Written evidence submitted by the Department for Transport (FAB0005)

Introduction

1.                  The Department for Transport (“DfT”) welcomes the Transport Select Committee’s (“TSC”) inquiry into freight and Brexit, and in particular the acknowledgement in the Terms of Reference that the UK’s exit from the European Union (“the EU”) brings both opportunities and challenges. Our freight transport operators, and the infrastructure they use, play an essential role in supplying business and consumers, and enabling exports that support jobs. The DfT is therefore pleased to make the following submission on freight transport.

Scope of this submission

2.                  This evidence covers matters for which the Secretary of State for Transport is responsible. The TSC has noted that border and custom arrangements, trade deals and tariffs fall outside the scope of this inquiry, so they will not be addressed in detail here. Similarly, this note does not consider issues relating to freight transport in Northern Ireland, where responsibility is devolved. However, some of the statistics presented include Northern Ireland.

3.                  This evidence starts with an assessment of the current situation across the freight industry, supported by departmental analysis. It then addresses the areas identified in the TSC’s Terms of Reference:

• the challenges and opportunities afforded by Brexit and how DfT is working with industry to address these;
• the steps that industry tells us it is taking, across modes, to prepare for Brexit;
• an analysis of the funding provided to the freight transport sector; including where government believes that additional funding may be required as a result of EU Exit; and
• details on the DfT’s programme of secondary legislation in respect of freight and any other legislative and regulatory changes that may be required as a result of Brexit.

4.                  The TSC will be aware of the sector reviews presented by Government to the Exiting the EU Committee, subsequently published by that Committee. Some of the material in those documents is relevant to this inquiry. 

5.                  The TSC’s inquiry will surface a number of challenges for freight that arise from the UK’s departure from the EU. Many of these will be addressed through negotiations. The TSC will understand that, ahead of negotiations, the Government will not want to describe in detail its view of how those negotiations will progress. The relative silence of this note on negotiations should not be misinterpreted. DfT is well-prepared for negotiations and the Government is confident that good outcomes can and will be achieved.

Current situation

Roads

6.                  Road haulage plays a vital role in the economy and the transfer of physical goods, accounting for about 76%[1] of goods moved (in million tonnes).

7.                  Freight transport by road directly contributed £13.1 billion to the UK economy (Gross Value Added, “GVA”) in 2016[2]. This does not include the GVA of in-house logistics operations for firms in sectors like retail and manufacturing so actual GVA for total road freight would be higher. Under a wider definition of freight and logistics, the activities have been estimated to contribute in the order of £62 billion GVA to the economy[3].

8.                  In 2017 there were just under 500,000 Heavy Goods Vehicles (“HGVs”) (over 3.5 tonnes when fully laden) registered in the UK and 3.8 million vans[4] (below 3.5 tonnes). Vans are a growing part of the domestic logistics picture – there is some evidence that HGVs are travelling less distance but carrying more goods by weight than in the past[5].

9.                  The vast majority of road freight lifted by UK hauliers is domestic freight solely carried within the UK. In order to carry domestic freight, a haulage operator needs to obtain a Standard Operator Licence[6]. A haulage operator wishing to operate both domestically and internationally (including between EU member states) must obtain additional licences.

10.             In Great Britain, there are just over 77,000 goods vehicle operator licences in issue which allow companies to operate HGVs and just over 8,000 of these licences allow both domestic and international operations[7]. International road haulage accounts for only 4% of goods moved by the UK lorry fleet but is nonetheless important for a wide range of UK supply chains[8].

Rail

11.             Traditionally, rail freight was used to carry heavy bulk materials such as coal, iron and steel and aggregates (the sand, gravel and stone used by the construction industry). It is also now being used extensively to carry containerised goods between Britain’s ports and industrial centres. In recent years, some of the UK’s major supermarkets have started using rail to carry fast-moving container goods from their national distribution centres to regional centres. The size of the rail freight market has increased significantly since privatisation; over the 20 years to 2014/15, rail freight volumes have increased by over 70%[9]. The industry is estimated to bring benefits to the UK economy of £1.6 billion per year in productivity gains for UK businesses, reduced road congestion and environmental benefits[10].

