European Union (Withdrawal) Bill

Lord Bilimoria Excerpts

Committee: 6th sitting (Hansard - continued): House of Lords
Monday 12th March 2018 Lords Chamber

[Lord Bradshaw (LD)]

My Lords, the logistics industry permeates all our lives. It dominates retailing and allows most sophisticated industries, such as the motor industry, to organise themselves on a multisite basis. When we buy something in most shops, we start a process which means that our purchase will trigger the order for a replacement, stretching back to the manufacturer or supplier. This arrangement has become very much more sophisticated since we joined the EU 44 years ago. Supplies of parts flow through a network as complicated as a spider’s web, throughout the community and beyond. This is what makes your orange appear at breakfast or your new car come off the production line.

We are told in ever shriller tones by the logistics industry and its customers that the survival of that system depends upon frictionless trade: no stops at borders, no need to provide documentation and no tariffs—they are the words of the Freight Transport Association. The industry was lured into a state of complacency by the assurances of Ministers that this “frictionless” trade would continue after March 2019, which is less than a year away. However, that complacency is swiftly turning to panic as it becomes evident that the assurances offered concerning frictionless trade are becoming less likely to be realised. Trade deals, even if these could be negotiated, seem a very distant prospect. Your orange at breakfast has to come from Spain, and the parts to make and deliver your Mini need to arrive at Cowley every 20 minutes or the production line stops. The prospect of empty shelves in the shops, as witnessed recently due to the weather, becomes almost a certainty.

If there is any interruption at ports or similar points of entry and exit, I suggest that people’s anger with those politicians who have sold them a false prospectus will be deep and severe. If people are unable to obtain the supplies of groceries to which they have become accustomed, or workers in factories that cannot get a time-critical supply of spare parts are laid off, there will be trouble. The chance of protests in the streets as these shortages become apparent should be taken far more seriously than the suggestion of a popular uprising if the concept of Brexit is eventually frustrated. The mantra “Europe needs us more than we need them” is perhaps best not put to the test, as there will be those doing business here who decide to seek the certainty of closer union with the EU by moving their operations within its borders. The future of the aircraft construction industry is an example.

The logistics problem is very serious in respect of Ireland, to which the noble Lord, Lord Berkeley, has referred. A very large amount of perishable material has to transit via Great Britain on its way to and from Europe. If any border checks are necessary to secure passage at either Holyhead and Dover—probably both, as things stand—there will be serious implications for that trade, and it will surely lead to the establishment of direct ferry links between the Republic and Europe to avoid using those at Dover or other crossing points. At this moment the Government of the Republic are giving serious consideration to that possibility.

Maybe those in the logistics industries—notably the ports industry, the Freight Transport Association and the Road Haulage Association—have kept quiet until now because they have always trusted and supported the party opposite and have trusted the assurances of David Davis and Liam Fox. That misplaced loyalty is about to be tested, possibly to the point where these businesses suffer permanent damage. The purpose of the amendments is to seek from the Government, at this late stage, the humility to accept that the promises about frictionless trade cannot be delivered and to bring back on Report a plan to keep Britain working and supplied in the present just-in-time way, or they face a defeat in this House on Report. As the Freight Transport Association said, the trailer registration Bill, to which the noble Lord, Lord Berkeley, referred, which is coming back to your Lordships’ House in Committee, is not a viable solution.

As the Prime Minister said only last week, we need certainty. I submit to your Lordships that we are as far from that as ever.

[Lord Bilimoria (CB)]

My Lords, I put my name to both the amendments and I would like to build on what the noble Lords, Lord Berkeley and Lord Bradshaw, said. Some 70% of the UK’s food imports by value are from the EU, and 60% to 65% of the UK’s agricultural exports are to other member states. Any risk of delays would put a strain on our supply chains and would probably raise food prices.

The Channel Tunnel illustrates how important timing is: 1.4 million trucks and 2,900 rail freight trains went through in 2014, transporting approaching £100 billion-worth of goods between the UK and the continent, including almost £200 million-worth of iron, steel and metal products from Yorkshire and the Humber. The time saved by using the Channel Tunnel was equivalent to 120,000 days in 2014, saving a lot of money on each crossing. So any delays and any more customs checks would up-end such financial projections and have downstream consequences.

