Exiting the EU and Transport

Lord Grayling Excerpts

Wednesday 23rd November 2016 Commons Chamber

[The Secretary of State for Transport (Chris Grayling)]

I beg to move,

That this House has considered exiting the EU and transport.

If I may crave the indulgence of the House briefly, I would like to say a couple of words about the situation on the railways in the south-west. As you know, Mr Deputy Speaker, there has been considerable disruption as a result of storms, including line closures and very extensive delays. I can inform the House that following the flooding that closed the great western main line between Exeter and Tiverton, the line has now just reopened. The Barnstaple branch is due to reopen this afternoon. The Looe branch is still closed, but I hope it will reopen on Thursday. There was also disruption when the South West Trains route was closed. I am immensely grateful to all the staff at Network Rail. They sometimes get a hard time when things do not work, but they rally around when there are major incidents and deliver solutions quickly. I thank them all very much for their work.

[Johnny Mercer (Plymouth, Moor View) (Con)]

I thank the Secretary of State for speaking to the House about this matter because it is not good enough for the south-west to be cut off again, or to be the poor relation of the national rail network. The report by the Peninsula Rail Task Force that was presented yesterday must be the framework for a fair deal going forwards, so will he commit to doing everything in his power to deliver on this piece of work and to make sure that Network Rail delivers for my constituents?

[Chris Grayling]

I absolutely understand the importance of the task ahead of us. The report, which I have read carefully, shares my view that the No. 1 priority is the sea wall and the cliffs at Dawlish. My hon. Friend will also be aware that last Thursday I announced—this was also in today’s autumn statement—the provision of £10 million for the next stage of the project. I am committed, as is the Chancellor, to making sure that it happens. It is a strategically important project for our nation—the south-west cannot be cut off via its principal railway routes—so I assure him that we will move ahead expeditiously with it.

[Kevin Foster (Torbay) (Con)]

I thank the Secretary of State for his comments and join him in thanking the Network Rail staff who turned the situation from that of two days ago, when there were literally hanging tracks, to one in which trains can run again. I am pleased that the Chancellor today described the £10 million of funding as the first step in this programme, and I thank the Secretary of State for his personal interest in this issue and his commitment to sorting out the issues with our rail infrastructure once and for all.

[Chris Grayling]

This absolutely needs to be done, and we will move ahead as quickly as we can. Following the incident on the Cowley bridge this week, flood protection works are due to start there imminently. It is a shame that the works have not quite started yet, but they will be starting very shortly, and I hope that they will deal with that issue so that such an incident cannot happen again.

Moving to the main business, the autumn statement demonstrates the Government’s commitment to modern infrastructure that can serve the public and support a dynamic economy. Our forthcoming departure from the EU represents a huge opportunity for Britain to carve out a new role in the world and to be a stronger and more ambitious country—a country that is better able to shape its own future in the world and a country that is outward-looking and open for business. That was what I campaigned for in the summer, and it is what the Government will deliver.

Business is starting to share this optimism. Since the referendum, several companies in the transport sector have announced significant investment in the UK. Nissan’s commitment of investment is fantastic news for the British economy, the north-east and the car sector, particularly as it is not just maintaining capacity at the plant, but expanding it. In August, Bombardier received an order for 665 new vehicles from Greater Anglia, which will secure jobs and skills in Derby. When I spoke to the international head of Bombardier’s rail division about a month ago, he said that such was the quality of the work in the UK, Derby was going to become a global hub for its rail business, which is another positive statement of commitment to this country.

Alstom has started work on developing a new site at Widnes, which will create 600 jobs along with, crucially, a training academy. The Spanish firm CAF has said it will now set up a train manufacturing plant in the UK, and Siemens, which manufactures rolling stock and other products in the UK, has committed itself to a continuing presence. Its chief executive said in July, “We’re here to stay.” Alongside Hitachi’s new rolling stock and manufacturing and assembly plant in Newton Aycliffe, which is creating 730 new jobs, this shows that we are becoming a centre for high-quality rolling stock manufacturing, so it is with good reason that I view the future with optimism as we approach negotiations on leaving the EU.

