My Lords, towards the end of my time as part of the usual channels the Government Chief Whip advised me that we would be receiving this Bill as a Lords starter. I recall thinking at the time that it was not one of those mentioned in the Queen’s Speech, and becoming instantly suspicious. I should tell the House that suspicion is an integral part of a Whip’s training. Later it comes as second nature.
Despite the distinct lack of interest in the Bill displayed in the Chamber today, I was right to be concerned. It is the first major piece of Brexit contingency legislation I have seen and is in essence a panic measure. Sam Coates of the Times got it right when he said on 7 February, “Last week No.10 said there was no date for the bill; there wasn’t a date and there was lots of work to do. Six days later it was published”. Someone in the department finally persuaded Mr Grayling that it was not a given that there would be agreement on road haulage arrangements after 29 March 2019.
It is a fact that without a system of fully effective multilateral road haulage arrangements, our businesses would literally grind to a halt. In the event of no deal, this legislation is hugely important. The alternative is chaos at our borders and ferry ports. It would make Operation Stack look like a minor hold up in B-road Britain. Thinking about it, I am staggered at Mr Grayling’s complacency in not requiring the Bill earlier and not ensuring that it had Queen’s Speech clearance.
In her customary charming way, the Minister has set out the Bill’s main provisions. Currently, we benefit from eminently sensible EU regulations that flow from the International Road Haulage Permits Act 1975—legislation, I might add, so old that it was enacted the year I graduated. The current regulations require road hauliers to have a Community licence for all operations in or through EU countries. Post Brexit UK-issued Community licences will no longer be valid, unless of course we have secured agreement. UK hauliers would be able to use European Conference of Ministers of Transport permits. These provide for a multilateral quota scheme, are limited in number and do not cover the full range of haulage operations currently permitted by the Community licence.
The problem with the ECMT permit scheme is that it is limited to 102 permits annually. These are specifically allocated to a company for use for one international journey at a time. If the permits are allocated to only the most modern vehicles—Euro 6—the number increases to a maximum of 1,224 permits a year. Currently, approximately 300,000 UK registered powered vehicles travel from the UK to the continent, and that is
without adding in those travelling to the Republic of Ireland, so reliance on ECMT permits alone would cripple our haulage sector and is simply untenable. It would be a bit like tickets for Glastonbury: you just about get online and they are all sold out in seconds. The permits will be gone. Even with rationing, some sectors would be given first refusal—and who would want to decide between essential medicines and fresh foods for supermarkets? These are decisions we should not have to make.
The second part of the Bill introduces a trailer registration scheme, which will be required following the UK’s ratification of the 1968 Vienna convention. This makes sense even though ratification triggers the need for a registration scheme. A failure to put one in place would mean that unregistered trailers could be turned away at the borders of countries that have ratified the convention.
As the Minister recognised, the road haulage sector is vital to the UK’s economy. It contributes £11.2 billion to it and enabled the UK to import and export 8.9 million tonnes of goods in 2014 alone. Additionally, foreign-registered HGVs carry 34.2 million tonnes of goods as part of the current Community licence scheme. It keeps supply chains working for our vital food and agriculture sector. The Community licence arrangements secure our industrial base, facilitate economic growth in EU trade and keep the construction industry and high-tech sectors moving forward. Without it, business here in the UK would grind to a halt and we would cease to be a major trading nation.
Eighty per cent of goods go by road, 47% of goods we exported in 2015 went to the EU and 54% of goods imported came from that same source. The impact of a failure to put in place either an agreement following a Brexit deal or a scheme, if there is no agreement, can be judged by the scope of the current Community licence. It is issued free of charge to the UK hauliers who sign a standard international operators’ licence. Community licences are issued to operators. Office copies must be retained and certified copies held on each vehicle on each international journey. Certified copies are not specific to each vehicle. At the end of 2016, 9,745 UK hauliers possessed a licence and more than 35,000 certified copies had been issued. This scheme is extensive and essential to our nation’s economic health and success.
