Business is finally stirring over Brexit. I have long been bemused by the failure of the CBI and other business lobbies to be more vocal about the effects of a policy which is bound to be harmful, whatever deal we get in the end. For every business that might have hopes of exporting more to China or Chile, there are a dozen or more who are more likely to be involved in trading with the countries of the EU, or considering doing so.
The recent warnings from Airbus and BMW were long overdue. There is little doubt that the aviation and car industries will be adversely affected by Britain’s departure from the EU. They, like many businesses, now source material and supplies in a range of countries and, moreover, often transport parts across borders to carry out specialised engineering tasks. The same is, of course, true of train manufacturers who, these days, combine assembly of parts manufactured elsewhere with making things locally. Therefore, for instance, a gearbox might come from Germany, toilets from Spain and wheels from Italy, but the whole is put together in Derby.
The response from the hard Brexiteers has been to bury their heads deeper into the sand and shout ‘lalalalala’ so that they can’t hear any of these perfectly reasoned arguments against their harebrained scheme. (I know some Rail readers are passionate Brexiteers, but the evidence against any benefits is accruing daily.)
Brexit, therefore, presents a clear threat to the rail industry and the Rail Delivery Group, to its credit, has employed a couple of people to examine the implications of Brexit and, crucially, how to ensure that any collateral damage is kept to a minimum.
I have some inside knowledge of the farcically named ‘Department for Exiting the European Union’ and none of it is reassuring. The Department is overworked, few officials know what they are supposed to be doing, authors of negative reports are told to go and rewrite them and the politicians in charge are driven by ideology rather than any practical assessment of the situation. The huge demands placed on the Department means that it is often unable to respond to concerns and therefore it is incumbent on organisations like the Rail Delivery Group to try to come up with the answers. Of course the RDG, beholden as its members are to government, officially has no opinion as to whether Brexit is a good or bad idea, but it is clear from talking to people across the industry that there are few Brexit supporters in the railways and many who are utterly exasperated at the prospect.
Laura Wright, who is in charge of the RDG’s work on Brexit, keeps mum about her personal views and manages to retain an optimistic air despite the difficulties of the task facing her. She says that for a smooth transfer out of the EU, the railways need four issues to be sorted out:
- Smooth border crossings
- Reciprocal market access
- Access to skills
- Clear application of technical railway standards.
Each of these presents challenges. Obviously, from day one the biggest issue is that the international railway must be able to keep running smoothly. The prospect of having prolonged border checks for either freight or passengers is potentially disastrous and to be avoided at all costs. For passengers, the Eurostar services through the Channel Tunnel could be stopped unless an agreement is reached to ensure that, for example, insurance arrangements are satisfactory and that drivers licences are mutually recognised.
The RDG was so concerned about the potential impact of Brexit on rail services that it despatched Wright and a colleague to look at how the United States deals with its borders with Mexico and Canada. It was not reassuring. There were various different systems on the border between Canada and the USA, some involving pre-checks which required passengers to turn up well in advance of the departure time. On the eastern crossing between New York and Montreal, there were no pre-checks and, instead, passengers were checked on the train. It took an hour to process just 30 passengers and on some days the delay can be up to two hours. It is not a system that is fit for purpose.
As far as freight is concerned, on the border between Mexico and the USA, Wright and her colleague observed how the rules specify that the train is driven to a bridge marking the frontier, at which point the Mexican crew leave and it is not until they are all off the bridge that the US crew walk on and take over the train. Not something to try in the middle of the Channel Tunnel.
Then there is the issue of what happens on the trains between Belfast and Dublin, and to the rules governing drivers’ licensing and other regulations. While the RDG is confident that these matters can and will be resolved, it is the sheer bureaucratic hurdle that is difficult to overcome. DEXEU has a myriad similar tasks to sort out, whether they concern drugs or donkeys, or fruit or ferrous oxides, and there is a danger that no one will quite remember that we have a tunnel connection with the EU that requires a new regulatory framework or that the rail safety is based on European standards.