12.             Five main Freight Operating Companies (“FOCs”), in addition to a number of smaller rail freight companies, are licensed to operate in the UK. The five are DB Cargo UK, Freightliner, GB Railfreight, Direct Rail Services and Colas Rail.

13.             These firms play an important role in delivering exports to market as well as imports to consumers and manufacturers. One in four intermodal shipping containers entering the country is now moved by rail[11]. Rail freight connections to the continent through the Channel Tunnel are operated by two rail freight companies; DB Cargo, through a long standing commercial contract and GB Railfreight via ‘open access’ arrangements.

14.             The effect of the recession, a relative reduction in the movement of bulk goods that are particularly suited to rail freight[12], and Calais migrant activity prompted a fall in Channel Tunnel rail demand from 2009, particularly for the shuttle service[13]. However both construction and intermodal sectors have picked up in recent years[14]. This recovery has seen over 2,000 rail freight services (excluding shuttle services) running through the Channel Tunnel in 2017, the equivalent of 1.2 million tonnes in freight carried[15], including food products, china clay and steel.

15.             The number of rail freight trains transiting the Channel Tunnel (again excluding shuttle services) is expected to increase further in 2018. Taking into account both rail freight trains and Eurotunnel’s Le Shuttle freight services, which carry HGVs, the Channel Tunnel was responsible for 25 per cent by value of all trade in goods between the UK and continental Europe in 2014 (facilitating an estimated £91.4 billion worth of trade in total)[16].

Aviation

16.             The UK has been at the forefront of shaping the global air freight framework. We have the third biggest air freight network in Europe and the twelfth largest in the world as measured by tonne-km. The air freight sector supports UK businesses sending goods around the world and importing them into the UK, enabling high value and time-sensitive products to be moved across the EU and globally. This can include critical pharmaceutical products and ‘just in time’ deliveries for supply chains.

17.             The UK air freight sector is flourishing. In 2017, the total amount of freight handled by UK airports grew by 10%, to 2.6 million tonnes shipped. Highlights included growth in Gatwick's freight volumes of 22%, and those of East Midlands Airport of 8%[17]. There is also significant investment underway; last year, for example, ground was broken on Segro Logistics Park East Midlands Gateway - a 700 acre facility, which will link the airport with a major new rail freight terminal and the M1.

18.             The government recognises the crucial role this sector plays in our economy, especially high end manufacturing, engineering, pharmaceuticals, retailing and the automotive sectors. For time critical goods such as pharmaceuticals, air freight is the only method of shipping fast enough to deliver these items in the required timeframe

19.             Although the volumes are comparatively small, the value of air freight per tonne is much greater than other modes of freight transport, due to the nature of the goods transported. In 2016 goods worth around £178 billion were shipped by air between the UK and non-EU countries. This represented over 45% of the UK’s extra-EU trade by value[18]. In terms of where this freight is flying from Heathrow currently handles around 65% of air freight by volume, with East Midlands Airport and Stansted being the next largest airports for freight transport.

20.             Air freight operates in several distinct markets: domestic; UK to EU/EEA; and UK to Non-EU/EEA. Dedicated fast parcel operators are dominant in the domestic market and, to a lesser extent, the UK to EU market, whereas the vast majority of long haul air freight is flown in the hold of passenger airlines.

21.             The volume of air freight imported and exported rebounded from the recession and has stayed more or less constant since 2010, with a notable 10% upturn in 2017. One of the trends which has caused the recent increase in air freight volumes is e-commerce, where customers often expect overnight or next day delivery. Much of the growth in total aviation demand in the last ten years has come from low cost carriers. As these do not carry freight, there has been no equivalent increase in freight capacity. Growth has also been limited by the lack of spare capacity at the UK’s largest airport in terms of freight volumes (Heathrow), particularly on specific routes at certain times of day.

