Exiting the EU and Transport

Andy McDonald Excerpts

Wednesday 23rd November 2016 Commons Chamber

[Andy McDonald (Middlesbrough) (Lab)]

I echo the Secretary of State’s expression of his regard for the workers who have come to the aid of the south-west’s rail system yet again. We have heard other hon. Members express their disappointment that we are still looking at issues of resilience in that area, and I know that they will want that matter to be resolved as quickly as possible.

The Government’s strategy for leaving the European Union—or rather, the lack of one—is causing great uncertainty throughout the transport sector. I do not know who the Secretary of State is speaking to about this, but we, and those in the aviation, rail, road and maritime sectors, are none the wiser about what the Government’s plans might be and what impact Brexit will have on the future of those sectors and all those who work in or depend on them.

[Sir William Cash]

I have already referred to the question of the ports sector. Speaking as Chairman of the European Scrutiny Committee, I can tell the House that it has been well established over a long period that the Government, the Labour Opposition, the unions and every one of the 47 port employers are against ports regulation. What are Labour Members going to say about that during this debate? Are they going to oppose it?

[Andy McDonald]

If the hon. Gentleman can wait six or seven minutes, I will come to that very point.

Today’s debate offers a welcome opportunity for the Secretary of State to provide some much-needed clarity on his plans for transport in a post-Brexit UK. He was one of the leading advocates of Britain leaving the EU, and he now has the privilege of being the Transport Secretary, so if anyone can provide us with a clear picture of what to expect in the months and years ahead, presumably he can.

One of the areas of transport most likely to be affected by the country’s decision to leave the EU is the aviation sector, which is a key pillar of our economy. Taken country by country, the UK’s aviation sector is the largest in Europe and the third largest in the world. It is worth about £50 billion in terms of our GDP, it supports 1 million jobs and it secures the Treasury some £9 billion in taxation each year.

While we accept the result of the referendum and are determined to secure the best possible deal for all the UK, we must not be an inward-looking nation that is cut off from the cultural and economic benefits that come with being an interconnected country. We must be ready to do business with the rest of the world. That means retaining and building on the connectivity that the UK currently enjoys in order to allow the flow of goods and services that will be key to getting the best out of Brexit.

[Robert Flello]

I, too, want Brexit to be a success and for us to get on with it and ensure that we get the best possible deal for our country. However, does my hon. Friend share my concern that the Department for Transport, which has seen massive cuts to its revenue budgets and day-to-day spend, just will not have the staffing in place to be able to deal with the huge number of issues? At the same time as we negotiate Brexit, we will be negotiating different agreements with other countries on matters such as aviation.

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[Andy McDonald]

My hon. Friend makes a good point. We have seen the inability to see such things through and deliver them not only on this issue, but through the prism of the franchising system in the rail market. He raises a grave concern about something that we will be watching with great care in the weeks and months ahead.

Through its membership of the EU, the UK currently relies on the EU single aviation market, which allows airlines to operate freely inside the EU without restriction on capacity, frequency or pricing and enables the use of the EU’s external aviation agreements. Leaving the European economic area could mean that we are no longer part of the single aviation market and could lose access to those external air service agreements. That is critical, because unless the position is clarified urgently UK airlines will lose the right to operate within the European Union and airlines will lose the right to fly UK domestic routes. The Government must ensure that Brexit does not damage the UK’s connectivity. The aviation sector has been clear about the importance of retaining an unchanged operating environment.

[Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

The hon. Gentleman and others have talked about getting the best out of Brexit as it arrives. Given the seven options for that process, does he imagine that any will be as good as the situation that we have at the moment? People are looking for the best decision, but the question is whether it will be as good as what we have.

[Andy McDonald]

The hon. Gentleman raises a critical point that is the whole focus of this debate. It is our concern in this House that we are simply not going to be able to deliver the same level of interoperability and accessibility as we currently enjoy throughout Europe. In the aviation sector, it is critical to achieve that before we even begin discussions about our trading relationship going forward.