The most effective option, so that we do not have to rely on the Bill, will be to negotiate and agree a bilateral road transport agreement with the EU, which in turn could be part of a wider trade agreement or a stand-alone agreement separate from a customs union. This should be done as a matter of priority and be in place before Brexit, or before the end of a transition period, if one is agreed. Frankly, anything short of an agreement replicating existing arrangements with no quantitative restrictions will greatly disrupt and constrain cross-channel trade.
We need arrangements that place no additional administrative or financial burdens on hauliers. It is only by achieving this that people avoid damaging the road haulage sector and the economy as a whole. It is difficult to see how a Brexit that does not include, as a
minimum, membership of a customs union could be compatible with preserving the current ease of transit of goods. In that context, can the Minister say something about costs when she sums up? I ought to add that I made the mistake yesterday of taking a look at the DfT’s memorandum accompanying the Bill and the two impact assessments of costs to government and business. It is worth reminding ourselves that at present, the Community licence comes at no cost to hauliers. The memorandum makes it clear that there will be full cost recovery. Those costs will cover the issuing of permits for both road haulage and trailers, and the enforcement of the scheme, including compliance inspection.
Will the Minister tell the House how much each permit will cost, how long the application process is expected to take, whether it will be an online system, what it will cost the Government to establish the scheme, how much the trailer registration scheme will cost and how much registering each trailer will cost? Given that this Government are supposed to be concerned about the cost of regulatory burdens on businesses, have they done any cost modelling of the impact on the businesses affected?
If the haulage sector is looking for sympathy from the Government it will not find much in the impact assessments, which simply say that larger businesses will require more permits and incur higher costs. They say that 99.6% of the haulage sector is made up of SMEs, which account for 45% of road freight turnover. The Government say that,
“smaller businesses may find it harder to absorb the additional costs of a permit scheme. Operators typically have tight profit margins and smaller scale businesses may have more difficulty in absorbing the new costs”.
That is a pretty sobering assessment, and my worry is that Ministers have yet to realise the seriousness of the position.
Rightly there has been concern in the aviation sector about the failure to agree a deal, leading to a cliff edge for the European aviation market. As yet, freight has not achieved that degree of realisation. The Freight Transport Association has estimated that the logistics sector contributes over £121 billion GVA to the UK economy. We need the Government to safeguard that return. We also need to ensure the mutual recognition of driver qualifications. This needs to be agreed early on in negotiations to secure cross-border operations for drivers and operators. Currently drivers and transport managers need to hold certificates of professional competence to operate a heavy duty vehicle in the EU. The haulage sector will require legal certainty post Brexit, as the Minister acknowledged, to guarantee mutual recognition. Can the Minister provide a timetable for resolving this and say what progress has so far been made?
The Government are keen to present this Bill as a last resort, but the lack of progress in the Brexit negotiations make it increasingly unlikely that the DfT’s preferred outcome will be achieved. I worry that insufficient thought has been given to the unintended consequences of Brexit on freight haulage. The Government have not reassured me by publishing this Bill, which is a panic measure. They have published
nocost assessments for the sector, nor have they given any detailed assessment of the impact of added bureaucracy on businesses or the on-costs.
As a result, I intend to table amendments asking the Government specifically to negotiate a deal which replicates the benefits of the current Community licence and brings the UK within its purview. I shall also be asking the Government to report on the impact of the international road transport permits regime on the efficiency of haulage between the UK and the EU. If we cannot have an agreement that allows business as usual for haulage, we could end up with one of Mr David Davis’s dystopian fantasies—only it would not be a fantasy, but a fact.
The Bill should, and no doubt will, be supported by Parliament in an attempt to prevent chaos on day zero for Brexit, but it is a far from satisfying way of dealing with a problem almost entirely of the Government’s making—for example, the shoddy way they have dealt with negotiations. I worry about this Bill, and this House should too.
5.45 pm