UK Transport and Brexit News & Views No. 65

Mark’s Brexit Week for Transport

With the UK Parliament back from recess, Brexit is now firmly back in the saddle and we’re hearing a lot of optimistic noises from DExEU. Nothing wrong with optimism, and the Micawber principle that something good will turn up sometimes holds true. But as a strategy to see us through Brexit and beyond it’s not enough, not least in the transport field where a culture of planning and risk based assessments has quite rightly replaced the early pioneers who just winged it. So our optimism needs to be firmly rooted in facts, the law, rigorous and detailed assessments, and the art of the possible.

That’s why the current debate about the customs union and border controls is so frustrating. The EU is not bluffing when it says the free movement of people is indivisible from the other freedoms, such as the free movement of goods and services. So when we say we are ending  the free movement of persons we cannot then expect the EU to grant us a frictionless border. That’s simply not a political possibility.

But it’s also not a legal possibility. The EU and the UK will be required after Brexit to carry out border checks, not just fiscal checks but a series of checks including security & safety, financial controls, and market surveillance controls, even if we stay in the Customs Union. Michel Barnier published an excellent slide on what that means, and I’ve not yet seen any expert rebuttal of his assessment.

And, as we’ve heard recently from HMRC, it’s also not a practical possibility to have frictionless borders either. Jon Thompson, Chief Executive and Permanent Secretary of HM Revenue and Customs (HMRC) has argued for the technological ‘Max Fac’ solution, which would cost £20 Billion a year and take more than 21 months to implement and will still generate friction. Some said he was exaggerating. I happen to think he’s underestimating. Anyone with any experience of major IT projects commissioned by the UK Government to solve complex problems knows they are always over-budget, and over-time.

A leaked UK Government report over the weekend suggested ‘Armageddon’ should Britain crash out of the EU. That may be an exaggeration, but, as explained, even a closer relationship, a deep and special partnership, will pose political, legal and technical challenges which need to be fully understood before they can be addressed. I hope the Government’s White Paper on Brexit, due to be published before the EU Summit on 28 June, will clearly set out the challenges and how he UK’s vision for the future relationship will address them. It’s also vital it doesn’t just deal with trade but also goes into sufficient detail on our future relationship on aviation, shipping, road and rail. It’s vital we don’t miss a thing.  

In conclusion, by popular demand we’re be featuring a song each week which best illustrates developments (and will hopefully lift our spirits for the many challenges ahead!).

This week, Aerosmith’s I Don’t Wanna Miss a Thing (from Armageddon)

Enjoy and have a good week!

1. UKTiE responds to Steve Baker MP
UKTiE has sent its reply to Steve Baker MP, Parliamentary Under Secretary of State for Exiting the European Union, asking for a reply to the specific request that the UK government publish a future partnership paper or position paper on transport. For further information, please find our original letter here along with the reply from Steve Baker MP here. It’s vital, in order to plan for Brexit, that we know in detailed terms what we are aiming for.

2. Project Armageddon?
The Sunday Times broke a story this weekend that well and truly broke the Brexit news cycle. The article outlines that Britain would be hit with shortages of medicine, fuel and food within a fortnight if the UK tries to leave the European Union without a deal, according to a Doomsday Brexit scenario drawn up by senior civil servants for David Davis. The supposed scenario involves planning for the port of Dover to collapse “on day one” if Britain crashes out of the EU, leading to critical shortages of supplies. The scenario further outlines that supermarkets in Cornwall and Scotland will run out of food within a couple of days, and hospitals will run out of medicines within two weeks. The documents are said to have been written for the Inter-Ministerial Group on Preparedness by civil servants at the Department for Exiting the EU (DExEU), Department of Health and Social Care and Department for Transport.  This alleged leak has both sides of the Brexit debate up in arms, with Brexiteers labeling this ‘Project Fear 2.0’ and Remainers believing this to show why Brexit should not happen. The truth of the matter is that we now have confirmation of the Government modeling various Brexit scenarios, which can only be seen as good news from a preparatory standpoint, but this must be accompanied with transparency over the outcome of these scenarios, good or bad. One of the primary driving forces of what Sir Ivan Rogers called the ‘Reversers’ is that they feel divorced from a process that they feel they should have more of a say in. This ‘Doomsday’ scenario does show the drastic consequences of a no-deal Brexit, even if the consequences laid out in this scenario only serve as a guide to what could happen.