Maritime

22.             UK ports currently handle around 480 million tonnes of cargo annually, of which a little under 80% is international trade. This trade through ports represents over 90% of all UK international trade by volume.

23.             The UK ports constitute a mixed-ownership sector comprising company, ‘trust’ and municipal ports, which compete with each other on broadly level terms, and are financially self-sufficient. This model is unique within Europe and unusual globally. 

24.             The volume of overall UK port traffic has tended to decline since 2005. UK-EU maritime trade is consistent with this. This decline masks growth in the higher-value cargo categories, such as movements where HGVs drive directly on and off the ship (roll-on, roll-off: “ro-ro”). This decline in total tonnage is driven by bulk freight, which accounts for the majority of tonnage. Decline in North Sea oil and reduced use of coal for energy generation have led to reductions in bulk freight over the last decade. Container traffic growth trend (predominantly non-EU) has also reflected the rapid growth of Chinese and other Far East export industries, coupled with continued growth in economies of scale in deep-sea container lines. One and a half million vehicles were exported in 2016, the largest value since 2000; this has been a modest but valuable contributor to ro-ro growth.

25.             Liquid and dry bulk freight has steadily fallen since 2006, driven by a change of profile in the freight transported and a move to containerisation / load on-load off (“lo-lo”), which has experienced a small amount of growth over the period. Ro-ro traffic growth since 1993 (predominantly intra-EU) benefited from Customs Union facilitation, although Dover also ceded market share to Channel Tunnel Shuttle services during this period. 

Figure 1: Maritime freight lifted by cargo category

Modal analysis

26.             In 2016, 239 million tonnes of freight were moved between the UK and the EU. Considering goods lifted by weight maritime lifted 86% of international freight tonnage, whilst aviation lifted <1% with the remainder carried by rail. However aviation carries a more significant proportion when considering the value of goods moved. The average declared value per tonne of international air freight is £136,802, whilst the average declared value per tonne of international sea freight is £844[19]. Table 1 shows how the total international freight lifted has changed over the last 9 years, by mode.

Table 1; Total UK-EU Freight lifted Annually (Million tonnes, 2008-2016)

27.             There has been an overall increase in freight handled over the last 9 years, driven by a fall in maritime freight traffic in 2009. Other modes have experienced weak to moderate growth in tonnage lifted, since 2008.

Figure 2; Total international freight lifted annually (Million tonnes, 2008-2016)

Figure 3; Relative change in UK-EU Freight lifted annually (100 = 2008)

28.             The relative growth within each sector is shown in Figure 3 above. A general trend across all modes is negative growth resulting from the economic recession of 2008-09. Slow to moderate growth has occurred since then for all modes.

29.              UK hauliers made 346,000 trips from Great Britain to the Republic of Ireland and Mainland Europe countries in 2016[20]. EU registered HGVs represent a significant proportion of UK-EU haulage and is on trend to increase. Figure 4 shows how international road haulage by UK HGVs has steadily fallen over the last ten years by 43% (excluding cabotage)[21]. This contrasts with the number of haulage vehicles travelling to Europe from GB, which has increased by 6% over the last ten years. This has been driven by a significant increase in foreign-registered vehicles, which have increased by 90% since 2000[22].

Figure 4: International road haulage by UK HGVs

30.              The EU, taken as a whole, is the UK’s largest trading partner. In 2016, UK goods exports to the EU were £167 billion (55% of all UK exports). UK imports from the EU, in 2016, were £279 billion (64% of all UK imports)[23].
 

