 1982, the Airports Act 1986 and the Transport Act 2000.
1.4 Review and amendment: The CAA or the Department may propose amendments to this document at any time. Any such proposals will be considered jointly by the CAA and the Department, and the Department will determine what changes, if any, are to be incorporated, taking account of the views of the CAA. Significant variations to the document will need to be agreed with the Treasury. The sponsorship statement will be reviewed jointly by the Department and the CAA at least every fifth year. Legislative changes take precedence over the terms of the Sponsorship Statement.
1.5 Publication: Copies of this document and any subsequent substantive amendment will be placed in the Libraries of both Houses of Parliament. Copies will also be made available to members of the public on request and be placed on the CAA's and Department's websites.
1.6 Effect: This document replaces the Sponsorship Statement dated 13 November 2002 which shall cease to have effect.
2.1 Functions and Duties: The CAA's principal functions and duties are set out in the Civil Aviation Act 1982, the Airports Act 1986, the Transport Act 2000, and the directions given under section 66 of the Transport Act 2000.
2.2 Objectives: The CAA's general objectives are set by the Civil Aviation Act 1982 which requires the CAA to perform its functions in the manner it considers best calculated
"to secure that British airlines provide services which satisfy all substantial categories of public demand ...., at the lowest possible charge consistent with a high standard of safety in operating the services and an economic return to efficient operators on the sums invested in providing the services and with securing the sound development of the civil air transport industry in the UK; and to further the reasonable interests of users of air transport services"
Objectives specific to the CAA's regulatory functions are set out in section 68(1) of the Civil Aviation Act 1982, section 39(2) of the Airports Act 1986 and sections 2, 70 and 87 of the Transport Act 2000.
2.3 Statutory functions: The CAA's main statutory functions are:
2.4 Aims: The CAA's Mission is to provide best practice regulation and expert advice that are independent and enable civil aviation to best meet the needs of its users and society in a safe and sustainable manner. Its high level values are:
2.5 Achievement of aims: To enable the CAA to achieve its Mission and values it will:
2.6 Performance targets: The key performance targets relating to the CAA's objectives will be set out in the CAA's corporate plan.
2.7 Co-operation: In pursuit of its objectives the CAA will work closely with the Department and the aviation industry both in the UK and abroad and with international aviation organisations.
2.8 Guidelines: From time to time, the Department may issue guidance to the CAA on general and specific areas of Government policy. Wherever possible, the Department will issue guidance only after discussion with the CAA and will take full account of the CAA's statutory duties. The CAA will follow such guidance unless it conflicts with its statutory duties.
2.9 Meetings: The Secretary of State and the Chairman of the CAA will meet regularly for a general exchange of views and to discuss matters of mutual interest. There will also be regular meetings between the Director General, Civil Aviation and the Chairman of the CAA. The Department and the CAA will encourage staff at all levels to have good informal contacts with those working in similar areas in the other organisation.
2.10 International business: The Department is responsible for ensuring that all international negotiations which may require Ministerial approval, including their prior policy development, are properly conducted and resourced. It is important to secure the best outcome for the UK in international affairs, and that the UK position is clear to other States.
2.11 The CAA has a duty to advise Ministers on technical issues and policy development, particularly in relation to regulatory policy. In recognition of this valuable advisory role, the Department will work with the CAA when drawing up the proposed line for international meetings; and on deciding whether CAA, DFT or both can best represent the United Kingdom's view in particular cases.
2.12 Except on purely technical matters or normal bilateral contacts with CAA counterparts in Overseas administrations the Department expects there to be a continuing dialogue and consultation with the CAA to ensure that both parties are kept informed and up-to-date. This is particularly important before discussions and correspondence with international organisations, including the European Parliament and European Commission, or other States. In the improbable event that the Department and the CAA cannot agree the line to take in negotiations, or the run-up to negotiations, the Ministers' view would prevail.