3. The Hunt for Brexit October
As noted in previous News & Views, there is a lot that needs to be agreed between now and October, with Ireland being at the top of the agenda for this month’s European Council summit. However, as Peter Ptassek, Germany’s Brexit Coordinator, tweeted “What to expect from June #EUCO regarding #brexit ? My personal impression: Not many are expecting very much now. If this is so, October would then have to solve ALL problems (withdrawal, NI, governance, future …) in one go. Odds still unclear.” So it looks like October it is then. This leaves a lot to that will need to be formally agreed at the October European Council summit. Although not impossible, the negotiations are pushing the boundaries of possibility and are veering into make or break territory. This would leave many ongoing strands of negotiation happening simultaneously, an original UK request, and it will be interesting to note the EU’s reaction to their staggered approach meeting the realities of the negotiations. For the time being though, nothing is certain until the June European Council comes and goes, but we do know that if everything needs to be agreed by October that the negotiations can no longer afford the setbacks that have, thus far, plagued both sides.

4. New infrastructure to absorb Channel port disruption will not be ready in time for no-deal Brexit
A recurring theme throughout the Brexit process has been the continuous flow of stories regarding the prospect of X amount of miles of queue at the Port of Dover due to lacking infrastructure to absorb any disruption at Dover. This week, it is the Independent’s turn to report on such a story, reporting that new infrastructure planned by the government to absorb disruption at the Channel ports will not be ready in time for a no-deal Brexit, because of delays in planning the project. The article further highlights that authorities have not even got as far as selecting the locations for the overflow lorry parks, with detailed proposals only set to be made public for consultation at the start of next year. The delays to the project comes after the government scrapped advanced plans for an overflow lorry park at Stanford West, near Folkestone, in November last year, after being challenged over it in the courts. At the time, it was reported that a new solution would be ready by March 2019, but the timetable appears to have slipped again, with no date now set for completion. Despite Lord Adonis labeling this as emblematic of the Government’s ‘ostrich-like’ approach to Brexit preparations, there is more nuance needed here, as is often the case in Brexit stories. While Theresa May’s government should be undertaking the necessary preparations but if the government is seen to be preparing too much fora no-deal Brexit, you can immediately imagine the headlines accusing a Bexiteer Tory government of preparing for an outcome it has always wanted. Conversely, the current optics of the government not seeming to be properly undertaking its Brexit preparatory work leaves many Brexiteers wondering whether incompetence will be the death of Brexit. 

5. Eurotunnel takes message to Brussels
Euractiv hosted an event titled ‘The Channel Tunnel: What economic value to European trade?’ where Eurotunnel CEO, Jacques Gounon, brought Eurotunnel’s Brexit message to Brussels. Gounon said that he was confident the UK and the EU would reach a preferential customs agreement and that Eurotunnel would preserve its competitive advantage. Karima Delli, MEP, chair of the TRAN Committee, said that Eurotunnel is a very important element in UK-EU trade and that she thought a 21 month transition period was too short to find appropriate solutions for Eurotunnel and wider UK-EU trade.

6. Are ‘Freeports’ the answer to post-Brexit ports chaos?
The Times reports that harbour and dock operators have called on the government to embrace freeports to boost the post-Brexit economy and regenerate struggling coastal cities and towns. Freeports are ports that get a special or differential taxation and excise treatment, allowing frictionless trade for the manufactured assets in which they deal. UK Major Ports Group has said that ministers should widen a commitment to propping up rural areas and the farming community after the country leaves the EU. It says that Britain should embrace freeports, which could rejuvenate places such as Teesside and its redundant Redcar steelworks. The concept underpinning the call for the Government to consider the use of freeports comes from their use in effectively creating tariff-free trade zones, something which could help with handling the post-Brexit ‘storm’. As freeports operate outside of customs territory, meaning goods would be able to enter and exit without incurring import procedures and tariffs. Freeports are often used as a tool to boost domestic manufacturing as it would allow businesses to import and export materials and goods without incurring costs or dealing with paperwork and delays. However, freeports have also attracted a fair deal of criticism due to them being seen as an opportunity for businesses to avoid taxes and on the working conditions of freeport workers as the ports are often given exemptions on regulation. Freeports certainly represent one of the more creative solutions and certainly a departure from the humdrum of the regular Brexit solutions, but it is still an idea and not close to yet being implementable.

7. UKTiE has also put together the latest timetable for Brexit. We will keep this up to date as the process develops: