Brexit: Transport

Lord Whitty Excerpts

Monday 6th February 2017 Lords Chamber

[Lord Whitty (Lab)]

My Lords, the noble Lord, Lord Patten, has a very overoptimistic view of the position. I agree that transport is likely to be one of the sectors least affected by Brexit, but the hope for a positive mood among the politicians of Europe, which was certainly still there after the initial shock two or three months ago, has been sadly disappointed by the way in which the Prime Minister’s definition of the UK’s bargaining position has excluded us from any form of membership of the single market and any form of real participation in the customs union. Both of those seriously affect the transport sector.

I thank the noble Baroness, Lady Randerson, for introducing this interesting debate. She and I are both members of the same sub-committee of the EU Select Committee, which has been looking at trade. When we looked at the options for trade, at that point we still considered partial membership of the single market at least as a potential option, as with at least temporary continued membership of the customs union. We have received evidence from and talked to, formally and informally, representatives of manufacturing and of goods and services, and we are now looking at services in more detail, including transport services. The initial reaction of those industries, after the shock of the referendum vote, was panic, and then they came back with the view, sector by sector, that, “Okay, we are where we are, but we could do a sectoral deal on this front and still retain all the key issues of membership of the single market”. I am afraid the Lancaster House speech, followed by the White Paper and the Statement with the White Paper last week, have cut off that possibility.

As the noble Baroness pointed out, transport has been hugely integrated across Europe for the past 40 years—not totally but to a significant degree. A regulatory structure applies to the whole of European transport, including on issues of safety, ownership, routes and vehicle standards, as has been said. These are all easy to deal with within the single market; they become much less easy outside the single market.

In aviation, there is probably greater scope for doing a bespoke deal than there is for the other sectors. European airspace already extends to some extent beyond the European Union—to Norway, Iceland and some of the Balkan countries—but it is very important that we establish early on in the negotiations that aviation is dealt with as a one-off. Not only does it define the use of European airspace and our access to European airspace, which at the moment also includes issues of establishment and whether UK-owned airlines or UK-domiciled airlines can operate effectively in other countries and within other countries, but it also defines our relationship with the rest of the world, including the open skies agreement with the United States. We need to retain that. That can probably be dealt with in a separate deal. Whether it could be dealt with in a separate deal entirely within a free trade agreement—which appears to be now where we are in terms of narrowing down our options, which we have, unfortunately, done over the past couple of months—is not entirely clear.

If we were to take the jump off the cliff, concluding that no deal is better than a bad deal, and go to WTO standards, we would still probably be able to do a separate deal on aviation, but that would require a lot of negotiation, hard bargaining and recognition of what the key British interests are in terms of retention of routes, slots, airline establishment and so forth. Aviation is somewhat different from the other modes of transport. Its regulatory system is very much an EU responsibility and competence.

I could argue that, if we reverted to control of the rail system with renationalisation of the railways, which I think is still the Labour Party’s policy, that would be more easily achieved outside the EU. It is not completely banned by the fourth railway package that we are currently negotiating, but it would be more difficult were we to remain members of the EU. However, the through routes to which the noble Baroness referred, such as the Eurostar and the large amount of freight that is carried by railways and so forth, all affect the railway sector. That is an essential part of the single market mechanism, and we will be outside the single market mechanism.

In road transport, there are a whole range of regulatory structures involving driver hours, vehicle standards, vignettes and cabotage arrangements and so forth. Drivers are an international workforce, so getting control of migration may limit the degree to which British operators and foreign operators trying to trade import and export from the UK have access to a skilled workforce. Once again, road transport arrangements are a key part of the single market, and we will be outside the single market.

On shipping, a lot of shipping is between ourselves and Europe and there will be arrangements on safety, standards and routes that are part of the single market. But the far more important aspect of the maritime situation is ports. It may be beneficial for the owners of UK private ports, which are by and large privately owned within the UK, to be free of the regulatory structure that exists within Europe, which is largely geared to publicly owned ports. The problem for ports is not ownership or regulation but that, outside of the customs union, we will face all sorts of additional responsibilities on port administration, port space and the cost at the port level. If we are to be outside of the customs union, the movement of people and goods through our ports will be a much more complex issue. It will require space to check, and it will require administration and bureaucracy. Some of it can be subject to electronic arrangements these days, but much of it cannot. In the end, because of the configuration of most UK ports, it will be difficult to extend the time, parking space and so forth which, even under the current arrangements, have been under some considerable strain, as we have seen particularly in Dover, over recent years. The need for additional space, checks and bureaucracy and the delays in shifting goods by road, rail through our ports and through our shipping will significantly increase.

All that is because we have taken a decision in principle that we will move away from the customs union. The ambiguous words in the Lancaster House speech have now been whittled down to mean that any continued co-operation is on administrative arrangements. Desirable as those may be, they will not stop all the pressure on our ports, our roads, our shipping and our rail systems. The narrowing down of the options by the Lancaster House speech has put a greater burden on transport than looked like being the case a few weeks ago.