Guidance

Civil Aviation Authority review: terms of reference

Updated 17 July 2023

Background

The Civil Aviation Authority (CAA) is the United Kingdom’s independent specialist aviation and airspace, safety, security, consumer rights, spaceflight, and economic regulator. It must carry out its functions to further the reasonable interests of users of air transport services which includes passengers and owners of freight and the interests of those overflown by aircraft. This ensures:

• the aviation industry meets the highest safety standards

• consumers have a choice, value for money, and are protected and treated fairly when they fly

• the efficient use of airspace to manage the environmental impact of aviation on local communities and the reduction of CO2 emissions

• compliance with regulations, so that security risks are effectively managed by the aviation industry.

The CAA is a statutory public corporation sponsored by DfT, established by Parliament in 1972 by the Civil Aviation Act 1971. Its role and status are governed by legislation that includes the Civil Aviation Act 1982, the Aviation Security Act 1982, the Airports Act 1986, the Transport Act 2000 and the Civil Aviation Act 2012.

The Pilling review 2008 (PDF,478kb) was the last strategic review of the CAA. However, there have been other reviews, including the House of Commons Transport Select Committee report 2005/6 session (13th report).

Scope and purpose of the review

A review of the CAA will give a detailed assessment of the effectiveness and efficiency of CAA’s functions and structures (including how it promotes government priorities around economic growth and environmental sustainability), its governance and its accountability to parliament and the department. It will dovetail with an audit of aviation safety by the International Civil Aviation Organisation and an existing series of workstreams to review the governance, performance and the working relationship with the department.

Efficacy

The review will assess:

• whether the CAA has a clear and relevant overarching mandate for delivering:

  • its statutory regulatory functions
  • government priorities

• the extent to which CAA’s delivery of its statutory functions is aligned with the strategic priorities of the department and wider government objectives and priorities, in particular promoting economic growth and environmental sustainability

• the current delivery model of the CAA

• the extent to which the CAA has the capability and capacity to deliver effective outcomes now and in the future, including in the context of taking on newer or expanded functions/responsibilities such as spaceflight and net zero aviation emissions

• the extent to which the CAA is delivering its objectives for customers and stakeholders across the aviation sector, including the effect its actions have on the UK’s reputation and meeting the government’s expectations on policy and process. In particular, the extent to which CAA is

  • effectively responding to its statutory duties, including to take account of promoting economic growth and innovation in its activities (per the relevant legislation) and supporting net zero aviation

  • supporting the future of aviation (that is, science, technology, engineering and mathematics (STEM) skills, airfield network, youth, general aviation)

  • customer-focused (for example, do their services work? are they easy to access? what are response times like?)

• areas where further progress by the government and/or CAA would help the CAA deliver its statutory objectives, including its consumer enforcement activity

Governance

The review will assess:

• the effectiveness of the CAA board, including diversity, capability and conduct

• the extent to which the board is clear about its purpose in delivering its statutory functions

• the extent to which the board is clear about the government’s objectives and priorities and actively considers them in the delivery of its statutory functions

• efficacy of arrangements in place for governance, risk management and internal control, including in relation to CAA’s subsidiaries, where relevant

• the extent to which the CAA board is open, transparent, accountable and responsive in its communications with the public, ministers and other key stakeholders

• the effectiveness of recent improvements to joint ways of working and governance (between the CAA and DfT), and processes in place to identify/address duplication of policy or other work, exploring further improvements that can be made

Accountability

The review will assess:

• the extent to which DfT’s sponsorship of the CAA is effective and appropriate, including aviation security compliance activity

• whether the CAA’s lines of accountability are clear and balanced across its guiding legislation and status as a departmental public corporation, including the extent to which the CAA is accountable to

  • its customers (for example, through strong engagement, and in particular, assessing whether complaints procedures are effective and if the new complaints review system is working effectively)

  • DfT for its performance

  • parliament

• the extent to which DfT is or should be accountable directly to parliament for the overall effectiveness and efficiency of the CAA

• the extent to which DfT and the CAA engage with/consider relevant government functions and guidance where applicable, for example risk analysis, stakeholder engagement, senior pay

Efficiency

The review will assess:

• whether the CAA actively considers and implements measures to maximise efficiency, including whether the CAA actively benchmarks its performance and costs to comparable bodies within the UK and internationally, to assure its performance

• whether there are any opportunities to improve the effectiveness and efficiencies for how CAA delivers non-regulatory services, including stopping, transferring or outsourcing services the CAA provides

• the extent to which CAA’s funding model (‘regulated user pays’) is the right model for the future, including to enable the creation of future regulatory frameworks, and whether there is potential for/it is appropriate to change the structure of the current regulatory charge framework, without increasing government funding

• CAA’s approach to digitisation and the case for further digitisation (including licencing applications and approvals and enhancing efficiency and customer service)

• CAA’s approach to its workforce, including its plan for securing the capabilities required for the future and its approach to having an efficient level of staffing

• where efficiency savings of no less than 5% can be made within three years, in line with His Majesty’s Treasury (HMT’s) objective for public body reviews

• CAA’s adherence to current financial guidance and ability to track progress towards clearly set goals (including the grant panel process)

Out of scope

Safety and Airspace Function: The review will not consider the CAA’s approach to safety and airspace regulation. The International Civil Aviation Organisation (ICAO) will audit CAA’s safety function in 2022/23. ICAO’s safety audit and recommendations will be entirely independent of the CAA review. However, the review team will

• coordinate with DfT and the CAA to maximise the value of both exercises

• ensure the review’s final report and recommendations align with the ICAO’s report to avoid the risk of contradictions, competing recommendations and unrealistic timescales for delivery/implementing recommendations

The review will not assess the operations of CAA’s subsidiary, Air Safety Support International (ASSI). The legal/statutory position for ASSI and its distinct role from CAA leaves it out of scope. The efficacy and efficiency of CAA’s corporate/shared functions (including to its subsidiaries) will be included as outlined above.

Methodology

The lead reviewer, supported by the review team, will consult a broad range of stakeholders including UK government departments, devolved administrations, consumers, businesses, and representative bodies, as well as with CAA’s own staff and management.

Evidence will be collected through a combination of internal stakeholder interviews, external stakeholder engagement, a public ‘call for evidence’ and desk-based research. Specialist advice will be sought as necessary. The review will also take account of other pieces of work that have recently considered the approach to the themes above.