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What about Brexit?

Darren Caplan, chief executive of the Railway Industry Association (RIA), dares to investigate the potential impact of Brexit on the UK rail supply sector.

Everyone’s talking about Brexit – except the rail supply sector, it seems. Having chaired rail industry events in recent months, the B-word has scarcely been mentioned despite provocations to do so. The results of a recent survey of RIA members even showed Brexit failed to make our members’ Top 3 priorities.

Yet as the June EU Summit approaches and more flesh is being put on the Brexit bones, it is becoming more important for the industry to engage and understand the process. It may simply be that the complexity and continual twists and turns of the negotiations have made it difficult for rail businesses to understand how Brexit will actually affect them.

Trade deals

The main opportunity of Brexit is that we could see the UK Government striking direct trade deals with other countries all around the world, presenting possibilities for rail exporters as part of so-called ‘Global Britain.’ UK rail – given its size and strategic significance to UK plc – is an important exports sector and should look to use the impetus of Brexit to grow its presence overseas. RIA has been lobbying hard for rail to be included in the Department for International Trade’s (DIT’s) thinking as it begins to negotiate in the years ahead, but we are concerned that other transport sectors are given far higher priority, even though recent research shows rail is comparable with sectors such as automotive and aerospace.

The DIT and Department for Exiting the EU, the two departments responsible for developing these new trade deals, must engage more with rail and increase its visibility to ensure it informs trade negotiation thinking.

Frictionless trade

There’s lots of talk at the moment about  the Customs Union and its possible replacements. Clearly, a future challenge for rail suppliers is dealing with possible tariff and non-tariff barriers. Whether increased costs or complex additional administration, noone wants to see impositions and delays at the border. UK rail suppliers could also lose Notified Bodies status, meaning they would lose the right to assess the conformity of some rail products before they are placed on the market – this would deleteriously impact on exports and the ability of UK firms to trade with EU countries. Similarly, were the UK to be classed as a third country, content could be limited by EU ‘rules of origin’ limiting third-country content to 45%.

Whilst this issue has been particularly high-profile in the automotive industry, it could have a similar impact on the rail sector, and so we urge the government to work for a Brexit deal which enables trade to continue as frictionless as possible.

Standards

The rail sector has a number of standards deriving from EU law. Unsurprisingly, RIA members would like to see the rail industry, rather than the government, being held responsible for standards. So, whilst the powers on standards would return to the UK, it would be UK rail advising on whether standards should be harmonised when the UK initially leaves the EU. This would make the transition to December 2020 simpler, avoid cost increases, and ensure suppliers would not need to manufacture to two standards. RIA would also like to see the UK remaining a member of the EU Railway Agency on a similar relationship to non-EU member Switzerland, so that rail can continue to influence standards in the years ahead.

The workforce

Finally, there is the issue of the UK rail workforce. The rail industry has certain skilled trade requirements where it has to rely on workers from outside the UK; nationally, the proportion of staff hailing from the wider EU is 20% (46% south of Derby). We encourage the industry and government to work together to ensure we have the workers we need from a combination of the EU and non-EU countries, and in terms of training up and attracting more people from the UK to work in this fantastic industry. Future Home Office immigration policy will have a role to play in helping deliver the workforce we need.

As with every other sector, rail is clearly going to be going through uncertain times. If we in rail supply can make the most of the potential opportunities and work to prepare for and mitigate the challenges posed by Brexit, we’ll all be better positioned to continue on the path to a growing and sustainable rail supply sector in the years ahead.

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