Civil Aviation (Insurance) (Amendment) (EU Exit) Regulations 2018

Lord Berkeley Excerpts

Wednesday 24th October 2018 Grand Committee

[Lord Berkeley (Lab)]

My Lords, I welcome the Minister’s introduction of these regulations. I imagine it is the first of a very large number of statutory instruments—and it just covers insurance. As the noble Baroness, Lady McIntosh, said, there is the whole question of EASA, which we will come to another day.

I have a few questions about the insurance cover itself. The Minister said that it covers the insurance requirements for air travel in the UK. Does that cover airlines registered in the UK? Does it cover airlines registered in the EU which are flying to or from the UK? Does it cover airlines registered in third countries which are coming into the UK and going on somewhere else or stopping here? Is there any requirement under these regulations for an airline registered in the UK to demonstrate that it has insurance outside the borders of the UK, specifically in the EU? I am sure that airlines do not think, “We just want to be insured in this country, we do not care what happens when we cross the frontier”, but it would be nice to have some comfort on that. Does the Minister expect the EU to want to know whether all these insurances that we have just talked about are valid in the UK before it will allow planes to arrive in its own airports from the UK? There is a large number of different scenarios here, leaving aside the fact that London to Dublin is the most traffic-heavy air route into and out of this country and Dublin will still be in the EU and apparently we will not be.

I would be grateful if the Minister could address those questions and give us some idea of what other SIs will be coming to cover all the other things that are required to enable continuity of flying after 29 March. I gather that either the Minister or her Secretary of State was given a bit of a telling-off by Mr Barnier for trying to prejudge the Brexit negotiations by going round every other member state and trying to get quiet deals with each one. I am sure she had a great time going round all those places but I do not know what has happened with this. I look forward to her comments.

[Baroness Randerson (LD)]

My Lords, the airline industry in this country is intensely competitive. It is a commercial environment where there is a real danger that airlines seeking to reduce costs will cut their insurance to the minimum in order to do so. It is obvious from this SI that freeing ourselves from EU standards means that we could allow airlines to have a lower level of insurance. The Minister read out an impressive but rather grim list of the risks that airlines face. Obviously those risks are also faced by their passengers and therefore I would be grateful if she could give some more detail about what restrictions will be put on airlines that are registered in Britain: how low can they go as regards their insurance cover?

It is obvious that the Government are anticipating a reduction because paragraph 7.3 of the Explanatory Memorandum makes it absolutely clear that this legislation will free airlines in the UK to take up lower levels of insurance cover than those required in the EU. It gives the example of “non-commercial operations”. As an aside, I would like to ask the Minister if she could define what the Government mean by that phrase. What sort of operations will need to have or will be allowed to have a lower level of cover? There is no point in freeing yourself up from EU controls if you are not going to allow variations from the standards that the EU has set. Will there be any guarantees of a minimum level of insurance cover or will we have some sort of free-for-all as a result of this? Air passengers will be concerned that there should always be an adequate level of cover.

I reiterate the question put by the noble Lord, Lord Berkeley: exactly how will this work? I have been trying to envisage the process. Thank goodness that several of our airlines have decided that they will neutralise some of the risks of Brexit and life after Brexit by registering in other countries. That covers their risks, which is a very good thing for them to have done. However, airlines are often based in more than one country. They may have their headquarters in one country but have most of their aircraft based in another one. Of course they fly between countries, so who will set the level of insurance that is required on each occasion? Will it depend on their country of origin, the flight that day, or will it depend on where the airline’s headquarters are based? If our UK-based planes fly from the UK to an EU country, will they not have the right to demand that those planes have an EU level of cover, not the reduced cover that the Government seem to envisage would be possible?

Finally, I put a rather prosaic point to the Minister. Paragraph 3.2 of the Explanatory Memorandum states:

“The territorial application of this instrument includes Scotland and Northern Ireland”.


What has happened to Wales, which has more than one airport? Can I ask for an assurance that the Scottish Government—sadly I cannot ask about Northern Ireland at this moment—have expressed their agreement to the concepts behind this SI and that the Welsh Government have done so as well, particularly since they do not seem to have been mentioned?

[Lord Rosser (Lab)]

I also thank the Minister for explaining the purpose of the regulations before us. Perhaps I may pursue the point that has been made about paragraph 7.3 of the Explanatory Memorandum to clarify what it means—or at least to establish that what I think it means is correct. It states:

“Article 6 sets out levels of insurance in respect of liability for passengers, baggage and cargo. Under Article 6(1), the minimum insurance cover for liability in respect of passengers is set at 250,000 SDRs per passenger”.


