In the early hours of 24 June 2016, it was decided by the British public that the UK would seek to exit the European Union (EU). For many, this was a shock outcome, and in the hours that followed that decision, we saw David Cameron resign as Prime Minister and the FTSE 100 and pound plunge to record lows in recent times.
However, as the dust settles, it is time to think about what this means for those operating in the haulage sector and where we will go from here. Vikki Woodfine, a Partner specialising in Regulatory Law at DWF LLP discusses some key issues as we move into unchartered territory.
The current position
The first thing to remember is that we are still a part of the EU and that to some extent it is business as usual. The exit is a staged process and it is set down by Article 50 of the 2009 Lisbon Treaty. Given that this has never previously been invoked by another Member State, we find ourselves embarking upon the unknown. Article 50 is triggered by a Member State stating that it wishes to leave the EU and negotiations then being held on a withdrawal agreement. The UK has not made this request under Article 50 yet and it is likely that no such request will be made until a new Prime Minister is in place, which is going to be by September 2016 according to David Cameron’s resignation speech. Indications at this stage from David Cameron certainly suggest that notice will not be given to The Treaty on the Functioning of the European Union (TFEU) until after his departure.
Once the Article 50 request to exit is made to the TFEU, the UK and the EU will then negotiate how the UK’s future relations with the EU will look, and the Lisbon Treaty allows for up to two years to reach an agreement. During that period of up to two years, the UK will remain a member of the EU and will fully participate in EU business. If there is no agreement within the two-year deadline, the only way that the deadline can be extended is if all Member States agree to this. However, commentary coming from EU leaders on 24 June indicated that there was a general desire to accelerate negotiations.
Other European countries such as Switzerland and Norway have their own relationships with the EU (eg EFTA, EEA) which have been painstakingly negotiated over years and these offer example frameworks of what might in theory be achieved for the UK. These frameworks provide certain pillars of EU membership such as the free movement of goods to extend, but they require many conditions to be respected such as respect for competition rules and other regulatory controls.
Many of the laws that govern the road haulage industry have emanated from Europe and therefore a valid question that operators now have is whether these laws will still apply? First, it is important to stress that we remain a member of the EU and will be likely to remain a member for some time, possibly a further two years or more. However, once our membership is terminated, the laws will still stand unless the UK Government repeals them or takes steps to amend them.
The underpinning law for HGV operators is found in the Goods Vehicles (Licensing of Operators) Act 1995, and that is domestic legislation, meaning that Brexit does not affect the status of this.
While rules on drivers’ hours began in Europe through EC Regulation 561/2006, the UK adopted these regulations within the Transport Act 1968 and consequently this law will remain, regardless of our status in Europe. Therefore, our eventual departure from the EU will have very little impact on the underlying UK laws which have implemented directives such as 561/2006. It seems unlikely that the UK will seek to change the law in this regard given that it all goes to the common goal of road safety, compliance and fair competition. Equally, any haulier operating outside of the UK would still have to be operating in accordance with EU regulations to avoid criminal implications while driving in those countries and so there is no benefit for the UK to introduce confusion by moving the goalposts now.
One area that may see some small change is regarding financial standing. The levels of financial standing that operators must meet are reviewed each year and tend to fluctuate annually depending on the value of the pound against the Euro, as the levels are set in Euros. Therefore, Traffic Commissioners may have more input/discretion in this area after the departure from the EU.
An area of greater impact upon leaving the EU will be in terms of cabotage. The UK Government will have to deal with this issue during the exit negotiations as ignorance with regard to this issue could cause untold damage to operators that undertake journeys across the EU.
While our existing transport laws are unlikely to see any major changes, what will happen in regard to anticipated legal changes on the agenda? For example, what will happen with “smart” tachographs? (for details, see Forthcoming changes to digital tachographs — the “smart” tachograph + New tachograph regulations) The simple answer at this stage is that we do not know.
A new EU Regulation applied to EU members from March 2016 introducing the “smart tachograph” which aimed to reduce the administrative burden on hauliers and to eliminate the most serious forms of tachograph offending. This regulation means that vehicles that are registered for the first time after 2 March 2019 will need to be fitted with a smart tachograph.
Given that it is felt that smart tachographs will lead to better enforcement of driving and resting times, they will make fraud more difficult, enhance road safety and reduce controls for businesses, is every likelihood that this law will be implemented in any event. Operators may also perceive a benefit in their introduction whatever our EU status as the new system will help to reduce roadside checks for companies and better target the offenders.
As the UK embarks upon negotiations with TFEU and will undoubtedly be looking to maintain free movement of goods, there would seem to be little sense in the UK looking to unravel European driven transport legislation as that will undermine UK hauliers’ ability to participate in European trade and the movement of goods on the Continent.
It is with this in mind and the fact that we remain a part of the EU and could continue to be a member for up to two years or more that operators must not suddenly ignore what is happening in Europe. With ongoing consultations such as the European Commission questionnaires inviting comments on EU Regulations 1071/2009 (on access to the occupation of road transport operator) and 1072/2009 (which includes rules on cabotage) UK operators should still engage in these processes as normal. Even upon our exit from Europe, many operators in the UK will remain affected by legislation from the EU. Whether that is because they operate within wider Europe, or because the UK Government may base much of its haulage agenda on what Europe is doing. As a result, UK operators should continue to respond to such consultations wherever possible.
As we exit the EU, we could well see stricter border controls and the expectation is that this will mean that the ability to cross the border into and out of the UK will be a slower process, thereby affecting the efficiency of transport operations. However, it is difficult to predict this with any certainty given that negotiations with TFEU could see the UK join the European Free Trade Area and remain in the European Economic Area, which may see a continuation of the rules governing free movement of goods/people.
Another concern, which was already a growing issue in the sector, is regarding driver shortages. The haulage sector draws heavily from the EU for its workers and therefore industry must not only continue to deal with an ageing driver population and an ongoing driver shortage, but must now deal with the potential of not having access to workers moving into the UK to fill these roles. A further issue could be that foreign labour returns home if the pound continues to drop and Britain enters the recession which the press has frequently spoken about. However, it may be that to deal with the issue of driver shortages, the Government pulls away from the EU driven concept of Driver CPC (DCPC), which some people see as a hindrance to new labour entering the haulage industry.
In reality though, it would seem unlikely that we will pull away from DCPC given our involvement with the European Agreement Concerning the Work of Crews of Vehicles Engaged in International Road Transport (AETR) which contains DCPC obligations. Our membership to AETR is not dependant on our membership of the EU and therefore our continued involvement with AETR is likely to be important in terms of ensuring ongoing trade with the EU.
Whatever happens remains to be seen, but for now operators must continue running their vehicles as before, taking the view that for now, it is business as usual. However, the next few years will no doubt be interesting times.