The decision to leave the EU heralds the biggest political and economic upheaval in a generation. No corner of the country will be unaffected. As yet, the implications for the rail industry remain largely unquantified.
The impact could be huge. European legislation frames how the railway works. Who defines air quality standards? The EU. Signalling? The EU. Procurement processes? The EU. Noise? The EU. Competition rules? The EU. Separation of track and trains? The EU. The ‘Digital Railway’? In many different ways, the EU.
It’s not hard to find fault with the UK’s railway - its structure is far from perfect. But by any measure you choose, it is successful. It carries more people, more safely and more reliably than almost anywhere else. It is seen as a great place to do business, and a great place in which to invest. Why else would bankers, suppliers, contractors and operators from all over the world compete to work here?
Will the likes of Siemens, Deutsche Bahn, SNCF or CAF walk away from a stable, liberalised rail market that will continue to grow for the foreseeable future? Will Hitachi or MTR shift operations to an EU member state? Possibly… but it seems unlikely.
Ahead of the referendum on membership of the EU, the transport industry was almost universally in the Remain camp. Dissenters were few and far between. But after two hours of detailed discussion, our RailReview panel members surprised themselves with their own conclusions.
Brexit might not be the catastrophe many had predicted. It presents opportunities that could lead to more British jobs, enhancing the national skills base and attracting inward investment. It could stimulate manufacturing and benefit home-grown companies, opening the door to innovative forms of funding. It could act as a catalyst for changes that are already under way.
Certainty, stability and protection of a whole-system ethos were the key outcomes wanted by our panel. Members called for clear leadership to ensure that a relaxation of EU restrictions does not lead to some sectors of the industry acting to the detriment of others.
THE NEW TRAINS MARKET
“The new Transport Secretary is a leading Brexiteer,” observed Campaign for Better Transport Executive Director Stephen Joseph. “Chris Grayling will want to show what the benefits of leaving the EU could be.”
Is that a good thing for the industry? The decision to leave has been made, so we must now get on and deal with it.
Grayling has said it could benefit UK manufacturing, and perhaps the signs are already there. A deal in August featured Abellio retaining the East Anglia franchise with a £900 million order for 660 new Bombardier Aventra vehicles to be built in Derby. Grayling said at the time: “The decision to order rolling stock from Bombardier will ensure our train building industry in Derby remains strong.” Swiss manufacturer Stadler will also enter the UK market, with 383 vehicles as part of the deal.
“Remember the huge argument in the last Parliament when the Thameslink order went to Siemens?” asked Joseph. “Government will not feel constrained in the future by the need to observe European procurement rules. A potential strength of the Brexit deal will be the promotion of more skilled manufacturing jobs in the UK.”
“One manufacturer believes it lost the East Anglia contract because of Brexit,” commented ESG Rail’s Elaine Greenwood. “It has been forced to consider whether it needs to have an assembly plant in the UK, like Hitachi, to secure future orders.
“Because of the sudden swing in the exchange rate, the company went from having a competitive bid to not having one. Asked to confirm prices at the last minute, this one declined to do so, knowing the slump in the pound had shifted the sands so badly.”
Len Porter, former chief executive of RSSB, knew of a company enduring the opposite end of the pendulum - a smaller British supplier on the verge of a deal with a large European train manufacturer. Brexit, he said, led to feelings of uncertainty. The contract was cancelled.