[Sir William Cash (Stone) (Con)]

While, of course, I entirely endorse the Secretary of State’s sentiment, there is an issue regarding British ports. It is a big issue, but I will not go into it now, as I am hoping to catch your eye, Mr Deputy Speaker. However, there are some serious questions still outstanding around qualified majority voting, as I am sure the Secretary of State knows.

[Chris Grayling]

I absolutely agree with my hon. Friend. He and I have discussed this matter in the past. The regulation coming out of the EU on ports is tailored to the particular structure of ports on the continent, but does not fit well with a private port sector such as ours. The opportunity to ensure that we have a regulatory framework that is right for the UK is one benefit that comes from leaving the EU.

[Robert Flello (Stoke-on-Trent South) (Lab)]

If between now and the great Act incorporating European legislation into UK law, as the first step towards unpicking things, the ports services directive comes into being—I am not sure how likely that is—would it not be incorporated straight into UK domestic legislation?

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[Chris Grayling]

We have said very clearly that we will fulfil our legal duties while we are still members of the European Union, and that at the time of our leaving, it is our intention to transpose EU law into UK law. However, it is then for this Government and this House to decide what areas of regulation we want to keep and what areas we want to change. Having listened to the representations of Members about the ports directive, I suspect that this House will want to return to this area.

[Mr Andrew Turner (Isle of Wight) (Con)]

How has this regulation, which to everyone’s great pleasure disappeared back in January, now reappeared? Why was it so popular that the House did not need to scrutinise it? Will my right hon. Friend tell me what amendments have been made to the regulation that now make it acceptable?

[Chris Grayling]

The first thing to say is that no piece of European legislation passes through this House unscrutinised, particularly thanks to the assiduous work of my hon. Friend the Member for Stone (Sir William Cash). This is one area where the Government intend that the House has the opportunity of proper scrutiny. It is very much my hope and belief, as I have said, that our decision to leave the European Union will ensure that in respect of ports, for which our model does not conform with that of the rest of Europe, we will have the opportunity to tailor something that is right for this country.

I want to focus on two particular areas, which will be the priorities for my Department in the coming months. At the top of the list is aviation. Our aviation industry is world class, and our airports service the third largest aviation network in the world. UK airlines have seized opportunities globally, including those offered by the European open skies agreement. I am focused on securing the right arrangements for the future so that our airlines can continue to thrive and our passengers have opportunities, choice and attractive prices. When I met the aviation industry, I found that one of its priorities was and remains the effective regulation of safety and air traffic management. That is also a priority for me as we approach the negotiations.

Our connections with Europe are, of course, important, but we need to widen our horizons, too, and we need to make sure that we have continuity for the aviation industry internationally. Leaving the EU gives us more freedom to make our own aviation agreements with other countries beyond Europe, and ensuring that we have that continuity when we leave is an imperative for me and my Department.

I have already had positive discussions with my current US opposite number about the arrangements that we will need after Brexit for the vitally important transatlantic routes. There will, of course, be a new counterpart in office in America in the new year, and I intend to reprise those discussions when the new US Transportation Secretary is in post. Both sides have an interest in reaching an early agreement and I am confident that we will achieve that.

Looking the other way, last month we signed a deal with China that will more than double the number of flights that are able to operate between our two countries, thereby boosting trade and tourism. This country is open for business and open to the rest of the world, and aviation has a big role to play in making that happen. Whether through new agreements or our support for a third runway at Heathrow, I will do whatever is necessary for our industry, businesses and the public. I shall have talks with other countries, such as Canada, where there is an interest in ensuring that we have good arrangements post-Brexit. There is a job to be done to make sure that that happens, but I am in absolutely no doubt that we will secure in good time and effectively the agreements that our aviation sector needs to continue to fly around the world and within the European Union. Not doing so is in no one’s interests. Many parts of the EU depend economically on the contribution made by British airlines flying to regional airports. It is in all our interests that that continues.

