What would Brexit mean for urban transport?

The 23 June is an important date in the sector’s calendar for multiple reasons, writes Ian Hall.

23 June has been highlighted on the office-wallcharts and online calendars of Intelligent Transport readers for a few months now.

This pivotal date is not only the day of the European Bus Forum 2016 but is also – almost as significantly – when the UK holds its referendum on European Union (EU) membership.

Intelligent Transport’s event will see more than 250 delegates from across Europe convene again on Manchester. By coincidence, this city in the north-west of England will also be where the result of the ‘Brexit’ (British exit from the EU) vote is announced, most likely at breakfast-time on 24 June.

UK Prime Minister David Cameron is battling for ‘Remain’, while other high-profile Conservative politicians, such as Boris Johnson, are leading the charge for ‘Leave’. The EU itself, naturally, is keen to keep the UK – one of the 28-nation bloc’s largest and most influential states – in the club.

The UK referendum strikes at the heart of fundamental issues such as sovereignty, identity and economy. So, naturally, organisations in the transport sector have been considering what leaving the EU would mean.

Buses, coaches, light-rail and metros (Intelligent Transport’s focus) have hardly been centre-stage in the debate – unless you take into account the slogan-emblazoned campaign ‘battle-buses’, of course. But the UK’s 43-year membership of the EU clearly impacts transport in multiple ways, directly and indirectly, and therefore the industry would be impacted by a vote to leave.

Centre-stage for aviation, maritime and rail

As momentum towards the referendum brewed, the UK Government actually took stock of the EU’s impact on UK transport via its grandly titled ‘Review of the Balance of Competencies between the UK and the EU’. This sprawling examination ran between 2012 and 2014, generating 32 reports, with one devoted to transport.

Aviation, maritime and rail emerge as the three transport modes that predominate in Whitehall’s analysis of Brexit’s potential impact (inevitably for the first two modes, given that air journeys and sea/port interests are mostly international). This modal focus is mirrored in transport-sector Brexit assessments done by private-sector consultancies, for example, economics consultancy Oxera, which this May produced a briefing note – ‘Brexit: implications for the transport sector’ – breaking out its assessment into Aviation, Ports and Rail chunks. 

The Department for Transport (DfT) received 111 pieces of evidence for the Balance of Competencies review, and held six workshops (with three modal topics being maritime, aviation and rail – roads was the fourth, along with a session in Brussels and an ‘FCO [Foreign & Commonwealth Office] stakeholder event’).  

‘Spurting out legislation’

The 70-page Balance of Competencies report for transport contains numerous sections of insightful and very relevant observations, albeit noticeably little explicitly relating to buses, coaches, metros and light-rail.

Those critical of the EU would grin (or indeed grimace) in likely recognition of some of the broader commentary about EU policymaking. For example, the report says: ‘One of the issues most remarked upon by [transport] stakeholders was the constant flow of legislation emanating from the [European] Commission. At the London workshop on maritime issues an attendee described the Commission as ‘spurting out legislation like a volcano’, and at the London rail workshop attendees expressed their frustration at the Commission’s ‘bureaucratic fidgeting’ and wanted regulatory stability.’

One section hitting Intelligent Transport’s sweet-spot reports: ‘As well as concerns about the quantity of [EU] legislation there were also concerns about the quality of legislation. The Confederation of Passenger Transport (CPT), representing the bus and coach industries, said: ‘Brussels’ generates some classic examples of the ‘wouldn’t it be a good idea if…’ school of policy-making which has largely been superseded in the UK by an evidence-based approach.’

‘Investment would fall’

Most of the transport organisations or individuals approached by Intelligent Transport for their views on Brexit’s potential impact declined to comment, largely citing a requirement or desire to stay ‘neutral’. 

Among those willing to comment was Mark Watts, a Labour MEP for a decade until 2004 who now runs public affairs consultancy Luther Pendragon Brussels. He is also co-ordinator of UK Transport in Europe (UKTiE), a body that represents UK transport interests in Brussels.

Speaking in a personal capacity, he identifies “three main implications of a Brexit for the UK transport industry: all three are harmful and all three could have impact sooner than some people think.”

He says: “First, I think investment in the transport sector would fall. Uncertainty is the enemy of investment and most economists think the economy will shrink after Brexit, possibly for several years.”

“Second, I think fares could rise as there’s a strong possibility of a run on the pound – and, given the ongoing uncertainty, this has already happened in recent weeks, to an extent – causing rising energy costs. Someone will have to pay for a low pound: the UK government, taxpayers or fare-paying passengers. Given the pressure on public finances rising fuel costs can only be mitigated by increasing fares.

