3.2 As referred to in our previous report the Company's financial difficulties had prevented it from making a start on its ten-year Investment Programme to increase the capacity and performance of the air traffic control system; the key objective of the PPP3. In oral evidence to the Committee of Public Accounts in November 2002 the Chief Executive of NATS said that despite the lack of external funding, the Company had used the year well, undertaking project planning and improvements to project management. Some investment funds had been generated internally, but he considered that the solution had to be achieved within "the next few months" to avoid a risk of demand exceeding capacity in the future.
3.3 The longer the Company lacked access to external funding, the more serious the consequences would be. In such difficult circumstances the Company faced a growing challenge in retaining key managers and in maintaining staff morale. A real risk of industrial action over pay and terms of employment was only averted with some difficulty in September 2002. Important procurement contracts, including a radar replacement programme, were deferred, and the Company was in a weak position to progress collaborative projects with other Air Traffic Control authorities while major uncertainty hung over its future finances.
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3 Paragraphs 3.36 - 3.39, The PPP for National Air Traffic Services Ltd, HC 1096, 2001-02.