[Stephen Gethins (North East Fife) (SNP)]

Given that the Secretary of State campaigned for leave, will he tell us how much preparation regarding this issue the Government of which he was a member carried out before the referendum?

[Chris Grayling]

The hon. Gentleman mentions preparation, but the objective is very straightforward. It is in the interests of the different regions and countries of the European Union that we continue to trade and to have good transport links between us. I see no logical reason for anybody to stand in the way of that. We now have to work out what the best precise arrangements will be. When it comes to aviation, however, the objective is business as usual. That is what is in everyone’s interests.

[Mr Mark Hendrick (Preston) (Lab/Co-op)]

The Secretary of State refers to business as usual, but he will know that aviation emissions are now included in the EU emissions trading scheme. Is it his view that we should remain in a trading scheme once we leave the EU?

[Chris Grayling]

The world has moved on somewhat. The International Civil Aviation Organisation agreement that was reached in Montreal six weeks ago provides a global framework to tackle emissions in the aviation industry. All of us, both inside and outside the European Union, will be part of that as we ensure that the economies of the developed and the developing world can continue to benefit from improved aviation links while, at the same time, we meet our obligations to control carbon emissions.

The second area on which I am focusing is road haulage. We depend on road hauliers—without them, our shops would be empty and industry would grind to a halt. Our logistics industry does a first-class job in getting our goods to the right places, but the vast majority of lorries on the roads never leave the country. As we look to the future and to trade that does leave the country and crosses borders, there is one simple fact that we need to bear in mind. About 85% of the lorries operating between the United Kingdom and the continent belong to EU-owned businesses—international hauliers that are not based in this country.

The member states of the EU and the United Kingdom have a common interest in reaching an agreement. We need sensible arrangements for the future to allow goods to flow freely from and to the United Kingdom. We need to give UK hauliers a fair chance to win business and to be successful. We shall focus on that during the negotiations, ensuring that we achieve the right outcome for the international hauliers that serve this country and for UK hauliers as well. I am talking to all those who are involved in running our roads and the freight services that use them.

[Ian Paisley (North Antrim) (DUP)]

Will that include an aggressive look at freight charges for the movement of goods outside the United Kingdom to faraway markets? I understand that New Zealand, Australia and Canada have freight subsidies that allow them to cut the prices of freighted goods.

[Chris Grayling]

I am not necessarily a great fan of inappropriate subsidies, but I hope and believe that as we negotiate free trade agreements with countries around the world we shall create an environment in which trade and freight haulage are conducted on a level playing field, and that there are no artificial barriers that push up our costs and help others to reduce theirs. Above all, however, we benefit from a world in which trade flows freely. That is clearly in the commercial interests of European hauliers, especially hauliers from the Irish Republic. I am very aware that as we enter the negotiations, we have a particular duty of care to our friends in the Republic. We have a duty to seek to reach an agreement that will ensure that their trade, which frequently involves travel by road through the United Kingdom to other parts of Europe, can flow smoothly. It is in all our interests to ensure that we have sensible cross-border arrangements.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

The Secretary of State mentioned discussions with haulage companies. Is he discussing with them the fact that they currently rely on EU drivers, courtesy of licence harmonisation, and the fact that, even so, it is forecast that there will be a shortage of 40,000 HGV drivers by 2020? Is he having discussions about what the Government can do to plug that skills gap?

[Chris Grayling]

Absolutely. The task is within the remit of the Minister of State, Department for Transport, my right hon. Friend the Member for South Holland and The Deepings (Mr Hayes). Not only is he the Minister responsible for our strategic road network but, as a former skills Minister, he holds the skills portfolio in my Department, and I know that he is very exercised about this issue. Of course, with a managed system of migration, we shall be able to recruit skills internationally when we need them, but I want a new generation of young drivers. There is much that we can do to make the profession more attractive, and my right hon. Friend is working on that at this very moment.