The challenges and opportunities represented by Brexit

Challenges

31.             The principal challenge for freight arising from the UK’s exit from the EU across all transport modes is to agree arrangements with the EU that allow businesses to continue to move their goods efficiently, and freight transport providers to compete fairly. After the UK leaves the EU, businesses across Europe will still want to export their goods and consumers will still desire products from beyond their borders. The precise arrangements to achieve this goal will be a matter for negotiation, but the UK is confident that there is mutual benefit in reaching a good agreement for freight transport. 

32.             This note will not discuss prospects for negotiations in more detail for obvious reasons. The following sections consider other challenges arising from the UK’s exit from the EU, including issues raised by industry.

Roads

33.             The EU strongly benefits from haulage with the UK. Any barriers to the haulage sector would, in absolute terms, result in losses to both the EU and UK markets. Due to the configuration of the sector the majority of losses can be expected to be borne by EU exporters and EU hauliers.

34.             The Government is confident that agreement can be reached on arrangements for international road freight that continue to facilitate the efficient movement of goods. The form of that agreement is a matter for negotiations, but both sides will have an interest in facilitating the continued flow of goods and opportunities to offer road freight transport services.

35.             Industry concerns about a shortage of number of HGV drivers have been voiced for a number of years, and questions have been raised as to ease of access in future to EU nationals. In 2015/16 there were approximately 291,000 professional lorry drivers employed across all sectors in the UK (including both road freight and other sectors such as manufacturing and retail)[24]. The industry has stated that the shortage in the number of drivers is primarily down to an aging workforce with the majority of drivers aged between 45 and 65[25]. These workers are not being fully replaced by new drivers. ONS estimates that around 11% (33,000) of the UK HGV driver workforce is made up of non-UK nationals[26]. Significant industry-led work is underway to improve the recruitment and retention of domestic drivers, such as targeting military leavers and job seekers.

36.             The Government has announced its plans to find a suitable solution for Operation Stack. The decision to construct a lorry holding area at Stanford West in Kent was subject to a judicial review and in November 2017 the Government announced that it was withdrawing these plans following legal advice. The Government has asked Highways England to restart work on a permanent solution, and they will be starting the consultation process in June 2018. In addition, Highways England has developed an interim solution that can be deployed when there is disruption to cross-Channel traffic. This will take the form of a contraflow system that will allow lorries to be held on the M20 between junctions 8-9, while allowing other traffic to continue their journeys in both directions (rather than diverting traffic onto local roads as is the case in normal Operation Stack).

Rail

37.             The Government recognises the value and importance of rail freight to the UK economy and as such is exploring all options to ensure that border arrangements allow for international rail freight to continue to be moved seamlessly and with minimal disruption, in both directions, following the UK’s withdrawal from the EU.

38.             EU legislation currently provides the regulatory framework for cross-border rail services, including international rail freight. This regulatory framework covers market access rights as well as safety and interoperability requirements.  Any future arrangements will need to ensure appropriate safety and regulatory oversight, and it will be in the interests of all parties to agree arrangements that allow these services to continue as now.

39.             We are also considering the situation in respect of international rail freight corridors.  The main benefits from this EU initiative will be derived on the continent of Europe.  The UK remains ready to co-operate with EU partners to facilitate rail freight where arrangements are sensible and proportionate.

Aviation

40.             The most visible benefits from the liberalisation of aviation within the EU have been for passengers, notably through the emergence of low-cost carriers. As noted earlier in this evidence, low-cost carriers do not generally carry freight, which explains why intra-EU air freight has not increased at the same rate as passenger traffic. Almost 0.5m tonnes of freight was shipped between the UK and the EU by air in 2017[27]. As the Government seeks to negotiate future arrangements for air services with the EU, the needs of air freight will be factored into our approach.

Maritime

41.             As for other sectors, the main concern for the maritime industry is that of borders and customs arrangements, which are outside the scope of this inquiry. We do not otherwise anticipate significant impacts on the maritime sector.

Opportunities

42.             As the UK leaves the EU there will be opportunities to expand trade in both goods and services with other countries around the world.  More trade in goods provides more opportunities for UK freight transport providers to expand their businesses.  Clearly this is particularly relevant for air and sea freight.  There is also every reason to believe that our trade in goods with the EU should continue to grow.