[Nick Smith]

The National Audit Office says that, under this Conservative Government’s watch, Network Rail and the Government have wasted £330 million so far on the great western mainline electrification. Does my hon. Friend agree that the Department for Transport needs to pull its socks up to deliver on future infrastructure projects?

[Andy McDonald]

My hon. Friend makes his point eloquently. That is the sort of wastage from this Department that we have seen in so many areas over the past several years. We have seen smart ticketing costs written off and the Great Western debacle. Everyone in this place is worried about its inability to function effectively.

It is vital that there be not only early assurances from Government, but confirmation that the status of current aviation practices will be guaranteed beyond our formal departure from the EU.

[Robert Flello]

My hon. Friend is being generous in taking interventions. I was slightly reassured by what the Secretary of State said a few moments ago about his planned meetings with the US Secretary of Transportation. My hon. Friend talked about access to the European network, but the danger on the US side is that we will fall back on the Bermuda II agreement, which was designed for a whole different world and certainly not for the 21st century. Does my hon. Friend share my concern that we have more to worry about than just European skies?

[Andy McDonald]

I do share those concerns. Although it is clearly imperative that conversations be had with those across the Atlantic, I was a little anxious to hear from the Secretary of State that that becomes the first port of call, rather than trying to resolve matters within the European Union.

[Chris Grayling]

I have also spent quite a lot of time with my German counterpart and with a number of other European Transport Ministers, and I will be doing that next week.

[Andy McDonald]

I am delighted to hear it.

Will the Secretary of State explain to the House his plans for the UK’s relationship with the European Aviation Safety Agency on leaving the EU? What is his intention? Will he seek to maintain technical co-operation through a bilateral aviation safety agreement approach, as with the United States, Canada and Brazil, or through a working arrangement with the EU, as is currently enjoyed by China, New Zealand and Russia? I urge the Government to confirm that air service agreements will be negotiated separately from the UK’s negotiations on future trade with the EU, as well as specifying the nature of those agreements. I invite the Secretary of State to outline his plans for UK airlines to retain the right to operate within the EU and retain access to the EU’s external air service agreements.

[Mr MacNeil]

The hon. Gentleman has touched on an important point about retaining the work done on the open skies agreement, because if we look back on UK air policy before that time, as I have done, we see that it was about bilateral agreements that specified flying into London airports only. I believe Iceland broke that by getting into Glasgow, because the father of one of the negotiators wanted to go shopping for suits in Glasgow. That absolutely points out the problem we faced when the UK was managing this itself: it was centralised for the benefit of the south-east of the UK, to the detriment of others.

[Andy McDonald]

I do not know where you get your suits, Mr Deputy Speaker—[Interruption.] Neither in Iceland, nor in Glasgow. It appears we should always go to Glasgow. The issue the hon. Gentleman raises is particularly pertinent given the decision we have just had on the additional south-eastern runway, so he makes the point well.

Numerous rail projects in the UK receive support via loans or direct funding as a consequence of our membership of the EU, and now is not the time for the Department to row back on investments in our railways, as we have seen happen repeatedly in respect of electrification works, which hon. Members have spoken about so eloquently this afternoon. I invite the Secretary of State to reassure the House that any funding shortfalls will be made up by the Government and that investment in rail will not suffer as a consequence of Brexit.

The Secretary of State said during the EU referendum that he wanted to take back control. Labour Members very much wish to take back control of our railways from private and foreign state-owned companies, which currently profit from the system at the expense of passengers and taxpayers. Ours is a policy supported by two thirds of the public, but, as the Secretary of State is aware, although running services in the public sector is currently entirely consistent with EU legislation, the fourth railway package may restrict the different models of public ownership that might be available. Does he agree—I believe he said so earlier—that it should be for UK voters to decide how best to order our railways? If so, will he confirm that his Government will not attempt to retain any European requirements in domestic law that would frustrate any future attempts to bring railways back into public ownership? I was delighted to hear what he had to say about HS2, and I suppose that if there is going to be a silver lining from leaving the EU, it will be that we will not be able to blame “them” any longer for any problems we have with disabled people getting access to our railway system.