I have talked about the potential for a more tailored regulatory framework for the ports sector after we have left the European Union. We have a thriving and competitive ports sector, strong international investment, and some first-class facilities. I believe that the sector will be an essential part of a nation that is focused on global trade, trading opportunities, and opening up trade links with other countries.

Our railway services through the channel tunnel link us with the continent, but apart from that Britain’s rail network is domestic. Although on day one after exit the rules will be the same as before, in future we shall be able to make our own decisions about changing those rules. We currently have a derogation from many of the EU standards for our existing railways. That is because many of them date back to Victorian times and were built to entirely different standards. That is not the case for new railways, so one example of the kind of challenge that we are dealing with in the construction of HS2 is the fact that European specifications for platform heights are inconsistent with flat access for disabled people on to trains. We have to address that as part of the development of HS2, but it is an example of how, freed from European Union regulation, we can make sure that we do a better job, in this case for disabled people, which I believe that Members on both sides of the House will think is the right thing to do.

I talked about the global opportunity for Britain, and across the transport sector I am determined not only to negotiate the best deal for Britain within Europe, but to find new opportunities for our transport sector around the world. We should support our industries as they sell their expertise and products and seek to win major contracts around the world. We have world-class expertise in this country in the automotive sector, aerospace, logistics, transport engineering, rolling stock manufacture and much more. We need to be confident in offering these services to the world, and we have every reason to be confident: we are doing some great things in this country at the moment, from the first-class work being done to deliver Crossrail in London to the high-quality automotive technology that is developing the new generation of autonomous and semi-autonomous vehicles.

[Nick Smith (Blaenau Gwent) (Lab)]

The Secretary of State talks about Crossrail. The infrastructure gap between London and the rest of the UK remains unbridged, so does he agree that the Cardiff-Swansea section of the great western railway electrification project must be delivered with UK Government funding as soon as possible?

[Chris Grayling]

As I said in the House the other day, I am not at all happy with the progress that has been made on the electrification of the great western main line so far. Actually, right now my priority is to get investment in better services into Swansea as soon as possible. The economy of Swansea and south Wales needs improved services, and that is my focus. I do not want to wait for the future for infrastructure projects; I want better services now. As we re-let the Great Western franchise, I am determined to see improved services to south Wales that provide a real boost to the economy in the areas that the hon. Gentleman and other Members for south Wales represent. Better transport links and improved services to south Wales and to the south-west are essential to making sure that we have a productive economy.

[Ben Howlett (Bath) (Con)]

One of the key hurdles facing a lot of railway companies is the European procurement rules. Has the Secretary of State had conversations with the Department for Exiting the European Union on the procurement opportunities that are available outside the EU?

[Chris Grayling]

Clearly, outside the EU, we have the opportunity to shape our own procurement rules. I do not want to be part of a Government who say that international firms are not welcome in the UK—that would be quite the wrong thing to do—but it is equally reasonable for us to say, for example, “If you’re coming to do business with us by being involved in the construction of HS2, we want you to leave a skills footprint in this country. We want apprenticeships and technical skills, and we want the engineers of the future to be trained and developed, and to be working on these projects so that they can carry on beyond them to build us further projects for the future.” That is our intention.

Let me be clear: Brexit is an unprecedented opportunity.

[Nick Smith]

I am very unhappy that the Secretary of State avoided my question about supporting the Cardiff-Swansea electrification, so I would like a better answer on that in the future, please. I am owed a letter from his ministerial colleague the hon. Member for Blackpool North and Cleveleys (Paul Maynard). Having said that, the Secretary of State did say he wanted to support an economic boost for south Wales, so will the UK Government be supporting the Cardiff metro plans, which are important for getting Blaenau Gwent working again?

[Chris Grayling]

Not only are we supporting the Cardiff metro plans and looking at how to deliver better services to the whole of south Wales—it cannot be just about Cardiff; it has to be about what happens to the west—but I will also be looking at whether we can provide better services to connect with the west of Wales and better services to Swansea. I hope that the hon. Gentleman will forgive me for saying it is not just about south Wales; it is also about how we deliver better services to north Wales. There is a tendency, particularly in the Administration in Cardiff, always to look to the south—there are important things happening there—but we as a Government have not forgotten that there are many different parts of Wales, and the commitment to the north is also very much in my in-tray.

