Brexit: Transport

Baroness Randerson Excerpts

Monday 6th February 2017 Lords Chamber

Asked by

[Baroness Randerson]

To ask Her Majesty’s Government what assessment they have made of the impact of Brexit on the transport sector in the United Kingdom.

[Baroness Randerson (LD)]

My Lords, across the world trade normally takes place most intensively with our neighbours. There are exceptions to that, of course—not much passes between North and South Korea, for example—but, setting aside countries with major ideological and diplomatic differences, it is obviously sensible to concentrate on trade with your neighbours. Distance costs time and money.

Even the vote of 23 June did not totally undermine those basic truths. It was possible for us to leave the EU while remaining in the single market, leaving intact the basic principles of successful international trade. However, the Government have decided to go for a very hard Brexit dressed in the clothes of bold internationalism. We are turning our back on Europe and seeking friends across the other side of the world.

Whatever the agreements made for trade in goods or services with the remaining EU and the rest of the world, trade will grind to a halt if we can no longer transport our goods or personnel. Our international trade stands on the shoulders of our airlines, HGVs, shipping and ports and our railways, so transport agreements must be prioritised. We are part of EU transport agreements which will have to be unpicked and hopefully replaced. There is a host of agreements with countries beyond the EU to which we belong as EU members, and these too will have to be replaced. That is the first step to stay where we are at the moment. The transport industry’s economic impact underpins all the rest. Get this wrong and nothing functions properly, from the City of London to the car industry in Sunderland.

I start with aviation, worth £52 billion a year to our economy. We have the third-largest aviation network in the world, and 54% of scheduled commercial flights from the UK go to the EU. The single aviation market has revolutionised the way people travel, with the advent of cheap flights. Airlines can have a base in one member state and operate on a cabotage basis between other member states. Therefore, easyJet can fly not just between the UK and Italy but between Germany and France or between airports within Italy, for instance.

Obviously, airlines want to carry on doing this. Post Brexit, they want the UK to become part of the European common aviation area, but this would require acceptance of EU aviation law. They also want us to remain a member of the European Aviation Safety Agency. Unless our airlines continue to get unfettered access to EU markets, they warn of inevitably rising air fares. They need to continue to employ staff from across Europe, with current employment rights protected. There is a host of other issues, such as security, repair and maintenance arrangements, pilot licensing, the availability of slots, air traffic management and so on.

Then there is the open skies agreement between the EU and the US. We are a member by virtue of being an EU member. We are part of a single airspace block with Ireland, which will of course remain in the EU. Therefore, continuing as a part of the open skies agreement will require obvious compromise, as it will involve sharing competence with EU institutions.

The road haulage industry has a similarly complex reliance on an open EU market. Even our domestic road hauliers will be impacted by withdrawal from the EU because 60,000 EU nationals now work in UK domestic transport. Any EU operator with an international operator’s licence can transport goods between any EU countries. EU rules underpin much of the regulatory regime for the road haulage sector, covering qualifications and licensing, drivers’ hours and tachograph standards, vehicle standards, roadworthiness and so on. There is significant co-operation between enforcement agencies across Europe, and safety on our roads is dependent on EU agencies and EU standards.

The main concern of the industry is that new certificate of origin rules, permits or quota systems would lead to delays at ports and add to the cost of goods. It points out that our ports have physically developed without the space or systems to allow significant amounts of paperwork to be processed. To transport a lorry load of goods from London to Milan in 1988 required 88 separate documents; it now requires one. I think that that says it all. UK ports handle 95% of imports and exports by weight. About half our maritime trade is with the EU. The British Ports Association estimates that, based on current trade levels, HMRC will have to process about 300 million additional customs declarations each year. There is a major fear of bottlenecks and disruption at ports.

I come now to railways, where there is concern about the bedrock of staff employment rights, passenger rights and safety. Mostly, of course, trains run entirely within our borders, but the obvious exceptions are Eurostar and the freight trains running through the Channel Tunnel. The tunnel carries a quarter of the UK’s trade in goods with the EU. Of course, the dream of the Channel Tunnel is far older than the EU, but it has been built and run as part of the EU. The possibility of tariffs and quotas will have the same impact on its operators as it will on the ports. Eurostar is a UK company and its whole purpose is to link us with Europe. It has thrived on the free movement of people. The EU directive establishing a single European railway area, with common rules and principles, has opened up markets in Europe. The costs are reduced by mutual recognition of qualifications and a consistent approach to safety. Eurostar wants to continue to recruit strongly from within the EU and to work closely with rail operators in Europe.

The themes I have spoken of are echoed by the bus and coach industry. It too wants to be able to trade freely with the EU—to take passengers without needing a visa and to bid for contracts in other states. It too values the simplicity that the EU has brought and the rights of access to those markets.

I want to make a final point on infrastructure development and the Trans-European Transport Network. It developed a transnational approach to infrastructure development and is a vital source of funding. It was expected to provide between 4% and 6% of the overall cost of HS2, for instance—a significant black hole for the Government now to fill.

There are some recurring themes: free access to markets with no tariffs or barriers; free movement of labour; a common and consistent approach to maintaining security, safety, regulation, employment rights and consumer rights; the right to invest on equal terms throughout EU member states; and common environmental standards. I have not had time this evening to explore the need to work together across the European Union on vehicle standards in order to improve air quality.

Those are not my demands; they are all taken from statements made by the major transport trade bodies and companies. The transport industry wants the future to look as much like the present as possible. It believes that the EU has in general enabled its businesses to expand and thrive. I have no doubt that the Minister will talk this evening of alternative markets—a big, bold, beautiful Brexit, with Britain trading with the US, China and Australia. However, I am not comforted by last week’s White Paper.

I have no doubt that major shipping companies and the big airlines will adapt and prosper over time, but there are huge parts of the transport industry which cannot do that: the markets of HGV operators have to be among their close neighbours; for ferry companies, long-distance options are not possible; markets in China are no use for bus operators which currently take tourists down the Rhine valley; and for Eurostar and the Channel Tunnel, trade with Europe is their whole purpose. For all of them, the Government’s decision to leave the single market cuts at the roots of their business.