Can I take it that, as far as these regulations are concerned, there is no change and that the minimum insurance cover which applies at the moment will continue to be applied in the future and not be reduced? The memorandum continues:

“For non-commercial operations by aircraft with a MTOM of 2,700kg or less, there is an option for Member States to set a lower level of minimum insurance cover”—


I take it that that is the present situation with us being within the EU and that we already have the option because the memorandum says—

“which the United Kingdom has chosen to exercise. To ensure that the flexibility provided for in Article 6(1) is retained, Article 6(1) is amended to include a provision for the Secretary of State, by regulations, to set a lower level of minimum insurance cover in respect of non-commercial operations by aircraft with a MTOM of 2,700kg”.

Does the Secretary of State intend to go to a lower level of minimum insurance requirement than we have already exercised under what I understand is provided for under the existing arrangements? It is clear from looking at it that the Secretary of State could take the first opportunity to reduce it even further. What are the advantages of having the lower level of minimum insurance cover that the Secretary of State may set by regulations? To whose advantage is it? Is it safer to have a lower level of minimum insurance cover? It would be helpful to know what the advantages are and whether the Secretary of State intends to lower the level even further than I presume we have already reached.

[Lord Berkeley]

Will my noble friend clarify his thinking on non-commercial operations of aircraft with a minimum take-off or landing weight of 2,700 kilograms? That covers small private planes. Does he agree that it would be quite difficult if those private planes had such a small amount of insurance cover that anybody who might be affected by anything they did could be seriously out of pocket?

[Lord Rosser]

That would seem to be one issue, but I was posing the question to the Minister with no particular objective in mind other than simply to find out the thinking behind it, given that we have already moved to a lower level of minimum insurance cover than would have applied if we had not exercised the option. At the moment, I genuinely do not know what the thinking behind it is, to whom it is considered advantageous and whether there are any downsides. That is the point of my question and I hope that the Minister will be able to respond to it.

The Minister referred to international treaties. Paragraph 7.4 of the Explanatory Memorandum states:

“Article 6(5) sets out that the values referred to in Article 6 may be amended if required because of changes to international treaties … Article 7(2) sets out that the values referred to in Article 7(1) may be amended where it is required as a result of changes to international treaties, and this is amended to enable the Secretary of State, by regulations, to amend the values in Article 7”.


I think that the Minister has already said this, but I would like an assurance that those changes will be made only in response to changes in international treaties and that the Secretary of State will not use this instrument to make changes that are not required under international treaties.

--- Later in debate ---

[Baroness Sugg]

My Lords, I thank noble Lords for considering the draft regulations. Many questions have been asked and I will do my best to get through all of them, but if I do not I will follow them up in writing. As I have said, the regulations just make the changes necessary to ensure that the retained EU legislation setting out the insurance requirements continues to function properly. They do not change that legislation.

My noble friend Lady McIntosh asked about the level of insurance. The regulations do not change the prescribed level of insurance in any way. I agree with my noble friend that drones are a real threat and that is why we are taking action. We have brought in height restrictions and flight restrictions close to airports, but there is more to do on that. We will bring forward a draft Bill which will look at police powers, among other things.

Reciprocal cover on insurance is required under international treaties. That will continue to be the case. Our continued membership of EASA is a matter for negotiations, but we have made our position clear that it is in everyone’s interest that the UK should remain part of EASA. We have played a leading role in it and will want to continue to do so.

The noble Lord, Lord Berkeley, asked whom this insurance will cover. It will apply to all aircraft flying into the UK, including EU carriers, third-country carriers and UK carriers. Everyone who flies into the UK will be required to hold this insurance as a condition for their permit to operate in the UK. The noble Lord is right to point out the number of pieces of secondary legislation coming our way. There will be around 14 aviation SIs to get through.

[Lord Berkeley]

The noble Baroness mentioned international treaties. Will those need to be redone because we are leaving the EU or are they ones to which the whole world is signed up and so there will be no change? In other words, did we sign up to them or did we sign up to them through the EU?

[Baroness Sugg]

We signed up to the international treaties as a member state—as the UK—so we will not need to rejoin them. Obviously, EASA is a separate group of which we are a member as part of our membership of the EU, but we have signed up to the Montreal convention, for example.

Regarding the member states negotiations mentioned by noble Lords, sadly I have not been on a Europe-wide trip negotiating bilaterally with member states. We are working closely with the Commission on agreeing a liberal deal, and that kind of multilateral level agreement is our primary objective. We want to be as ready as we can be for when we leave the European Union, and so the noble Lord was quite right to point out that we have approached member states, but our preference would definately be a multilateral deal on that.

Turning to the questions from the noble Baroness, Lady Randerson, regarding the minimum level required and how low we could go. Just to be clear, it is not about reducing cover in any way. Article 7 sets out the minimum insurance for special drawing rights and that is carried across, so we will still have that same minimum level. I can assure all noble Lords that the amendments to regulations will be made only in response to an international treaty change.