One whole aspect of Brexit is the huge complexity caused. The amendments highlight the impact that it will have not just on our freight industry but on as us a public. The list of border operations includes revenue collection, safety and security, environment and health, consumer protection and trade policy. Modern customs systems have to balance providing security with facilitating the free flow of goods. Some 37 million tonnes of trade a year pass through Southampton alone, including more than 1 million containers. How could you possibly inspect every container? It would just create delays and blockages.

Of the freight transport that goes in and out of the UK, 69% of that going to the EU is lorry traffic, whereas 99% of non-EU is containers. Of the EU share, between 75% and 100% of lorry traffic goes through Dover, the Channel Tunnel, Harwich and Holyhead. We cannot possibly have any delays that will make life more difficult for our businesses. I just mentioned the requirement for food products. Ireland and the British land bridge have also been mentioned. We will be talking about air transport later, and rail in more detail.

The UK will not be deemed a third country until the end of any transition period, if one exists. Even if the UK were to remain in the customs union with the EU, it would still be a third country and goods would be subject to checks. Freight using the UK land bridge will effectively be subject to non-tariff barriers—people always miss the non-tariff barriers.

Brexit will cause one disaster after another in this area. Customs’ rule of thumb is that 2% of cargo coming from third countries is subject to physical exam, while 4% to 6% of such cargo is subject to documentary checks. However, the Department of Agriculture is obliged to check up to 50% of food and other products that contain an element of food, such as cosmetics, pharma or medical devices. There is a 100% check on animals, including pets. This is how complicated this whole area is. Revenue will prepare a list of approved customs courses for use by traders. Traders should apply for customs registration numbers. This will be absolutely disastrous; I do not think people have comprehended how difficult it will be.

As the noble Lord, Lord Bradshaw, mentioned, 50% of FTA members operate more than 200,000 lorries: almost half the UK fleet. FTA members represent 90% of freight moved by rail. FTA members consign 70% of UK visible exports by sea and 70% of UK visible exports by air. They speak for this industry. If we do not listen to them, we are not listening to the people who do this. How UK companies get goods to and from the continent in the future will be a matter for EU negotiations, but the changes to border controls and customs will impact our transport efficiency. There is no denying that. At the moment there is frictionless movement of goods to and from the UK. Unless a solution can be agreed as a free-trade agreement when the UK moves outside the single market and the customs union, that will change.

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[Lord Bilimoria]

If noble Lords do not like facing reality, they can cheer, but I am talking about this reality as a businessman who imports from and exports to Europe. I will be affected, my consumers will be affected and our citizens will be affected. Noble Lords can laugh as much as they want, but this is the reality.

Aidan Flynn wanted the prospect of a deal. This is the quote:

“We’re all looking for transition, in terms of whatever changes are going to be required … but effectively, if there’s no likelihood of a plan by October 2018 in terms of UK-EU negotiations you’re going to be without a doubt going into … a cliff-edge situation”.

[Lord Robathan (Con)]

My Lords, the noble Lord, Lord Berkeley, raised a very important point about freight transport crossing the border between the Republic of Ireland and Northern Ireland. It is a very legitimate issue to raise and I hope the Government will listen. He also identified that, of course, this can be solved with modern IT.

I want to bring the House’s attention to the reality of the border in Northern Ireland. I was working in the Northern Ireland Office just over three years ago. I said to my office, “I’d like to go to South Armagh”. They said, “Well, Minister, that’s a frightfully bad thing to do”, but I went. Noble Lords may know that South Armagh used to be referred to as “bandit country”. Let me tell you, three and a half years ago, it certainly still was. I was with a lot of police, with a helicopter going overhead; the police still fear for their lives there because there are booby traps and things laid for them.

