RAIL INDUSTRY TRADE IN GOODS AND SERVICES POST-BREXIT

13 JULY 2017

On 13 July RDG hosted a panel discussion on rail industry trade in goods and services post-Brexit. We saw a fruitful discussion about the opportunities and challenges specific to our sector. Our panellists represented different facets from the wider industry. Maggie Simpson, Executive of the Rail Freight Group, presented the rail freight sector’s views on Brexit, discussing the implications of leaving the Customs Union. Gordon Wakeford, Chairman of the Rail Supply Group, represented the industry supply chain, sharing concerns about customs relations and access to skills but also looking at opportunities world-wide post-Brexit. David Moore, Transport and Infrastructure Partner at Dentons law firm shared his legal expertise in view of Brexit and Alasdair MacEwen, Director at Culmer Raphael, shared his perception of the view from Brussels. Paul Plummer, CEO of Rail Delivery Group, represented all passenger operators in Great Britain as well as RDG’s freight and infrastructure members. The panel discussion was chaired by Laura Wright, Head of European Policy at RDG.

Summary of the panel discussion
Following the triggering of Article 50 on 29 March 2017, all industry sectors, including the rail industry, are facing legal uncertainty until the negotiations between the UK and the EU are resolved. In anticipation of the new relationship, the rail industry has looked at where the challenges but also the opportunities lie.
As a sector that imports both goods and services, which moves people across borders and which possesses mainland Britain’s only physical link to the continent, getting Brexit right for the rail industry will be a barometer for whether the deal will enable Britain to prosper in the decades ahead.
With this in mind, the panel discussion focused on the following key themes:

• Access to markets
As an opportunity of Brexit, attendees highlighted the potential for British rail products and services to reach other markets across the globe. However, the EU is a crucial market for the British rail industry supply chain. Leaving the EU should not hinder the supply chain process and still allow British rail goods and services to access the EU market. The British rail industry has a positive story to tell and can share its experience and expertise with other liberalising markets across the globe, including the EU.

• Access to skills
Skills, be it high, medium or low skills, are of utmost importance for the sector. The rail industry wishes to be able to recruit the best people for the job from anywhere around the world in order to support an industry critical to the UK economy. Over 216,000 people work in the rail industry in Great Britain. Recent surveys by the National Skills Academy for Rail (NSAR) have demonstrated that between 15% and 20% of the industry’s workforce is from EU countries, excluding the UK, and primarily operate at lower skilled levels. This percentage is greater in London and the South East – estimated to be as high as 50%.
Notwithstanding Brexit, the railway industry, like many sectors, is facing the combined challenges of an ageing workforce, changing skills requirements due to digitalisation, and a stringent government target to rapidly increase the number of apprentices. Attendees highlighted that a major concern for several employers in the rail industry is the uncertainty attached to retaining their current EU workforce and to have access to this pool of skills in the future. In addition, a point-based immigration system is unlikely to cater for those employers who need access to lower-skilled labour.

• Standardisation
Technical Specifications ensure that systems are covered in order to meet essential requirements and to ensure the interoperability of the EU’s rail systems and specifications for products to be traded.
Attendees highlighted that for rail products and services, which will hopefully continue to be marketed in the EU, compliance with EU standards will be necessary. Up until now, the UK has been influencing, if not guiding the standardisation process as a highly-valued member of the European Railway Agency.
With Brexit, the UK’s status within the Agency is no longer guaranteed and the British rail industry may risk having to comply with standards without being able to influence them anymore.

• Customs
As a final, but no less important subject, attendees discussed customs relations. Whilst, currently, fluidity of cross-border rail movements and the fluidity of the supply chain are guaranteed, industry is at risk of losing this certainty post-Brexit. Impacts of leaving the Customs Union may also be seen inland – with potential long or unreliable lead times at ports due to customs procedures.
It will be crucial to have customs procedures and systems in place which allow frictionless movement of goods.

Conclusion
The good news is that one railway, working together, is well placed to deal with future challenges. Already, it is delivering improvements to the service it provides, making journeys better and in doing so supporting local communities. It is essential that the UK remains a great place to invest, do business, and where industry can maintain its competitiveness as the UK exits the European Union.

Our railway is the backbone of the British economy. It employs around 240,000 people, moves 4.5 million people around Britain each day and 86 million tonnes of freight each year. It spreads wealth to every part of the country. If Brexit supports investment in this vital service, and enables rail manufacturers to prosper, the deal will put Britain on the right track in a post-Brexit world.

Our sector wants to work constructively with government and maintain a stable environment for the rail industry to ensure the success of our sector continues in the future. This will be achieved by creating new opportunities for the British rail industry, but also by maintaining high safety standards, the ability to access a skilled workforce, creating frictionless cross-border travel, and by retaining the ability to access non-UK infrastructure to allow British companies to grow further and sell their valued expertise.

Contact – Laura Wright Head of European Policy laura.wright@raildeliverygroup.com

Market Access Final Version