Leaving the EU: Aviation Sector

Jesse Norman Excerpts

Wednesday 31st October 2018 Westminster Hall

[The Parliamentary Under-Secretary of State for Transport (Jesse Norman)]

I am grateful to you, Mr Hollobone, and rejoice in your chairmanship of this debate. I am also grateful to the hon. Member for Wythenshawe and Sale East (Mike Kane)—an old and much-loved colleague of mine from the Treasury Committee—for securing this important debate on the effect of the UK leaving the EU on the aviation sector.

I need hardly say that this is a matter of great importance to the Government, and a topic on which there is a keen focus on achieving our desired outcome. The hon. Gentleman asked for reassurance, and I can tell him that aviation remains a high priority for the Government, just as it is for him. I point out to him and to the hon. Member for Kilmarnock and Loudoun (Alan Brown) that this country is far from not having an outward-looking industry—nothing could be further from the truth. We are proud of the aerospace companies. We know that, like all global businesses, they constantly have to manage change in their political circumstances, and we are pleased that there has been no shortage of capital investment in the UK.

The hon. Member for Strangford (Jim Shannon) is no longer in his place, but as he said, not only has there been new investment such as that in Bombardier but, as he put it, we can expect good times to be around the corner, based on the economic flows that he has observed. He is right about that, and we have projects such as the joint investment with the MOD and RAF Lossiemouth, and the Airbus Wing Integration Centre in Filton—my hon. Friend the Member for Filton and Bradley Stoke (Jack Lopresti) has worked closely on that, alongside his other work with Airbus—and the opening of Boeing’s first European manufacturing facility in Sheffield. Those are not the actions of companies that are worried about the UK, or about the safety of their investment and the possibility of it growing in the aviation sector—far from it—nor are they the actions of companies that are concerned that the UK might be, as the hon. Member for Kilmarnock and Loudoun suggested, turning in on itself. On the contrary, they show that the aviation industry is confident about Britain’s place in the world post Brexit, and rightly so.

This is a priority for us and, as the Government’s White Paper sets out, we are seeking to secure an agreement that maintains reciprocal and liberalised—I emphasise the word liberalised—aviation access between and within the territory of the UK and the EU, alongside UK participation in the EASA system. There is something of a contradiction among the things said by Opposition Members, in that they are perfectly happy to recognise that these things are matters that go down to the last minutes, because only when everything is agreed is anything agreed, but at the same time they are desperate for there to be more progress. In many cases it is the EU which is inhibiting progress on this for negotiating purposes.

[Karl Turner]

Considering that we are five months away from leaving the European Union, does the Minister think that everything is in place? Is he confident that there will not be any major problems, such as those that have been spoken about by hon. Members today?

[Jesse Norman]

I take all comments and points made by hon. Members across the House with great seriousness, but all I am doing is pointing out an inconsistency in the Opposition’s position. The Government remain confident that an agreement will be secured. Not only that, it is interesting to see that there appears to be increasing confidence of that within the private sector as well, as the remarks of several chief executives of airlines have recently made clear.

[Several hon. Members rose—]

[Jesse Norman]

I have a short period of time in which to speak. I have been given a little extra time by the hon. Member for Kingston upon Hull East (Karl Turner). I have dozens of points to address but if hon. Gentlemen wish to intervene, I am happy to take their points.

[Alan Brown]

Can the Minister explain what the Government’s confidence in reaching an aviation agreement is based on, given that the Secretary of State told the Airport Operators Association conference that discussions have not yet begun?

[Jesse Norman]

As so often the case, I am sad to have given way to the hon. Gentleman because these points are covered precisely in my speech and if I had had the extra 45 seconds to be allowed to make them, I could have reached them. We are seeking liberalised aviation access. We recognise that is what UK and EU consumers and businesses want and need. As we move forward it is important to be clear that we recognise that it is in everyone’s interests to do a deal quickly and to make it a good deal.

Before I turn to the many specific points that have been raised, as colleagues have said aviation is crucial to the UK’s economy and its standing as a great trading nation. It has been a global success—there can be no doubt about that. We have the third largest aviation network in the world and the biggest in Europe, with direct flights to more than 370 international destinations in 100 or so countries, providing at least £22 billion to the UK economy every year and supporting more than half a million UK jobs.

As a Government we do not wish to see the introduction of new barriers that would hinder the growth of our aviation industry—I do not think any Member of Parliament wishes to see that. That is why we are seeking to strike the right deal with the EU, one that allows that sector to grow and prosper. We should be clear that not just the UK will benefit from a liberal aviation market. It is in the interest of all EU countries and citizens that a comprehensive air transport agreement is negotiated.