2.13 Communication: The Department and the CAA recognise that working together successfully requires effective two-way communication at many levels. In practical terms this means that both the Department and the CAA agree to operate a policy of 'no surprises' in relation to particular issues and cases likely to generate media, business or public interest or lead to significant announcements. To achieve this, the Department and the CAA will in particular:
The Department and the CAA will respect the requirements of confidentiality of any information which they share.
2.14 Freedom of Information: The Department and the CAA shall consult each other on the handling of Freedom of Information requests (made under the Freedom of Information Act 2000 and the Environmental Information Regulations 2004) in which they have a mutual interest. In doing so they will have regard to the relevant Code of Practice, including overall timescales for responding to disclosure requests.
2.15 Supplementary Agreements: In addition to this Statement, the Department and the CAA have agreed a Statement of Agreed Practice in connection with the application and enforcement of EC Regulation 785/2004, on insurance requirements for air carriers and aircraft operators; and a Memorandum of Understanding between the Department, the CAA and the Air Transport Users Council in connection with the application and enforcement of EC Regulation 261/2004, establishing common rules on compensation and assistance to passengers in the event of denied boarding and of cancellation or long delay of flights in the UK. Such agreements, which form annexes to this document, are complementary to and consistent with this Statement.
2.16 Overseas Territories: In accordance with the Civil Aviation Authority (Overseas Territories) Directions 2003 the CAA shall continue to maintain Air Safety Support International Limited as a wholly owned subsidiary company of the CAA to ensure that the United Kingdom discharges its obligations under the Convention on International Civil Aviation done on 7 December 1944 in respect of the Overseas Territories.
3.1 Accountability to Parliament: The CAA is accountable to Parliament through the Secretary of State for its functions. In the light of the financial duties placed on the CAA by the Civil Aviation Act 1982, there will be no formal appointment of an Accounting Officer for the CAA. The Department's Accounting Officer will, where he considers it necessary, write to the CAA Director of Finance giving guidance and advice on the stewardship of public funds and the duties and responsibilities of an Accounting Officer.
3.2 Corporate Governance: The CAA will comply with the Combined Code on Corporate Governance in as far as it is appropriate for a Public Corporation and the particular circumstances of the CAA.
3.3 Dealings with Parliament: In dealing with Parliament the CAA will be objective and even-handed, and will consult the Department where appropriate and keep it informed of action taken. The Department will keep the CAA informed of their activities where appropriate.
3.4 Role of Secretary of State: The Secretary of State, in consultation where appropriate with the Secretary of State for Defence, will:
Secondary legislation relevant to the CAA will be prepared in accordance with the working arrangements agreed from time to time between the CAA and the Department.
3.5 The sponsoring division: Within the Department, the Aviation Directorate is the sponsor unit for the CAA. The Civil Aviation Authority Sponsorship Team is the primary source of advice to the Secretary of State and the Accounting Officer in discharging their responsibilities and the primary point of contact for the CAA within the Department. Other working level contacts are also in place for policy matters such as aviation safety and environmental issues.
3.6 Role of Chairman: The Chairman is responsible to the Secretary of State for the overall direction and management of the CAA within the policy framework set by the Secretary of State and has a particular responsibility for the proper discharge by the Board of its collective role.
3.7 Appointment of Board Members: The members of the Board are appointed by the Secretary of State for Transport, generally following open competition and in consultation with the Chairman of the CAA, and are responsible for all aspects of the CAA's organisation and performance. The member who has responsibility for airspace policy is de facto appointed jointly by the Secretary of State for Transport and the Secretary of State for Defence, and the member with responsibility for national security is nominated by the Secretary of State for Defence.
3.8 Role of Board members: Board members have collective responsibility for ensuring that the policies and activities of the CAA are consistent with provisions of the Civil Aviation Act 1982, and with the provisions of the Companies Acts 1985 and 1989, in respect of any subsidiary companies established under Companies legislation, with Government policies as communicated by the Secretary of State and with the policy framework set by Secretary of State. The Board will ensure that the CAA fulfils its statutory functions, taking account of such guidance and directions as the Secretary of State may give, and that the requirements of propriety, regularity and value for money are met. In consultation with the Chairman, the Secretary of State will appoint non-executive members to the Board who, by their stature, background, breadth of oversight and overall experience, can make direct and relevant contributions to the management of the CAA.
