Licensing of Operators and International Road Haulage (Amendment etc.) (EU Exit) Regulations 2019

Baroness Sugg Excerpts

Monday 18th March 2019 Lords Chamber

Moved by

[Baroness Sugg]

That the draft Regulations laid before the House on 6 February be approved.

Relevant documents: 17th Report from the Secondary Legislation Scrutiny Committee (Sub-Committee A)

[The Parliamentary Under-Secretary of State, Department for Transport (Baroness Sugg) (Con)]

My Lords, these draft regulations will be made under the powers conferred by the European Union (Withdrawal) Act 2018 and will be needed if the UK leaves the EU without a deal. They amend regulation 1071/2009, which sets the requirements and procedures for transport operator licensing, and regulation 1072/2009, which regulates access to the international freight market. This SI makes minimal changes to those regulations and consequential amendments to domestic legislation to ensure that road haulage markets continue to operate effectively.

Regulation 1071/2009 provides a framework for the licensing of transport operators—both haulage and bus and coach operators—in member states of the EU and ensures minimum standards across the EU. Operators are licensed by national authorities. In Great Britain, this is the traffic commissioners; in Northern Ireland, it is the Department for Infrastructure. Operators need to comply with four criteria in order to be considered fit and proper persons to hold an operator’s licence. These criteria are: having a stable establishment; being of good repute; having a sufficient level of financial standing; and possessing the required professional competence.

Regulation 1072/2009 sets out the rules and procedures for accessing the international road haulage market. It allows appropriately licensed hauliers from EU member states to operate in other member states and provides for enforcement mechanisms to regulate and control this access.

The withdrawal Act will retain regulations 1071/2009 and 1072/2009 in their entirety on exit day. The draft instrument we are considering makes the changes necessary so that these regulations continue to function correctly, and it is essential to ensure that the regulatory regime in place after exit continues to operate.

The regulations will ensure that the requirements of regulation 1071/2009 continue to be applicable to UK hauliers and public service operators—both those operating in the UK and those operating overseas. They will also ensure the continued operation of regulation 1072/2009, which provides that hauliers from the 27 EU member states will continue to be admitted to the UK provided they have a valid operator’s licence, issued by the country in which they are established, showing that they meet the requirements that I outlined earlier.

The regulations require hauliers to hold a UK licence for the Community after their current Community licence expires. This is a new document and will look very similar to the current EU Community licence, which hauliers already hold when operating in the EU. The criteria for this will be the same as for the Community licence.

The European Commission has already published legislation that would govern UK operators’ access to the EU for nine months after Brexit. This is based on the principle of reciprocity, and this SI allows us to offer a reciprocal level of access to EU hauliers. The regulations might also help in future negotiations. They demonstrate that the UK is committed to maintaining high standards in the freight industry that meet the EU baseline. They also allow for the UK to adjust levels of market access to EU hauliers in order to reciprocate whatever is agreed in the negotiations.

The access rules in regulation 1072/2009 also include provisions to allow hauliers to practise cabotage—jobs entirely in another member state. Currently, three domestic jobs in a seven-day period are permitted for EU hauliers as part of their return trip once they have completed a job in another member state. Previously the power to suspend cabotage provisions if they disrupted the domestic market was subject to the approval of the European Commission. These regulations transfer this power to the Secretary of State so that we have the ability to suspend cabotage for non-UK hauliers if reciprocal arrangements are not offered to UK hauliers in the EU.

The regulations also modify the Goods Vehicle (Licensing of Operators) Act 1995. Section 2 of the Act makes it an offence for a person to use a goods vehicle except under an operator’s licence. However, for very practical reasons, the provision exempts holders of Community licences issued by member states from this requirement. This means that EU hauliers are able to operate in Great Britain without having to apply for an operator’s licence. An equivalent provision is made in Northern Ireland legislation. The SI also allows us to exempt operating licences using secondary legislation in future.

The regulations provide for the continuation of the road haulage and passenger transport licensing system. They also allow for EU member state hauliers to continue to operate in the UK, ensuring that supply chains continue to function effectively. I beg to move.

--- Later in debate ---

[Lord Tunnicliffe (Lab)]

My Lords, I took a slightly more optimistic view of this SI than the noble Baroness, Lady Randerson. However, clarification in plain language will help. Paragraph 2.7 of the Explanatory Memorandum says:

“The UK operator licensing regime will generally remain as at present”.


I wonder whether we could have simpler language than that. My understanding, taken with recent agreement in the EU, is that the situation will be fully reciprocal. I will say it again, because it is a question to which I would like a direct answer. The Explanatory Memorandum uses terms such as “provided that”, which enthused me to look up the European Commission—I will not do this again. On 19 December 2018, it published a regulation of the European Parliament and of the Council on,

“common rules ensuring basic road freight connectivity with regard to the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the Union”.

At the end it says that the regulation applies until 31 December 2019, and that it was “done at” Brussels. I do not understand EU law. Is that now a piece of EU law? Does it, together with this SI, mean that in all respects, except the names of these licences, the situation for operators is identical to where we are now, with, of course, the overriding importance that the agreement of the EU is only until the end of the year?

[Baroness Sugg]

I again thank noble Lords for their consideration of these regulations. The noble Baroness, Lady Randerson, asked about the hot topic of ECMT permits. The European Commission has published the draft regulation on road transport. It was approved by the European Parliament last week. We expect it to be approved by the Council of Ministers this week—tomorrow, in fact. We welcome the substance of these proposals, which will ensure that the majority of UK hauliers can continue carrying goods into the EU for the rest of the year without needing an ECMT permit, providing that we reciprocate and provide equivalent rights to EU hauliers, which we are doing through these regulations.

[Lord Tunnicliffe]

Am I right in understanding that that also includes the cabotage allowance?

[Baroness Sugg]

The Commission’s proposal includes the right for UK hauliers to complete point-to-point journeys and transit journeys. It also offers limited cabotage and cross-trade journeys. Cross-trade journeys are limited compared to what UK hauliers can do now, which is three movements in seven days. They will still be allowed to do two cross-trade or cabotage operations on every international trip for the first four months of these regulations, then one cross-trade or cabotage operation every trip during the next three months.

[Baroness Randerson]

Could I point out that this complexity underlines the importance of consultation and, therefore, public awareness? People in the industry could be forgiven for being confused.

[Baroness Sugg]

I agree with the noble Baroness. The EU has proposed a complex system. It has been clear that it is not replicating current market access provisions, but it is ensuring basic connectivity and phasing out the current system by the end of the year. However, given that UK hauliers are allowed to have these journeys, we do not expect the vast majority of haulage operations to be able to continue. We have ECMT permits to fall back on.

As I said, the measure is based on the UK granting reciprocal access. To protect businesses and minimise disruption, we are currently offering more to EU hauliers than the EU is offering us, so we are mirroring the situation at the moment. We have the power to amend this and mirror the EU’s offer. The regulation does not cover transit to third countries, but will cover transit to EEA countries such as Norway, so we will use the ECMT permits to those third countries. It also makes it clear that bilateral agreements with the UK can be negotiated and concluded for periods during which the regulation applies—for example, after December 2019—but should we be in a no-deal scenario and should these regulations come in, we will of course be negotiating at pace to understand our future arrangement.

If we leave the EU without a deal, we will not be able to issue Community licences, as we will no longer be a member state. Therefore, we have had to come up with a replacement document: the UK licence for the Community. UK hauliers should continue to carry their current Community licence, which lasts for five years. Only when a Community licence expires will it be replaced by the new UK licence for the Community.