Lest we forget, 164 million passengers travelled between the UK and EU airports in 2017. UK residents made 42.7 million visits to the EU and spent an estimated £21.3 billion while they were there. It cannot be in the interests of either UK or EU businesses or consumers for flights to stop, let alone be interrupted. That is why we are working so hard to reach a deal which continues the current arrangements, in as close to a liberalised form as we can.

As hon. Members across the Chamber have said, consumers and industry want certainty, and quickly. So do the Government and much, if not all, of the EU and its member states. It is true that negotiations on transport have yet to begin—that is an EU decision—but let me assure Members that we are ready for that when they do. We work closely with the aviation industry to ensure that the needs of the global sector are factored into our negotiations. Our objectives for future partnership on aviation are precisely to preserve the connectivity, the high safety standards and the efficient use of airspace that consumers benefit from today.

There are many reasons why the EU should and will, I think, agree to a liberal aviation deal with the UK. The UK has been at the forefront of driving forward the liberalisation of aviation markets across the world, precisely the point made eloquently by the hon. Member for Central Ayrshire (Dr Whitford). It is that liberalisation that has driven down prices and opened up accessibility to aviation markets for many people across this country.

We provide EASA with a significant amount of expertise and have played a key role in enhancing safety standards across Europe. One of the ironies of the present situation is that EASA was set up if not largely by the Civil Aviation Authority then with heavy influence from this country. We are a global leader in aviation security, with one of the best security systems in the world. Our geographical position in the aviation network means that along with Ireland, the UK services more than 80% of traffic entering or leaving EU airspace from the north Atlantic.

We start from a unique position of having wholly aligned regulatory standards with the EU. No two agreements are exactly the same; we recognise that. Each one will inevitably be tailored to suit the circumstances of the parties involved, but we seek an agreement on which we can build a further liberal future aviation relationship. The benefits that both sides gain from air transport are clear, and the benefits that we have described are so evident that we feel some justification in believing that the arrangements will continue.

As a responsible Government, we must also contemplate the unlikely event that we might conceivably be forced to leave the EU without a deal. We believe that flights between the UK and EU will continue, even if that happened. It would be in nobody’s interest to introduce obstacles to airlines or to limit the choice of destinations that passengers enjoy today. The continuation of flights is far and away the highest probability, but we have to prepare for all eventualities until we can be certain of the outcome of negotiations. Our preparation plans continue at pace, against the possibility of a no deal, in part to support the final deal we eventually agree.

As part of that planning we have published three aviation technical notices. These set out the pragmatic approach that the UK would take in any no-deal scenario. The point of that approach is to avoid disruption to air services, to support businesses and consumers, and to maintain their rights across the EU. We expect the EU to do the same. We think they will. It is character for them and in the interests of both UK and EU consumers and businesses. Our preference, of course, would be to have in place a multilateral contingency agreement with the EU27. We are pleased that the EU is preparing for contingency plans as well as for future partnership discussions. We would welcome a common approach, but we must prepare for all scenarios.

It is certainly true that the UK and EU aviation sectors urgently need reassurance that we are working on positive post-EU exit solutions for all possible outcomes and that in any scenario there will be continued connectivity. Regardless of the outcome, the European Union (Withdrawal) Act 2018 will provide the maximum possible certainty to individuals and businesses about their legal rights and obligations as we leave the EU.

Turning to third countries, we are also aware that the issue reaches beyond the EU. We are working hard to deliver another priority, which is to replace quickly EU-based third country agreements with countries such as the US and Canada. We are working with these countries to ensure new replacement arrangements are in place after we leave the EU. Despite some reports to the contrary, talks have been positive and we have made significant progress. We believe with some confidence that these arrangements will be ready for exit.

The UK also has 111 independently negotiated bilateral air service agreements with countries all over the world, including China, India and Brazil. There will be no change to these when the UK leaves the EU. As always, we will continue to seek new and improved bilateral air service agreements with the rest of the world, seeking to improve connectivity, choice and value for money for businesses and consumers.

I turn now to the points raised in the debate, starting with those of the hon. Member for Wythenshawe and Sale East. He said that it was critical that the choices that constituents are able to make remain the same. We recognise that. It is important to be aware that tourism is booming across the UK and is now worth over £66 billion annually to the economy. As he knows, we are proposing reciprocal visa-free travel arrangements to enable UK and EU citizens to continue to travel freely for tourism. The Home Office has set out proposals on the movement of workers and will set out future immigration policy shortly. We have been clear that we seek a comprehensive agreement on air transport that provides for continuity of services and opportunities.

The hon. Gentleman asked whether there was an adequate fall-back. As I said, our preference is for a contingency agreement with the EU27 to be in place, but since the Commission will not engage with the UK at the moment, for tactical reasons of negotiation, we need to discuss bilaterally with member states what arrangements will be put in place. The aviation technical notices clearly set out the pragmatic approach we propose in any no-deal scenario. Specifically, we intend to give permits to EU airlines—this addresses the point the hon. Member for Central Ayrshire made about Ryanair—to allow them to operate in the UK, and we expect that to be reciprocated by the EU.

The hon. Member for Wythenshawe and Sale East and other colleagues asked what practical steps the Government are taking to secure the mutual recognition of aviation safety standards. Of course we recognise that our continued participation in EASA in some form will reduce regulatory burdens for the sector. As we set out in the White Paper, there is an established mechanism and a precedent for third countries to participate in the EASA system.

All UK-issued safety approvals and certificates conform with the international requirements of the Chicago convention, so all those associated with the international operation of UK-registered aircraft should continue to be recognised for the operation of air services by UK aircraft. Let me be clear that we are pressing the EU for technical discussions to take place between the CAA and EASA as soon as possible, to ensure that any respective contingency and other plans are fully aligned. We seek an improved shared understanding of the situation on all sides.

The hon. Gentleman expressed concern that the Government may not be prepared to use the opportunity to prepare the aviation sector for the next five to 10 years. As colleagues across the House have rightly pointed out, that issue is in many ways independent of Brexit. As colleagues know, the Government are developing a new aviation strategy, the purpose of which is specifically to achieve a safe, secure and sustainable aviation sector. That is a long-term strategy. It is not a 10-year or even a five-year thing—it is a strategy out to 2050 that is designed to lay the foundations of a strategic shift and development in the way our aviation industry operates.

We have a strong focus on consumer issues, but of course we also champion the economic benefits of aviation. We will consider how we can maximise the role of our world-class aviation sector in developing trade links, but we recognise the need to focus inward on industrial strategy as well as outward on international trade. On 7 April, the Government published the aviation strategy next steps document, which outlines the key challenges ahead for aviation and our considerations in responding to them. We plan to deliver a final aviation strategy in early 2019—for those who asked, that is not so far away.

Turning to airports and Border Force, the Department for Transport continues to work closely with Border Force on the “Welcome to the UK” initiative. Border Force recognises that, given predicted passenger growth, which is undiminished by the concerns that were raised, queues at passport control may get longer. The purpose of the recent announcement that millions more people will be able to use e-passport gates was precisely to meet that long-term contingency. The two sides are committed to working closely with the industry to minimise queuing times by reducing last-minute schedule changes and ensuring that service-level agreements are set at the right level. Alongside that, the Government plan to consider whether there are additional or alternative funding mechanisms in the medium term.

The hon. Member for Wythenshawe and Sale East rightly asked whether skills and training will be adequately maintained in the face of the changes to the sector after Brexit. I reassure him that the Government are very much committed to working with industry to support the aviation sector. The Department is working closely with officials across Government to explore all those issues and to incentivise the growth of the UK aviation sector in the longer term by examining options to stimulate skills and training alongside and through the work that is being done in this sector under the industrial strategy. We believe aviation is critical to both the UK and the EU, and we are determined to make it so in the future, too.

The hon. Member for Strangford, who was not in his place when I mentioned him earlier, is absolutely right to highlight the continued investment in this country. He said good times are around the corner. I think times are pretty good at the moment, given the way tourism is booming and the economy continues to grow. We have a late-stage economy that is still growing at more than 2.5%—I think we can all be very pleased about that. He is absolutely right that that performance is not discounting a disaster post Brexit; it is actually discounting continued business and economic growth, and rightly so.

The hon. Member for Central Ayrshire rightly pointed out the huge falls in flight costs that resulted from liberalisation. She highlighted Hanover. I am pleased to say that when George I came to this country from Hanover he did not have to go by aeroplane, but it would have been a lot cheaper if he had done so—in her judgment, the Elector of Hanover could have come here in a matter of hours for something like £50. Let me reassure the hon. Lady that Ryanair should have no reason at all not to fly to Britain. The UK intends to continue to offer arrangements that will allow it to fly unimpeded to this country, and we expect the EU, in the open spirit I described, to do the same, as we grant permits to EU carriers. But we want a comprehensive, liberalised agreement, and she rightly focused on the benefits of that.

The hon. Member for Plymouth, Sutton and Devonport (Luke Pollard) raised non-disclosure agreements. I do not think there is anything that any Government could or should be concerned about in that respect. This is a very delicate time in discussions with the EU over Brexit, and such agreements are quite common.

I was invited to wind up by 3.57 pm, so I will quickly pick up some other points. The hon. Member for Plymouth, Sutton and Devonport mentioned licences, and I have a private pilot’s licence myself. Tragically, I have not used it much recently, but I am sensitive to the point he raised. I am confident in the capacity of the CAA to manage any issues and to ramp up. Given the time, I should probably sit down. Thank you very much indeed, Mr Hollobone.

[Mr Philip Hollobone (in the Chair)]

I call Mike Kane to bring the debate in to land.