Crunch time: industry urges MPs to end Brexit ‘farce’

As Parliament prepares to vote again tonight on Theresa May’s Brexit deal, the Freight Transport Association (FTA) has urged MPs to “consider the needs of those tasked with keeping Britain trading”, and to be mindful of the cost and disruption to the UK economy that a no-deal departure from the EU would entail.

The plea follows the Road Haulage Association’s (RHA) assertion last week that the government had “lost its way” and provided a “complete and utter lack of clarity” on the implications for international hauliers after Brexit.

The withdrawal deal MPs will vote on tonight, little over two weeks before ‘Brexit day’ on 29 March, is identical to the one MPs resoundingly rejected in January, with the exception of an eleventh-hour legal codicil (or “joint instrument”) agreed with the EU, which the British government says provides legally binding assurances that will reduce the likelihood of the UK being held in ‘backstop’ arrangements – designed to prevent a hard border on the island of Ireland – in perpetuity.

London is also making what it calls a “unilateral declaration” on the Brexit deal, stating its position that nothing in the agreement will prevent it from pulling out of the backstop arrangements should UK/EU relations break down.

The direction of travel in Parliament today is likely to be influenced significantly by the legal advice of the attorney general, Geoffrey Cox, and whether it is considered to provide sufficient reassurance to MPs about the likelihood of the UK being trapped in the backstop.

A few minutes before Transport Operator‘s bulletin was published today, Mr Cox released his advice, which stated: “I now consider that the legally binding provisions of the joint instrument and the content of the unilateral declaration reduce the risk that the UK could be indefinitely and involuntarily detained within the [backstop arrangement], at least in so far as that situation had been brought about by the bad faith or want of best endeavours of the EU.

“It may be thought that if both parties deploy a sincere desire to reach agreement and the necessary diligence, flexibility and goodwill implied by the amplified duties set out in the joint instrument, it is highly unlikely that a satisfactory subsequent agreement to replace the [backstop] will not be concluded.

“But as I have previously advised, that is a political judgment, which, given the mutual incentives of the parties and the available options and competing risks, I remain strongly of the view it is right to make.

“However, the legal risk remains unchanged that if through no such demonstrable failure of either party, but simply because of intractable differences, that situation does arise, the United Kingdom would have, at least while the fundamental circumstances remained the same, no internationally lawful means of exiting the [backstop], save by agreement.”

While reaction to this had yet to emerge at the time of writing, it is likely to cast significant doubt on Mrs May’s chances of winning this evening’s vote.

All eyes will also be on Northern Ireland’s Democratic Unionist Party (DUP), who have held the balance of power in Parliament since the 2017 election and who have been implacably opposed to any Brexit arrangement which could risk changing Northern Ireland’s status within the UK.

They say they are studying the new codicils to the withdrawal deal carefully this morning, but the attorney general’s position almost certainly makes their support for the plans less likely.

Should MPs pass the deal, the UK road transport industry will enjoy a 21-month respite from uncertainty in the form of a transition period, during which most current European regulations affecting the sector will continue to apply until the end of 2020, with cross-border operations continuing unimpeded.

The extent of long-term access to the European market, however, would remain uncertain, with most aspects of the future relationship between the UK and EU still to be negotiated during this time. While the parties have expressed their intention to safeguard continued reciprocal access for freight and passenger road transport operators as part of the so-called political declaration accompanying the withdrawal agreement, this element of the package is not legally binding, and far from set in stone.

Should the deal fail to be passed today, and Parliament fail to reach a consensus on an alternative way forward in further votes expected later this week, a no-deal, ‘cliff-edge’ Brexit on 29 March remains an alarming possibility – one which the FTA is adamant Britain should avoid at all costs.

Today, the association reminded politicians that a no-deal Brexit would break the prime minister’s promise of two years ago to keep trade as frictionless as possible, in an open letter to Mrs May which it has shared with all MPs, laying out its priorities in terms of minimising the impact of EU withdrawal.

James Hookham, FTA’s deputy chief executive, sauid: “For the past two years, the logistics industry has been warning of the potential disruption and damage of a no-deal Brexit, which could include short-term gridlock at ferry ports if customs processes and checks are not implemented smoothly, shortages of perishable foods and medicines, restrictions in the labour market caused by a shortage of workers as they return to the EU, and severe delays for imports and exports which would hinder the UK’s manufacturing and retail sectors.