3.9 Code of Practice: The Board will adopt and observe a Code of Practice based on the Cabinet Office Guidance on Codes of Practice for Board Members of Public Bodies. In exercising its functions the CAA will require high standards of conduct by members.
3.10 Staff: In accordance with schedule 1 of the Civil Aviation Act 1982, the CAA is responsible for the appointment and management of its staff.
3.11 Staff pay: The Secretary of State has no locus in law over the pay or conditions of CAA staff. The CAA will inform the Sponsorship Team of its intended pay remit before beginning negotiations with staff representatives. If necessary, the Secretary of State will issue guidance to the Chairman on wider pay policies.
4.1 The Corporate Plan: The CAA will each year, after consultation with the Department, prepare and submit a Corporate Plan in accordance with any guidance issued by the Department. It will provide information on objectives; performance indicators; performance targets; timing; and costs. It will take account of current planned resource allocation to the CAA and provide any further information about resource requirements as requested by the Department.
4.2 Budget planning: The CAA will consult on its budget annually with the industry which, either directly or through the Eurocontrol route charges system, is the source of its income. Pursuant to section 11 of the Civil Aviation Act 1982, the CAA will consult the Secretary of State before making its charges schemes.
4.3 Repayment to the Department of the Eurocontrol "national contribution": The CAA is designated to receive payments from the Central Route Charges Office of Eurocontrol to cover its own costs and the Department's costs incurred in relation to the route charges system. The CAA will make a monthly Sterling payment to the Department of an amount equivalent to one twelfth of the United Kingdom's share of the approved Eurocontrol annual cost base.
4.4 Financial propriety: guidance in relation to financial propriety in the public sector is set out in Government Accounting and the Fees and Charges guidance published by the Treasury. The CAA will follow this guidance where applicable.
4.5 Financial Information: The CAA does not have monies voted to it by Parliament but must recover its operating costs, plus a rate of return set by the Government, through charges on the aviation industry for its regulatory services and on users of UK airspace through the Eurocontrol route charges system. The CAA is to carry out its activities so as to achieve value for money and to meet the requirements of regularity and propriety.
4.6 Public expenditure framework: The CAA counts against the Departmental Expenditure Limit (DEL), which is determined by the Treasury. The CAA will meet the financial requirements set out under that framework.
4.7 Financial reporting: By the 7th working day of each month, the CAA will provide the Department with actual expenditure information for the previous month and profiled expenditure for the rest of the year. The Finance Director, or her nominee, will be responsible for providing any other information (such as NLF loans information) required for the monitoring and control of public spending.
4.8 Timetable for financial reporting: This will be agreed in January of each year to which the reporting relates and will incorporate such requirement as may be necessary for the purpose of producing the Whole of Government Accounts.
4.9 Internal audit: The CAA will maintain effective arrangements for internal audit in accordance with the requirements of the Companies Acts and the Combined Code on Corporate Governance. These arrangements will operate to provide an independent appraisal and evaluation of the CAA's internal control system ie. the whole network of systems and controls established by the CAA to deliver its objectives with regularity, propriety and value for money.
4.10 Audit Committee: The Board will maintain an Audit Committee to support the CAA in the discharge of its responsibilities and advise on audit or audit related matters.
5.1 The annual report and accounts: After the end of each financial year, the CAA will prepare an annual report of its activities, together with its audited annual accounts. These will comply with the Report and Accounts Direction issued by the Department, with Treasury approval. The report will outline the CAA's main activities and performance during the previous financial year and set out in summary form the CAA's forward plans. The report and audited accounts will be laid before Parliament by the Secretary of State.
5.2 External audit: The CAA's accounts will be audited by independent auditors appointed by the Secretary of State under section 15 of the Civil Aviation Act 1982 as amended by the Civil Aviation Act (Auditing and Accounts) Order 1984. The CAA will submit the audited accounts to the Secretary of State, who will lay them before Parliament. For the purposes of (a) the examination of certification of the Department's accounts; or (b) any examination pursuant to section 6(1) of the National Audit Act 1983 of the economy, efficiency and effectiveness with which the Department has used its resources; the Comptroller and Auditor General may examine such documents as he may reasonably require which are owned, held or otherwise within the control of the CAA and may require the CAA to provide such oral and/or written explanations as he considers necessary. This Condition does not constitute a requirement or agreement for the examination, certification or inspection of the accounts of the CAA under Section 6(3)(d) and (5) of the National Audit Act 1983.
5.3 External auditing procedures: Before the annual report and accounts are submitted to the external auditors, the CAA will send copies to the Department for comment. Copies will be with the Department by 31 July each year. The CAA will also provide responses to all issues to be raised in the auditor's management letter in time for these to be incorporated into the management letter.
6.1 Management and accounting information: The CAA will maintain management information and accounting systems which enable it to review its financial and non-financial performance against budgets and targets in line with the corporate plan.
6.2 Monitoring: The Department will monitor during the year the CAA's performance against its plan and its compliance with all relevant delegations and directions.
6.3 Annual Report and Accounts: The CAA's performance against key targets will be reported in its annual report and accounts. The annual report will reflect the corporate plan, and report on outcome against plans.
6.4 Financial Management and Policy Reviews: The Department and the CAA, in consultation with other Government Departments will critically review the CAA from time to time to examine:
a) the continuing need for the CAA's regulatory activity and the extent to which its functions could be more effectively undertaken in other ways;
b) the efficiency and effectiveness with which the CAA carries out its activities and uses its resources.
In carrying out such reviews, the Department will be mindful of Cabinet Office guidance on the conduct of FMPRs and of the need to ensure the continuity of aviation safety regulation.
7.1 Service Standards: The CAA will publish and maintain a statement of the service and standards which will be provided to its customers, in line with the Government's public service principles.
7.2 Consultation: So far as is practicable, the CAA will consult the aviation industry and others affected by its activities on matters such as standards, new regulations and charges, in advance of decisions of specific interest to them. The CAA will conduct consultation in accordance with the Cabinet Office Code of Practice on Consultation where appropriate. Regulatory Impact Assessments will be conducted in accordance with the guidance issued by the Department.
7.3 Appeals: Regulation 6 of the Civil Aviation Authority Regulations 1991, as amended by the Civil Aviation Authority (Amendment) Regulations 2001, provides a procedure for appealing against decisions or proposals made by officials of the CAA. The outcome of a Regulation 6 procedure is subject to Judicial Review by the High Court. In cases of fitness of character, an appeal may be made to the County Court. The Regulations also provide for appeals where the CAA proposes to vary certain conditions of an Air Traffic Services' licence issued under the Transport Act 2000.
7.4 Regulatory Impact Assessments: All primary and secondary legislation relating to the CAA will be subject to regulatory impact assessment. The CAA should seek to reduce unnecessary and over-detailed regulation and ensure that necessary regulation is clear and fair.
7.5 Role of the Parliamentary Commissioner: In cases where maladministration is alleged, there is a right of appeal to the Parliamentary Commissioner for Administration.
7.6 Role of the Council on Tribunals: The Council on Tribunals exercises a supervisory role over the workings of the CAA as a tribunal.
Memorandum of Understanding between the Department for Transport (DFT), the Civil Aviation Authority (CAA) and the Air Transport Users Council (AUC) in connection with the application and enforcement of EC Regulation 261/2004, establishing common rules on compensation and assistance to passengers in the event of denied boarding and of cancellation or long delay of flights in the UK.
Statement of agreed practice in connection with the application and enforcement of EC Regulation 785/2004, on insurance requirements for air carriers and aircraft operators.
Dated: 17 May 2006