I particularly want to focus on smuggling. We followed a lorry on one of the little lanes from the Republic into the north. We did not stop, but the police said, “That’ll be smuggling”. We saw the impact of smuggling diesel, because there are different duties in the south and the north; huge amounts of diesel are imported from the south to the north, including a lot of red diesel that is then cleaned—sorry, has the red taken out of it—and has a huge environmental impact. There are still different subsidies there. Cattle get smuggled back and forth across the border because a lot of money can be made through smuggling across the border. There are two different customs so, of course, there are customs officers on the border; not sitting in posts, as they used to be, but still down there. They do not do much, it has to be said; there is less to do because we are part of a single market. There are, I believe, 275 different crossing points between the south and the north of Ireland, on a border of some 305 miles. Between 1922 and 1972, it was never possible to police everyone. During the Troubles—I served out there for a bit—it was not possible to stop terrorists crossing the border. We used to put concrete blocks and everything at the border, but it did not work; people came across the border.

I also remind noble Lords that there are different currency units: Ireland uses the euro but we use the pound. People manage to get past this quite easily and they will manage to do so in future as well. People say that the border in Ireland is a huge problem; it will only be a problem when we leave the European Union if people wish it to be so. It does not have to be so; good will and common sense on both sides will show that it is not beyond the wit of man for Northern Ireland and the Republic of Ireland to co-exist quite happily and trade with each other—as they did before 1922, between 1922 and 1972, and since.

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[Lord Berkeley]

My Lords, I shall be brief on this amendment because the Minister has almost answered some of the questions. However, it is worth reminding the Committee that the Prime Minister has talked about how she is keen that the various agencies should continue to exist after Brexit. I have not seen anything about the European Union Agency for Railways, as it is now called. It is vital that we have this agency.

We have only one link across the Channel at the moment. Last week DG MOVE at the Commission produced a paper which goes into great detail about what we cannot have after we have left. It is a pity that we do not have a response to it. That includes our UK-registered train drivers who will not able to operate in France or anywhere else unless they pass the test in France. The same applies to approvals for equipment that is manufactured over here if it is not produced to the same standard. This could be a complete disaster, and it will be a great shame if we cannot maintain our involvement with the European railways agency because some of us have spent the past 10 years trying to have one technical agency that covers all the railways in Europe rather than having 25 different ones, which is what we had before.

I hope that when the noble Lord comes to respond, he will be able to give us some warm words about how we can retain our involvement with the European railways agency and sort out all the different issues around standards, drivers’ approvals, rolling stock approvals and everything else. I declare an interest as the chairman of the Rail Freight Group, and we do want to see rail freight and Eurostar continuing their services after March next year. I beg to move.

[Lord Bilimoria]

My Lords, I added my name to the amendment to note that rail contributes £85 billion of extra economic benefit to the British economy. About 41,000 of the 240,000 people who work in the rail industry are EU nationals. To make this point, the amendments basically say that we have to adhere to the European Union Agency for Railways, which has EU-wide responsibility for implementing the technical aspects of railway legislation. This cannot be under- estimated because it encompasses safety, specifications of interoperability—TSIs—and a common verification process for infrastructure and rolling stock. Most railway industry manufacturers have standard products designed for supply across the whole of the EU, in line with these requirements.

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[Lord Bilimoria]

My Lords, I have put my name to these amendments. It should be emphasised that the European common aviation area, or what we refer to as the single European sky, should not be taken for granted. Any British airline can fly anywhere it likes in the EU—not just to but within another member state—and sell tickets to anyone in the 28 member states, without restriction. The aviation industry contributes £52 billion to our economy and, as we have heard from the noble Baroness, Lady Randerson, it leads to cheaper fares, better consumer protection and compensation, and a greater variety of destinations. There is of course the environmental aspect as well.

Does the Minister accept that, if we retain access to the single skies, it would require accepting the jurisdiction of the European Court of Justice, which is one of the Government’s red lines? Does he also realise that there is no fallback on the WTO in the aviation sector? In fact, Tim Alderslade, the chief executive of Airlines UK, has said:

“The Government is fully aware that aviation sits outside”,


the WTO system. He continued:

“The principle of ‘no deal is better than a bad deal’ does not apply to us”.


So whatever happens, the airline industry needs a deal. It cannot have any limits to capacity. Already, easyJet has said that it has applied for a licence in Austria to set up easyJet Europe. As we have also heard, airlines plan their schedules up to a year in advance. Can you imagine if the situation with Ryanair was happening today? How will we cope with that across the sector if we do not come to an agreement?