Let me be clear that Brexit represents an unprecedented opportunity to shape our own future, and we will make the most of that opportunity. We will get out into the world and do business right across the globe, and at home we will continue to build a world-class transport system for this country.

[Stephen Gethins]

Will the Secretary of State tell us what meetings he has had with the European Transport Commissioner, given the importance that that relationship will have over the next little while? Will he also tell us what was discussed in those meetings?

[Chris Grayling]

I have already had one meeting with the Commissioner, when we were in Japan, and I will see her again next week at the Transport Council. We will work out the best way to take forward negotiations in due course, but we have had exploratory discussions. Those discussions have been constructive, and I look forward to having further such discussions with her.

I have to be mindful of the need to ensure that we have a structure for the future that will create stability and opportunity for our aviation and haulage sectors, and that takes advantage of the potential freedoms that leaving the European Union will offer this country’s transport sector. We fully intend to take advantage of that opportunity.

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[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.

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[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

We have heard from the Secretary of State for Transport that we should have confidence; he has reassured us that we should have optimism, but, of course, we have heard no details.

The impact of Brexit on the different modes of transport—aviation, maritime and road haulage—will be immense, but its main effect will be on all the people in our communities, with rising costs for goods and mobility. There are also those who want to do business with us or to visit us as tourists. It is wrong for Ministers not to have a full explanation of how exiting the EU will impact on businesses, consumers and passengers.

Nobody doubts that we are facing stormy seas, yet instead of a plan we are told by the Foreign Secretary that Brexit will be titanic. That is scary enough, but time after time, in terms of plans and answers, we find it is just an empty vessel. The Government’s model is less a ship of state and more like the Mary Celeste. So let us see the Brexit rhetoric cast overboard, and let us hear some definitive answers.

People will be affected; they and our businesses deserve to know what the plan is. This failure to provide a plan is simply a plan for failure. People face additional journeys for connections, more expensive tickets, fewer rights to challenge delays and cancellations, additional insurance costs and long queues at border controls. When they call home, their calls could cost more because they will not have mobile phone roaming protection.

The Chancellor said today that he wanted the UK to be the No. 1 destination for business. Well, how are people going to get here? Let us start with aviation. Leaving the EU could restrict operations by UK airlines in Europe, and by EU airlines in the UK, leaving our constituents and visitors to the UK paying the price for Brexit through higher fares. Analysis from the independent Oxera economists states that such restrictions could lead to UK passengers’ airfares rising by 15% to 30%.

As an MP from the highlands, and as chair of the regional airports all-party parliamentary group, I am also extremely concerned about the increased cost pressure on regional airports. These airports have thrived with the increase in low-cost airlines, and the advent of cheap short-haul flights across Europe owes a large part of its success to the EU. As easyJet said:

“the single aviation area gives airlines freedom to fly across Europe and since its introduction passengers have seen fares fall by around 40 per cent”.

Without that agreement, fares will inevitably be higher.

[Chris Grayling]

Earlier this week, I met the proprietor of AirAsia, who has built an extraordinarily successful low-cost airline across south-east Asia. Countries there are not in a European Union-type institution. Can the hon. Gentleman explain to me and to the House why it is not possible to have a low-cost aviation set-up in Europe with us outside the European Union, but it is possible to have such a set-up in a part of the world where there is no such body as the European Union?

[Drew Hendry]

Let me answer that by giving the right hon. Gentleman the words of easyJet itself. EasyJet is currently registered in the UK and can fly largely without restriction from the UK to other member states—France and Germany, for example—and wholly, in terms of the domestic market, within countries such as Italy. EasyJet is now setting up a separate operation outwith the UK to ensure that it can continue to fly without restrictions after the UK leaves the EU. As its chief executive officer, Carolyn McCall, said, current EU flying rights might have to be renegotiated, and the new company will ensure easyJet can operate within the EU. She added:

“We are not saying there will be no agreement. We just don’t know the shape or form. We don’t have the luxury of waiting. But we have to take control of our own future.”