“Third, a Brexit would hit the whole transport supply-chain in the UK, including manufacturing. Rules for European transport equipment will continue to be set in Europe, and the UK won’t have any say, like Norway, which is outside the EU but their transport sector seeks to comply with EU standards. If you’re [as a country] not at the top-table it will surely be harder for your country’s firms to be shortlisted for contacts overseas, let alone win tenders. It’s not just about regulatory compliance: it would be about retaliation.”

EU regulations’ impact

Dr Matthew Niblett, Director of research organisation the Independent Transport Commission (ITC), was another willing to give his view. He told us: “Areas on which EU regulations have had an impact on urban transport in the UK include competition, passenger rights and safety. EU rules safeguarding the rights of bus and coach passengers were implemented in 2013 and have recently been incorporated into EEA [European Economic Area] agreements – so, the UK has to ensure it is compliant with EU regulations on things like disabled rights.

“The key question is what happens to these regulations in the event of a Leave vote. It is a strong possibility that the UK will then seek membership of the EEA in order to benefit from access to the Single Market, in which case many regulations will still be applicable, although we will have little say over the creation of new rules.”

Asked whether he believes UK bus and coach operators would welcome potentially offloading EU-instigated rules in such areas, Dr Niblett says: “I would imagine reputable operators are keenly interested in issues such as customer service and safety so they would still want to uphold standards.”

Another senior transport professional who spoke to Intelligent Transport concurred with this, believing that EU-wide rules or standards ranging from environment-related requirements to engines were unlikely to be ignored in the UK after a Brexit. 

Tony Travers, Director of LSE London (a research centre at the London School of Economics), has a trade-focused spin on how Brexit would affect transport. He tells Intelligent Transport: “Leaving the EU would affect transport manufacturing and purchases in several ways. Trade rules would be likely to change, with different tariff rules. UK manufacturers would still have to adhere to EU rules if they wished to sell exported goods there. Presumably the UK would continue to have procurement rules, though these might change. British operators wishing to offer services within the EU and EU countries’ operators offering services in Britain would have to fit in within new trade rules. ‘State aid’ rules could be altered outside the EU if the government wished to do so.” 

Employment and free movement

In contrast to most corporates and public-sector bodies, trade unions have been more willing to express their positions on Brexit.

The TUC wants the UK to stay in the EU, as does Unite, which is ‘campaigning for the UK to stay in the EU as the best hope for workers’. Within the transport arena, the RMT and train-drivers’ union Aslef are both backing Brexit.

In respect of workers’ rights, the ITC’s Niblett says: “We know that a high proportion of employees’ rights are safeguarded through EU legislation. So you can understand why trade unions are so nervous about leaving.”

Free movement of people across the EU has inevitably been one the main talking points in the Brexit dialogue, and can be examined ‘both ways’: the number of EU nationals living and working (including many in transport) in the UK; and the number of UK nationals on the Continent.

One senior transport professional spoken to by Intelligent Transport had an interesting perspective on the latter aspect, saying that Brexit was likely to cause many retired ex-pats to return home from sunnier shores – and these retirees would take up concessionary/free local urban transport.

But perhaps the most pressing concern for employers is where – literally, in some cases – Brexit would leave their non-British European employees: a question that spins into countless further uncertainties. Specific employment-related issues in the transport sector include driver CPC (‘Certificates of Professional Competence’), which gained a mention in the Balance of Competencies review.

Just days to go

The ITC’s Dr Niblett had various further thoughts on Brexit: He told us: “If the UK votes Leave there would clearly be a lengthy period of economic and political uncertainty. In the case of an economic downturn it is reasonable to assume that if unemployment rises and incomes are squeezed, passenger numbers would fall. This might mean lower fare revenues, but at the same time slightly less wear-and-tear on transport infrastructure and perhaps lower maintenance costs. We might also see the return of net emigration – in contract to current rates of immigration – causing a downturn in passenger numbers. In respect of indirect consequences, there is also talk of the potential break-up of the UK, which would bring other profound challenges.”

Beyond the macroeconomics and other uncertainties, the impact on transport depends largely on what deal the British government negotiates (and to what extent it will try to sign up to existing regulations). But even the procedures and timetable for a UK divorce from the EU are disputed.

So, is Brexit on the cards? At the time of writing, with just days to go until the vote, the polls are close, and many voters remain undecided. Voter turnout is being seen as crucial in determining the outcome.

Even if Brexit is not centre-stage at the European Bus Forum on 23 June, the event’s timing means the EU Referendum will be the hot topic on everyone’s lips.

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