Reciprocal arrangements will depend on what final agreement is made but it is unlikely that it will be as simple as now. The fear here, of course, is that franchise bidders from Europe will be deterred by new regulations such as, for example, having to present a new safety case as the European one will no longer be acceptable. Frankly, if this further messes up the franchise system as constituted, there will be little shedding of tears – certainly from this correspondent – but that is not the point. Brexit will be causing difficulties and extra expense unless these matters can be resolved easily.
Probably the worst risk is around staff. A deal announced recently by the government will allow those currently working to remain, probably indefinitely but many may still choose to leave because they feel unwelcome. Incredibly, 50 per cent of railway workers in London and the South East are non British EU nationals and overall the total is 20 per cent. Without these people, it is doubtful whether vacancies can be filled and this is probably the issue of greatest concern to the rail companies. While many of the jobs are unskilled and low paid, there is also a cohort of expert engineers and other highly skilled workers who would be very difficult to replace. One particular difficult area of recruitment is bilingual train drivers because of the British aversion to learning languages. There may be fewer newcomers ready to cross the Channel to seek their fortune in the UK and if this source of labour dries up, wages may well have to rise pushing up costs or the number of jobs may have to be reduced through mechanisation or computerisation.
Finally, on railway standards, it is likely that initially all existing standards will apply and that will be mutually accepted. However, as standards on either side change over time, then issues of compatibility may arise. The UK will, too, be leaving the European Union Agency for Railways (formally known as the European Railway Agency) which works to ensure the adoption of interoperable standards across Europe and developing a common policy towards safety. Apparently we could have stayed in it but that would have involved paying a fee and the Government refuses to do this.
In the interests of fairness, the RDG also considered potential benefits of Brexit. They searched high and wide, but found few. There is, according to Ms Wright, ‘a good opportunity to review all the standards and assess whether they are all appropriate, given that we are a more liberalised market than other parts of Europe.’ Therefore the legislation that comes through is more detailed and prescriptive than we need given that the UK liberalised its market a long time ago. ‘However, this is a long term benefit, as we are not going to make changes for many years.’ Exporting, too, may be a new opportunity, but this will be dependent on what trade agreements are made.
Probably, most ironically, the greatest potential benefit is if there is complete chaos at Dover after Brexit. The railways are equipped to process freight inland and that may become a competitive advantage. So, the worse the chaos on the M20 and M2, the better it is for the railways. Not a point that the rail industry will want to boast about!
As ever with Brexit, it is the issues that no one thought of at the time we had the referendum that may come to haunt us. The RDG, an organisation I am not always complimentary about, has done an excellent job in trying to resolve these issues but there may well be the unknown unknowns lurking in a corner that may hit us on Brexit Day next March.
It’s the railways, stupid
In all the chaos of the railways at the moment, there are still odd bits of good news. A report, Rail Cities UK, our vision for their future, just published by the Urban Transport Group (a much improved name for what used to be PTEG, RDG please note!) highlights the fact that railway use has increased faster in many provincial centres far faster than in London. It cites cases such as Huddersfield, boosted by a thriving university (which incidentally has some of the best designed university buildings I have ever seen) where growth has been 91 per cent over the past decade, St Helens with 184 per cent and Coventry (another city with lots of students) with 143 per cent. There are numerous other examples and yet it has invariably been a struggle to obtain funding for schemes to improve railways locally. The report points out that given the difficulties of building new urban roads, and the fact that people are increasingly turning away from car-based transport, supporting rail based transport, whether light or heavy rail, can be the only option.
The report cites a series of obstacles that would make it hard for cities to improve their rail networks, such as the failure of the industry to implement its investment programme on time or on budget, the lack of coordination at local level between rail and other transport providers, and the appraisal methodology which often fails to take into account many of the wider benefits of schemes. Consequently, the report argues for greater devolution and integration of local services, pointing to the fact that devolved areas have tended to invest heavily in transport. It is not a new message but perhaps it has added resonance given Network Rail’s chaotic investment process of the past few years.