43.             There may be opportunities to adjust our regulatory regime so it is better suited to the needs of the UK.  When the UK leaves the EU, the same regulations will apply as now.  It will be a matter for Parliament to decide whether those rules should be changed, and whether UK rules should adapt to developments internationally.  Our future relationship with the EU may see the UK agreeing in future to achieve similar outcomes from our regulation for some sectors.  It is too soon to make specific predictions as to how negotiations might evolve, so where examples below cover future changes in regulation these should be viewed as indicative.

Roads

44.             There are opportunities to adjust the regulatory regime for domestic road haulage after we leave the EU. One small example of a practical change would be the move from Euros to pound sterling in the documentation (e.g. for financial adequacy requirements for haulage operators) which would avoid the problem of sterling amounts fluctuating with exchange rate changes.

Rail

45.             In September 2016, the Government published a Rail Freight Strategy[28], setting out a vision for the growth of rail freight. A market forecast published as part of that study suggested that there was potential for significant growth in rail freight, in particular in markets such as intermodal, construction and automotive. The report noted some potential for increased international rail freight traffic through the Channel Tunnel in the long term.

46.             The two cross-Channel rail freight companies are actively promoting rail freight in order to increase the volume of traffic. They are also exploring options for encouraging the modal shift of HGV freight to rail freight. This would have the benefit of taking lorries off the roads by taking goods to rail depots nearer to their ultimate destination. Government is continuing to liaise closely with the rail freight community to keep them informed of developments that may impact on their continuing cross channel operations.

Aviation

47.   The Government is developing a new Aviation Strategy, with the aim of  achieving a safe, secure and sustainable aviation sector that meets the needs of consumers and of a global, outward-looking Britain’. This a long term strategy to 2050 and beyond. It will have a strong focus on consumer issues, as well as championing the economic benefits of aviation such as those provided by air freight. The Government plans to deliver a final Aviation Strategy by the middle of 2019.

48.   Consumers and businesses have benefited from the UK’s global connectivity and access to markets and we want to build upon this as we leave the EU, so that in addition to establishing an ambitious new relationship with the EU on aviation, we open up new links with the rest of the world by;

• establishing an ambitious new relationship with the EU on aviation;
• examining our air service agreements, to ensure that we are using these treaties to drive even more connectivity and competition for the benefit of the consumer;
• setting out our approach to international standards to maximise the UK’s influence while helping to develop the capacity of other nations; and
• reducing barriers to the movement of freight, encourage the uptake of digital processes in the industry and encouraging the UK to export.

49.   DfT will work with the Department for International Trade (“DIT”) and the Department for Business, Energy and Industrial Strategy (“BEIS”) to identify what more can be done to support this sector around the country, including looking at how aviation links up with other transport modes. The Government also wants to explore further opportunities to leverage UK skills and experience overseas, the benefits that further international collaboration could bring and the promotion of the air transport and aerospace sector to encourage the right connections and attract inward investment.

50.   The planned expansion of Heathrow Airport is also expected nearly to double existing freight handling capacity at the airport and lead to a significant increase in long haul flights with more destinations served more frequently. This corresponds to a significant increase in available air freight capacity to UK businesses, making it more likely firms can move goods where and when they want to, and helping to put downward pressure on costs, further supporting international trade.

Maritime

51.             The UK’s ports sector is in an excellent position to facilitate growth in demand for trade to and from both the EU and the rest of the world. 

52.             On the bulk side, recent declines in coal and oil imports have released port capacity for newer types of traffic, such as biomass and offshore wind construction, operation and maintenance. For ro-ro, Dover’s consented development of the Western Docks is in progress, and will facilitate further growth in ferry traffic at the Eastern Docks as well as general cargo. 