That is in no small part due to the lack of clarity from the UK Government over what aviation agreement the UK will eventually come up with. The Secretary of State and his colleague the Secretary of State for Exiting the European Union have said:

“Market access remains a top priority, and we want to make sure we have liberal access to European aviation markets.”

Strikingly, however, there was no guarantee that the UK would stay within the open skies agreement. The UK Government need to explain to us now how this is going to work. When open skies was agreed back in 2008, the UK market was one of the key attractions for the United States. At the time, the UK accounted for a 40% share of the EU-US market. If the agreement ceases to apply, as was mentioned earlier, will the UK have to revert to the Bermuda II bilateral agreement, signed in 1946 and last amended in 1991?

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[Drew Hendry]

No, I will make some progress.

What access arrangements will be in place? What is the plan for the millions of people connected with this industry? Will UK companies have access to a single European market, with no taxes or duties payable on goods?

There are a lot of potential uncertainties for UK road haulage companies as a result of Brexit, particularly in terms of employment, drivers’ hours rules, access to markets and border controls. Transporting a lorry load of goods from London to Milan in 1988 required 88 separate documents; the internal market replaced them all with a single piece of paper. In response to the balance of competences review, the Freight Transport Association said that the EU had created

“a market that logistics has served for nearly half a century”,

benefiting British businesses; the Road Haulage Association, similarly, felt that for its sector the overall judgment was a fine one. It said that

“‘competences in UK road transport are finely balanced in our sector. Although we have not got a 100% solution in terms of market access we have got the most of what we think the industry would want”.

That is largely a reference to cabotage, the practice whereby a haulier from the UK can carry goods between two other member states—for example, Spain and France. So, what is the plan?

[Chris Grayling]

rose—

[Drew Hendry]

I am happy to give way to hear the plan.

[Chris Grayling]

Will the hon. Gentleman tell the House, first, what proportion of cross-channel traffic is carried by UK hauliers as opposed to hauliers based elsewhere in the EU, and, secondly, the balance of cabotage carried out in the United Kingdom by European hauliers, and vice versa?

[Drew Hendry]

The Secretary of State is trying to make an argument similar to that made during the Brexit campaign about how the EU has to buy cars made here because there is a bigger market for them. That does not square with the facts of what is happening in the European market. For example, what will happen when there is a shortage of drivers in the road haulage industry, as at the moment many of them are EU nationals, supplying our road transport network? We have not heard the plan, and I heard nothing in the Secretary of State’s remarks today to say that there was a plan in this regard.

The EU single market has delivered significant economic and social benefits for Scotland. The four freedoms of the single market—freedom of movement of capital, of people, of goods and of services—have removed barriers to trade and opened Scotland to a market of more than 500 million people. The single market has also generated direct benefit, and there are now unanswered questions about funding. As of October 2016, some £350 million had been legally committed for transport funding, meaning a further £450 million is available as long as it is committed before the UK leaves the EU. Some £13 million of that went directly to Transport Scotland, with the agency being available to seek a further amount from the remaining £450 million. However, there has been not a peep from the UK Government or the Chancellor on whether the funds will be committed up to 2020. Will the UK Government seek to top up the funding to Scotland after we leave the EU?

I will conclude now, but there are many further issues relating to rail and bus networks, including vehicle standards and testing, disabled badges and a whole lot more. There are so many questions on transport in the light of Brexit that I think we will return to the subject again and again. Those questions are being asked not just by me or my hon. Friends, but by industry and the public. They deserve answers. They deserve “the plan”, but instead they see that, on issues relating to maritime, road or air, they have a UK Government who are all at sea, taking the road to nowhere, and booked on an expensive and uncomfortable flight from reality.