My hon. Friend the Member for Blaenau Gwent (Nick Smith) has not had an answer to his question, because he made it abundantly clear that he was talking about the infrastructure. The Secretary of State suggested he should be satisfied with improved services, but those will come only with improvements in the infrastructure.

The skills footprint, to which the Secretary of State referred with great regularity—of course we share some of his concerns—should be delivered whether or not we are in the European Union. That is not a consequence of any move. It should be an absolute prerequisite that is woven into everything we do.

Although we have decided as a nation to leave the European Union, co-operating with, and retaining our connectivity to, the EU is vital. We would greatly appreciate it if the Secretary of State enlightened us on what progress is being made to ensure that hauliers from the UK can carry goods between other member states and on whether it is his intention to secure an agreement for British driving licences to continue to be exchangeable with those of EU member states after Brexit.

Finally, let me mention UK ports, which directly employ more than 25,000 people, many of whom voted to leave because of anxiety surrounding EU ports services regulation. Many leave campaigners argued that leaving the EU would ensure full exemption from those regulations. However, the former shipping Minister, the hon. Member for Scarborough and Whitby (Mr Goodwill), was reported as saying that the ports services regulation would still apply under an arrangement that granted the UK access to the European economic area. Can the Secretary of State clarify the Government’s intentions on any withdrawal from ports regulations and guarantee that any exemptions do not inadvertently undermine strong industrial relations and the welfare standards of dock and port workers?

[Sir William Cash]

Whatever the hon. Gentleman may try to infer with regard to the European economic area, it is completely beside the point. The fact is that there is a regulation and, as he knows, it is on the brink of being brought in—I believe it is by the end of this month. All that talk that he has just given us has nothing to do with the issue. The real question is whether the Labour party is going to oppose it. Will it say that it condemns it, because that is what the unions, the Government and, as I understood it, the Labour party wanted?

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[Andy McDonald]

I am not sure whether I could have been any clearer. I have just addressed the issue head on. If the hon. Gentleman reads Hansard, he might be a little clearer in his own mind.

My contribution has been full of questions, because so little has been revealed so far that would give any idea of what the Government are setting out to achieve after Brexit and of the mechanisms by which they aim to achieve any such objectives. Huge questions remain over the future of our flourishing aviation sector; over what existing EU legislation will be retained and what that will mean for our railways and ports; over whether EU funding for transport projects will be made up by the Government, and over issues to do with connectivity by road and what Brexit will mean for haulage.

I invite the Secretary of State to bring forward the details of his Department’s plans for Brexit, which have been, so far, so stark staringly absent.

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[Dame Rosie Winterton (Doncaster Central) (Lab)]

As my hon. Friend the Member for Middlesbrough (Andy McDonald) and other hon. and right hon. Members have made clear in this welcome debate, Brexit has huge implications for our whole transport network, but I want to focus on the rail freight sector. I was disappointed that the Secretary of State did not include rail freight as one of his priorities, and I suspect that the rail freight industry will be disappointed, too. When the Minister replies to the debate, I hope he will reassure us that the Government take the industry’s concerns seriously.

I have previously raised in the House the situation of DB Cargo UK, a company with headquarters in my constituency that has recently announced 893 redundancies. In a letter to the trade union ASLEF, the company said that as well as falling demand from the coal and steel industries, Brexit has caused a slowdown in demand for the movement of freight by rail. I have discussed the problems facing the rail freight industry with the relevant trade unions and also this week met the chief executive officer of DB Cargo UK, Hans-Georg Werner. I hope Members and the Minister will agree that rail freight is a key service for those doing business in the UK, enabling the import and export of goods through ports and the channel tunnel and, crucially, the movement of goods within the UK. Rail freight depends on the total volume of UK trade as well as the modal share between rail and road. It is a good barometer of the health of the economy as a whole.

[Andy McDonald]

Does my right hon. Friend agree that sustaining the rail freight industry is vital for the maintenance of the infrastructure itself and that we neglect that issue at our peril?

[Dame Rosie Winterton]

My hon. Friend makes an absolutely correct point. That is why we need to use this debate to highlight some of the infrastructure issues we face and to try to tease out of the Minister what the autumn statement might mean for the rail freight industry.