53.             For containers, investment in deep-sea terminals at Felixstowe South, Southampton, London Gateway and Liverpool has already expanded capacity to accommodate growth well into the 2020s, including berths which have already demonstrated their capacity to handle the largest box-ships entering world fleets. Further deep-sea and feeder capacity has extended consents too, including at Bristol, Teesport and Bathside Bay (Harwich). DfT is aware that other ports also have substantial development aspirations.

54.             Further ahead, the National Policy Statement (“NPS”) for Ports sets a highly encouraging planning framework for future port development in England, provided that it proceeds in harmony with the environment. It emphasizes the vital importance of the ports sector for the UK economy. The devolved administrations also have broadly supportive planning frameworks.

55.             The Government is also in the process of developing ‘Maritime 2050’, a long-term strategy to secure the future of the UK maritime sector.

56.             Ports are nodes in logistics chains that need to flow effectively from start to end.  The UK enjoys strong inland connectivity to our ports, with investments such as railway loading gauge clearances for hi-cube containers on standard wagons increasing the resilience of high rail shares achieved at the main deep-sea terminals; and road improvements completed and pending such as the A160/A180 serving Immingham and Grimsby, the A63 in Hull and the A14 serving Felixstowe and other ports, for example. 

57.             DfT’s recent Ports Connectivity Study points the way to further raising the prominence and priority of accessibility schemes, giving the fullest possible recognition to the special importance of keeping international trade flowing. 

58.             There has been some interest in whether the UK’s exit from the EU creates possibilities for the creation of new freezones (freeports) at ports or elsewhere[29]. Policy in this area is a matter for Treasury Ministers. The Taxation (Cross-Border Trade) Bill, currently before Parliament, will renew the legal context for authorising freezones. 

59.             In the future, we expect that unit-load trade (containers, and ro-ro including trade vehicles) will grow with both the EU and the rest of the world, to mutual economic benefit.

60.             The UK has one of the best and most adaptable ports industries in the world, with a proven track-record of investing in new capacity throughout changing economic conditions without any necessary call upon the taxpayer.  

61.             In particular, if there were to be an increase in the proportionate share of deep-sea traffic, our ports are prepared to accommodate such an increase and to compete to provide a good service to their customers.

Steps being taken by industry

62.             Many of the details of EU exit remain a matter for ongoing negotiations with the EU. It is a stated priority of the government to allow for the ongoing carriage of freight to be as frictionless as possible and the DfT has been engaging with the freight transport industry – freight companies, representative bodies and their customers – to support this objective. DfT will read with interest submissions made to this inquiry by the freight industry.

Roads

63.             DfT Ministers and officials have frequent engagement with the industry including the Road Haulage Association (“RHA”) and the Freight Transport Association (“FTA”), including roundtables, workshops and informal meetings. We continue to engage regularly on both EU Exit and domestic policy issues. The RHA paper[30] of 9 January 2018 advised its members on a number of practical steps including encouraging EU staff to obtain full passports, to seek to train more staff and to encourage shippers to improve paperwork with a particular focus on descriptions of goods. The FTA has been holding workshops and providing EU exit analysis via its website[31]. In addition, it has written to the Prime Minister asking to prioritise logistics industry during exit talks with the EU.

Rail

64.             DfT continues to engage regularly with the rail freight industry on a wide range of matters, including EU exit. In addition, Rail Delivery Group host EUPEG, a bi-monthly meeting of members and key stakeholders where EU exit issues are discussed. EUPEG is attended by freight and passenger representatives, as well as Network Rail, ORR (the independent regulatory body), and DfT.

Aviation

65.             Ministers and officials have carried out an extensive programme of visits, meetings and roundtables across the aviation industry, including those with an interest in air freight, which has informed and continues to inform our thinking. We will continue this high level of engagement as negotiations progress to ensure that we secure arrangements which allow our aviation industry to continue to thrive.

Maritime

66.             There is constructive engagement between Government and industry on preparations for EU exit to ensure all parties are prepared for the various scenarios. 