This whole aspect really keeps us connected to these countries; the administration and infrastructure run like clockwork. However, I have looked at a table of the Brexit impacts under different scenarios. It lists eight scenarios, five of which would not be allowed any more. An EEA airline flying from a third EEA country to the UK, for example Air France flying from Berlin to London, would no longer be allowed. A non-UK airline flying from the UK to a third EEA country, such as Ryanair flying to France, would no longer be allowed, and nor would a UK airline flying between two EEA countries. A UK airline flying within an EEA country or an EEA airline flying within the UK, such as Ryanair flying from London to Glasgow, would no longer be allowed; nor would a US or EEA airline using the UK as a hub to fly from Europe to the USA, such as American Airlines flying from New York to Heathrow and continuing on to Rome. We take this all completely for granted but it will no longer be available to us.

According to Ministers, 35 separate pieces of EU legislation work together to make the EU’s aviation single market. This is separate from the single market in goods and services and continued membership for the UK, or alternative arrangements, will be needed. What can we do? As a result of its membership, UK airlines benefit from 42 air services agreements entered into by the EU with countries outside the European Union, including the United States and China. This is what open skies is all about: it has allowed European majority-owned airlines to fly between places within any EU country, not only between the home country and another EU country.

We have also heard about the common regulator, the European Aviation Safety Agency. The UK has been a really proactive member of that organisation. It has been a leading member of it because it has brought benefits to the UK and to Europe. Security is also going to be really important and difficult—as will future border and visa arrangements.

In the longer term, unhindered access to EU aviation is absolutely essential. Benefits have been derived from open skies and a more restricted market would be disastrous. The transport regulations are most comprehensive. They provide for compensation, reimbursement and protection from overbooking. A large part of this is European Court of Justice law. Passengers are protected when they take off from an EU airport or land at one, provided that the carrier is an EU carrier. These are all issues that we take for granted, but if we do not look at these amendments it will be another way in which the whole economy and all our citizens and businesses will be damaged.

I shall conclude by quoting Andrew Haines, chief executive of the UK Civil Aviation Authority:

“Let’s just imagine the UK was to withdraw from EASA altogether and adopt our own framework–although I’m yet to meet anyone of substance that supports that approach. It is, of course, theoretically possible and let’s just suppose we established the best aviation safety regimes in the world. It would mean a major increase in UK regulatory regime, potentially represent a major barrier to track increased costs and yet we would also risk becoming a backwater in terms of wider impact”.


A backwater—that is where we are heading.

[Lord Liddle]

I congratulate the noble Lord, Lord Bilimoria, once again on an excellent speech raising many serious issues which we have to deal with. I shall draw particular attention to Amendment 233, which asks that any amendments to the roles and responsibilities of the European Aviation Safety Agency should be subject to the affirmative procedure. I would like a response from the Minister. I see no reason why the Government cannot just agree to that now to assure the Committee that there will be full accountability on these questions. Why not just say, “Yes, we agree to that”?

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The UK has been and is influential within EASA. UK expertise has contributed significantly to the high standards of aviation safety in Europe. The harmonised aviation safety regime has raised standards across Europe, as the noble Lord, Lord Tunnicliffe, has pointed out: facilitated the development of integrated cross-border supply chains and supported the growth of the European aerospace industry. The UK’s continued participation in the EASA system is beneficial not just for us but for the rest of the EU. The UK, with the second largest aerospace sector in the world, supplies vital components to aerospace exporters within the EU, and EASA itself benefits from the UK’s expertise and technical input, with roughly 40% of the expertise in the EASA system coming from the UK. The UK is committed to maintaining high standards of aviation safety, and the Government want to avoid disrupting trade or imposing additional regulatory burdens on industry in the UK or the EU. The precise form and nature of the UK’s future relationship—

[Lord Bilimoria]

I thank the Minister for giving way. I just want to clarify that he is accepting that by remaining in EASA we will have to submit to the European Court of Justice, and therefore the red line does not exist any more.