“The government believes it has developed the necessary procedures to be followed but yet there is still so much to be agreed and announced.

“Whatever the final outcome of tonight’s vote, and those later this week, the logistics industry needs sufficient time to learn, adapt to and implement the necessary operational processes to comply with the announced procedures.  With just over two weeks to go until the UK’s proposed departure from the EU, it is worrying that we still have so much to clarify.”

He continued: “The logistics industry is agile and adaptable, and will respond to challenges, but it is impossible for those involved in complex supply chains to adapt to new trading conditions in a matter of days. The sector still needs confirmation of many aspects, including whether road haulage permits will be required, the level of customs tariffs, access to a skilled workforce and how red tape will be minimised for imports and exports.

“Slipping to a no-deal situation, and reverting to complicated World Trade Organisation rules and tariffs, would impose additional costs of between five and 35 per cent on the UK’s supply chain.”

Hookham concluded: “Mrs May needs to urge Parliament to recognise the real jeopardy that a no-deal Brexit, as outlined in today’s letter, would impose on the logistics industry and the country as a whole. Business cannot trade on what-ifs and maybes; a transition period to whatever the new market arrangements will be is essential if Britain is to keep trading efficiently after its departure from the European Union.”

Last week, the RHA aired its own concerns about the lack of progress in resolving the deadlock.

“It is patently clear that government has lost its way,” said chief executive Richard Burnett.

“There are some momentous decisions to be made both in the run up to Brexit and beyond. Yet tens of thousands of UK hauliers responsible for keeping the supply chain between the UK and the rest of Europe are still in the dark. Because of government ineptitude they are simply not ready.”

The problem wasn’t simply about trucks, the association said, but about the wider economy, and the millions of businesses in both the UK and the EU that rely on an effective supply chain. Those dependent on smooth and dependable distribution would suffer, it said, such as those carrying and waiting for perishable goods and medicines.

Another example cited was the music industry, which the RHA said was “totally dependent” on a smooth-running transport operation. Just a six-hour delay in transport arrangements could easily mean the cancellation of a venue booking, with “disastrous” consdequences for ticket sales, personnel costs and so on. Meanwhile, Formula 1 race teams may need more than 20 trucks to transport its cars and technical equipment; if only 14 were to arrive on time, it would be “a disaster”. Such scenarios could lead to many thousands of jobs being put at risk.

RHA cited the promises a year ago of the transport secretary Chris Grayling, who said: “We will maintain a free-flowing border at Dover – we will not impose checks in the port. We don’t check lorries now – we’re not going to be checking lorries in Dover in the future. The only reason we would have queues at the border is if we put in place restrictions that created those queues – we are not going to do that.”

But Richard Burnett claimed that this was “at odds with the reality of the situation”.

“It’s misleading,” he continued.

“If the French are going check both inbound and outbound trucks, the timing of the supply chain into the UK will be severely affected.

“The whole situation has turned into a farce, as is being clearly demonstrated in Calais right now. And, through no fault of its own, the industry on which the economies on both sides of the Channel rely so heavily is being set up for a fall of catastrophic proportions.”

Contingency plans

As the political uncertainty rumbles on, the Department for Transport, EU institutions, and haulage and freight trade groups have been busying themselves with further contingency preparations.

On 5 February, the roads minister Jesse Norman confirmed that legislative arrangements were in motion to provide continued access to the UK market after Brexit for hauliers from the other 27 EU member states.

“Over 80 per cent of haulage between the UK and continental Europe is undertaken by EU hauliers and it is important to ensure that the UK’s supply chains are protected,” he said, in a written ministerial statement.

“The UK needs to be sure that essential supplies for citizens and businesses can be imported, and UK products can continue to be exported as usual.

“We think this unilateral access is justified at this stage both to provide reassurance to wider industry on the capability for international freight flows to continue, but also to help ensure reciprocal arrangements for UK hauliers.”

The move follows publication of the EU’s own contingency proposals (TO78) which would provide UK hauliers with the right to conduct operations to, from and through the EU for nine months after the UK’s withdrawal from the bloc.

The legislation announced by London last month provides for the reciprocal access to the UK for EU hauliers that would be a precondition of this coming into force.

