By Jim Pickard – Financial Times
The UK will ask for its aviation industry to be regulated by the EU after Brexit, in a move that will place it under the indirect jurisdiction of the European Court of Justice, a supposed “red line” set by Theresa May.
Chris Grayling, the transport secretary, told aviation industry representatives that the government wanted the UK to remain in the European Aviation Safety Agency, which is in charge of standards and safety checks across the continent.
At the same time the UK is expected to maintain continued partnerships with, or actual membership of, six other agencies, according to a report by European law firm Fieldfisher.
The UK has said that it wants to continue its membership of two partnerships on fusion research: Fusion for Energy and the Joint European Torus.
It is also likely to seek a strategic association with the Agency for the Cooperation of Energy Regulators and the Body of European Regulators of Electronic Communications, which oversee the energy market and telecoms market, respectively, according to Fieldfisher.
London may also continue to pay towards the European Fisheries Control Agency while continuing an involvement with the European Systemic Risk Board, which has overseen the financial system to mitigate risk since 2010.
The Department for Exiting the EU said that the UK would remain involved with certain EU institutions after Brexit but that it was too early in the negotiations to know which ones.
Overall, the UK will save £471m a year on regulators after Brexit, according to Fieldfisher, which studied the future of 69 bodies that currently oversee the UK in various ways.
The savings come from quitting 21 bodies that will no longer be directly relevant to the UK, such as the European External Action Service, the European Parliament, the European Anti-Fraud Office and the European Training Foundation.
The functions of 28 EU agencies will need to be repatriated to equivalent authorities in the UK. The current budget spent on these agencies is about £114m a year, and will need to be spent domestically after Brexit, the report said.
One example is the European Banking Authority, the functions of which are likely to be picked up by the Prudential Regulation Authority. Others include the European Medicines Agency, which will transfer UK functions to the Medicines and Healthcare Products Regulatory Agency.
Another £35m or so is paid to the seven bodies with which the UK is likely to maintain close collaboration or full membership, including the aviation agency.
Taken together, that makes an estimate of £149m a year required on regulation after Brexit, with 1,500 staff needed to re-establish EU agencies and institutions domestically.
But estimates are difficult because extra spending could be required, said John Cassels, the author of the report.
The responsibilities will be transferred to an array of existing bodies and government departments and, in some cases, entirely new organisations.
“The administrative cost-savings associated with Brexit do appear to be attractive,” said Mr Cassels. “However, the reality is that the regulatory transition required to repatriate functions of EU agencies back to the UK is likely to be disruptive to regulated businesses and individuals, as well as to the UK civil service itself.”
ADS, the aerospace industry lobby group, has put an estimate of up to £400m over a decade to replicate the European Aviation Safety Agency, which regulates the industry.
Whitehall’s preparations for Brexit are largely focused on three broad areas. Along with setting up new regulatory bodies, there is also the need to create customs infrastructure and improve the management of immigration.
Ministers have not drawn up official costings to replace the EU’s regulatory functions. But any costs are likely to form part of the £3bn which Philip Hammond, the chancellor, set out for Brexit planning over the next two years in last week’s Budget.
Last week, it emerged that the government had not calculated the staff, investment and buildings needed for the UK to maintain standards.
The refusal to give figures on the issue emerged from parliamentary questions by Mary Creagh, a Labour MP and member of the pro-single market campaign Open Britain. She called the government “woefully unprepared for Brexit” after several departments — including health, transport and environment — refused to give a clear answer.