At the moment, the Government are giving little clarity as to what they are looking for from future trade agreements, but it is clear that some options, particularly those with increased trade tariffs, could be challenging for the UK market as a whole and for rail freight in particular. We know that uncertainty about what trade agreements will be reached in those Brexit negotiations is having a detrimental effect on business. The rail freight industry has been especially affected by the slowdown in the construction industry, where there is a nervousness from investors; as we wait for the Government to set out their negotiating position, investment decisions are being put on hold. Whether we are to remain in the customs union and whether we are to maintain access to the single market could have massive impacts on our customs and excise regime, which would naturally have an impact on points of entry, such as ports.

We must also consider the direct impact of European legislation on the rail freight industry. Much railway legislation derives from European law and provides a number of essential protections for rail freight, for example, on track access and charging. It will be vital that these protections continue in any revised legislation. I know the industry considers it essential that a coherent and holistic approach is taken, with any change in law being specifically linked to a change in Government policy for the railways, rather than having piecemeal changes. That applies to legislation on rail freight through the channel tunnel. Many railway standards are also set at European level, particularly technical standards for interoperability, which aim to improve the cost-effectiveness of railways and the ability to operate across Europe. I hope the Minister can assure me that discussions with the industry are being held about any revisions to infrastructure standards, to protect the ability of freight to operate efficiently.

There is a real need for the Government to provide reassurances to the rail freight sector, so that business confidence remains strong and investment is supported. Rail freight operators need confidence to plan ahead, when buying new wagons, for example, investing in new terminals to support future traffic and looking at expanding in areas such as the automotive industry. Again, the Government need to work closely with the rail freight industry to make this happen and deliver solutions that support growth.

One such solution is, of course, HS2, which has the potential not only to provide business for the rail freight industry during construction, but in the longer term to free up capacity for rail freight. Again, I hope the Minister can assure the House that the Government are talking to the industry about the potential for rail freight in HS2.

There are many other areas of European law that affect the rail freight industry, especially workers’ rights and environmental legislation. Workers’ rights and protection are particularly important in this industry not least because of safety considerations—something of which we are too well aware at the current time. I hope that the Minister can assure me that he is discussing these issues with the relevant trade unions.

My hon. Friend the Member for Liverpool, Riverside (Mrs Ellman), the Chair of the Transport Committee, made some very good points with regard to environmental legislation. Rail freight is vital in cutting emissions, and we need assurances that, once we have left the European Union, we will mirror agreements under the EU and work actively to help the industry by investing, through Network Rail, in projects that increase capacity, improve connectivity and encourage intermodal solutions to help cut emissions. I hope that, in the process of doing that, we will look across Europe for good examples. In Austria, for instance, I understand that subsidies are available for trains that carry road freight vehicles, and we need to consider whether we should be emulating such practices as we go forward. Will the Minister tell us what planning has been done to improve not only freight productivity, but that link with environmental targets?

On the autumn statement, will the Minister tell us what its implications are for the rail freight industry? I am not sure whether I heard the words “rail freight” mentioned during the statement. I know that the Chancellor said that it will be about departmental decisions, but, again, because the Secretary of State did not mention it in his opening remarks, can the Minister shed a little light on what he thinks the Department is looking at with regard to rail freight, and also what the process will be for coming to those decisions? Investment was talked about, but we need to see that applied to the rail freight industry.

As we have seen today, the process of leaving the European Union will be complicated, fraught with uncertainty and might have considerable unforeseen consequences for our economy’s productive capacity. The need to secure the most advantageous deal for business is understood, but of course the shape of that deal is what will be contested over the coming months. I hope that we can agree that there is an overriding need to reduce uncertainty for business as a whole and for the rail freight sector in particular. It is essential that the Government have serious discussions with the rail freight industry and the unions, which represent those who work in the industry, about the post-Brexit future, so that the best possible outcome of Brexit negotiations can be achieved. Again, I hope that the Minister, in his reply, will be unequivocal about his commitment to openness, transparency and the fullest possible consultation with all those involved in this vital industry.