Mr Norman added: “Our legislation contains provision to suspend EU hauliers’ rights to undertake cabotage operations in the UK. We are putting in place measures to introduce such a suspension, which could be put into effect immediately after exit day if needed. Our intention and expectation is that such a suspension will not be necessary.

“In parallel we have been considering bilateral and unilateral measures with EU member states. France is separately progressing a unilateral measure to provide wider access to UK hauliers in the event of no deal. There are also 22 historic bilateral agreements that would come back into effect if the UK leaves the EU without a deal.”

As a result of the contingency measures, the government expects “that hauliers should not need an ECMT permit to continue doing a range of business in all, or much of the EU, even in the event of no deal”.

“But,” Mr Norman said, “it is important to continue to prepare for all possible scenarios.”

To this end, the government has been allocating ECMT permits as a backup measure – with official figures indicating that more than 11,000  applications were made by HGV operators, for fewer than 1,000 available permits. As such, the overwhelming majority of applications were declined.

“Whilst this will be very disappointing for international hauliers, other options are being developed, so there is no need for dramatic action by those who’ve been unsuccessful,” said the Road Haulage Association.

“The Department for Transport (DfT) has confirmed that extra permits (about 70 per cent more) will be available for UK operators. The RHA understands that an additional application period will take place, allowing operators of Euro 5 lorries to bid for permits.

“All applicants who have been unsuccessful in this bid round will be automatically entered into the next round for annual and monthly ECMT permits.”

While encouraging international operators to apply for permits should applications reopen, the RHA agreed that: “the most likely arrangement on a no deal exit from the EU is that there will be an agreement in place that will allow UK operators to move goods between the UK and EU without the need for permits…

“We expect the legislative process to move swiftly, but do not expect final confirmation on this until early March.”

Meanwhile, both the RHA and the Freight Transport Association (FTA) have welcomed news from HM Revenue & Customs (HMRC) that there would be a temporary, six-month waiver of security and safety declarations (SSDs) for post-Brexit logistics movements.

The SSDs’ function is to advise UK authorities of details of each and every consignment in a lorry arriving in the country by road. They are separate from import customs declarations, and the onus to prepare them is on the haulier.

According to the RHA, each declaration includes up to 37 individual lines of information, much of which is duplicated on the customs declarations as submitted to HMRC by importers.

Pauline Bastidon, FTA’s head of global and European policy, said the move was “a positive step towards minimising disruptions on trade between the UK and EU and integrated supply chains after Brexit”.

“However, it is imperative that the UK government maintains pressure on the EU to ensure that a similar waiver is adopted by the EU,” she said.

“To ensure that Britain can keep trading efficiently, it is vital that the European Commission and UK agree a longer-term, more sustainable arrangement to remain in the same security zone, which would make safety and security declarations for UK-EU trade irrelevant.

“Above all, it is vital that the UK’s supply chain remains as frictionless as possible – British business needs to be confident that goods and materials will continue to transit the nation’s borders as swiftly and efficiently as possible.”

The RHA said the requirements for SSDs as originally outlined by HMRC would have been impossible for hauliers to fulfil.

“It is clear that government has listened to us,” said RHA chief executive Richard Burnett.

“We have been insistent that the proposal to introduce consignment level SSDs for imported road haulage would be impossible to introduce by 29 March.”

But he warned: “The extension will help but it still isn’t enough. There is no guarantee that businesses will have the necessary processes in place in six months’ time. It’s just a stay of execution. We need practical simplification of the system to ensure that it works for everyone and we will continue to push for this.

“However, the issue of goods leaving the UK and entering the EU by road remains. As things stand the demand will also be for consignment level declarations for these road-based movements.”

The association is advocating “massive simplification” of SSDs after the six-months suspension, arguing that government authorities will have access to the data “on all shipments from other sources anyway”.

“Demanding a repeat of the same information, as currently planned, to meet unnecessary bureaucratic specifications is wrongheaded and inappropriate,” it said.

Meanwhile, the government’s trailer registration scheme is now open. All commercial trailers over 750kg, and all trailers over 3,500kg, must be registered from 28 March, regardless of Brexit outcomes, before they can travel through most European nations. Full details are available at the government website – where operators can also complete the registration process.

To prepare for deal and no-deal scenarios, the government is also instructing commercial drivers operating in the EU to: check whether they require international driving permits, and how many; request a motor insurance green card from their insurance provider; and display a GB sticker on their vehicle.