67.             We know that some ports are examining the potential advantages and disadvantages of freezone status, which as noted earlier, are partly contingent on the future trade relationship with the EU.

Funding

EU funding

68.             The Withdrawal Agreement gives important clarity and certainty to recipients and beneficiaries of funding in the UK, especially those who participate in multi-year programmes such as structural funds, cross-border programmes and programmes run by the Commission.

69.             We will continue to benefit from EU programmes under the current 2014-2020 budget plan. No UK region will lose out on EU budget funding in this period and anyone who receives European funding can continue to bid for and receive funding until the end of their projects.

70.             This settlement, once agreed as part of the Withdrawal Treaty, will supersede the requirement for the domestic guarantee announced by the Government in 2016. UK organisations should continue to bid for EU funding with the assurance that payments will continue after EU Exit.

CEF / TEN-T

71.             The Connecting Europe Facility (“CEF”) is the EU’s funding programme for the trans-European networks for Transport, Energy and Communications.

72.             The Transport element (“TEN-T”) focusses on improving cross-border links and removing bottlenecks to improve the operation of the different transport modes. For the most part, it funds big infrastructure projects with an emphasis on rail rather than road and supports modal shift to rail transport.

73.             The fund can also support projects that promote efficient and safe freight logistics through;

• the e-freight initiative (developing intelligent transport systems to improve the logistics chain),
• supporting the development of multimodal logistics platforms; and
• the provision of safe and secure parking for hauliers.

74.             Of the €24 billion funding allocated to date, just over €155 million has been awarded to 47 projects. UK involvement has been small, with one project promoted by DB Cargo UK to develop the EURO-HUB multimodal rail terminal in London, being awarded €1 million.

Roads

75.             DfT intends to provide funding to support roads-related programmes, including the trailer registration scheme and DVSA’s contingency planning for enforcement and the permit system.

Legislative and regulatory arrangements

76.             The European Union (Withdrawal) Bill will provide for EU laws to be brought into UK law on the day we leave the EU.  The Bill provides powers to correct EU legislation where necessary to ensure it functions as UK law.  The Department will table a number of Statutory Instruments using these powers, many of which will be relevant to the regulation of freight transport. 

The Haulage Permits and Trailer Registration Bill

77.             The UK’s aim is to maintain and develop the existing level of transport connectivity with the EU, as part of the wider future partnership.

78.             The legislation is part of wider Government preparations that will ensure the UK can deliver a smooth and orderly exit from the EU, as we move from our current membership of the EU to our future partnership.

79.             The Bill supports these preparations by:

• providing powers that will support British hauliers to continue operating internationally after the UK leaves the EU;
• giving the Government the necessary framework to introduce new administrative systems if needed after exit; and
• providing flexibility to deliver any negotiation outcome.

80.             The Government has introduced legislation on cross-border haulage as the UK continues its preparations for exit from the EU.

81.             Whilst the Government remains committed to permit-free, liberalised market access, it is possible that a future deal with the EU could require a form of permitting system. This Bill ensures that we have the legal frameworks in place to deliver a new administrative system. This would also be used to manage existing permit arrangements with non-EU countries.

82.             The Haulage Permits and Trailer Registration Bill, which passed through the House of Lords and has now been introduced into the House of Commons, gives the Government this flexibility. This Bill gives the UK the powers we need to support UK hauliers to continue operating internationally after the UK leaves the EU.

83.             Key elements of the Bill include:

• arrangements to enable all our permit schemes, including if required as part of a deal with the EU – ensuring UK hauliers can obtain the necessary paperwork to provide services to and from other countries; and
• the establishment of a trailer registration scheme allowing UK trailers users to meet the registration standards outlined in the 1968 Vienna Convention - this will ensure UK operators driving on the continent can comply with the requirements of those EU countries which require the registration of trailers travelling on their roads.

June 2018