Examination of Witness (Questions 1-19)
MR JOHN
HUGH REES
WEDNESDAY 23 JANUARY 2002
Chairman: Good afternoon. Before the
Committee begins its session, there are one or two housekeeping
matters. Will members of the Committee who have interests to declare
please make them public.
Mr Stevenson: I am a member
of the Transport & General Workers Union.
Miss Jackson: I am a member of the Transport
& General Workers Union.
Chairman: Gwyneth Dunwoody, member of
the Rail Maritime and Transport Union.
Mr Donohoe: Brian Donohoe, member of
the Transport & General Workers Union.
Miss Ellman: Louise Ellman, member of
the Transport & General Workers Union.
Miss McIntosh: Anne McIntosh, I have
a declared interest: I am on the register of the RAC; my husband
works for an American airline; I have minor shareholdings in BA,
BAA, Railtrack and Eurotunnel.
Chairman
`
1. Thank you very much for coming to see us.
Would you be kind enough to identify yourself officially and then
we can take a record.
(Mr Rees) My name is Hugh Rees. I am
Head of the Sectoral Economics Unit in the Energy and Transport
Directorate of the Commission.
2. Did you wish to open the batting with a few
remarks of your own?
(Mr Rees) I can do, if you wish. I hope that you have
received what I might call the glossy version of the White Paper,
plus a statistical publication, which I thought you might find
of interest.
3. It has only just arrived. We have the White
Paper.
(Mr Rees) If I may, I will give a word of explanation.
This is called a White Paper but I think it is rather a white-green
paper in the sense that we have deliberately attempted in the
paper to provide something readable for the general public. It
is not the usual rather academic style that the Commission sometimes
adopts in White Papers. We are attempting here to stimulate a
debate on the transport situation in the Community, particularly
in the period since the last White Paper, which dated from 1992.
The last White Paper, as you will recall, was written at the time
of the development of the Single Market. This White Paper aimed
very much to create a single market in the sector of transport.
That meant that the paper was directed very much at what we term
opening markets - liberalisation, removing of rules and rather
arcane restrictions that limited the efficiency of the transport
sector. Looking back over the last ten years, I think we can say
that this has been a success. It has been a success in the sense
that the transport sector has grown; more services have come on
offer; there has been a better development of services, particularly,
for instance, in civil aviation, and, as a result of this, there
is more transport now than there was ten years ago for passenger
and freight. But the success is limited by the fact that we can
see quite a number of problems arising generally throughout Europe
now in the transport sector. First, we have the problem of congestion,
which is affecting all modes of transport, particularly the road
mode in urban areas and airports. Railways are also suffering
problems and there are also problems in some of the major ports
of the Community. So we have this problem of congestion. The second
problem we have is the environment, where we have emissions which
particularly affect urban areas. We also have the greenhouse gas
problem where, in terms of greenhouse gas, today around 30 per
cent, about one-third, of the greenhouse gas emitted in the Community
comes from the transport sector, and over 80 per cent of this
comes from the road sector. So we have this problem, which makes
it very difficult to meet the Kyoto Accord. We have the problem
of safety. I have the latest figures but the published figures
are of around 40,000 people killed on the roads and we also have
the problem of energy dependency, where 98/99 per cent of the
energy requirements come from a single source of energy - oil.
So we have all these problems and I think they have arisen from
two facts: first, the problem that the investment on the supply
side of the transport industry for transport infrastructure investment
has gone down in real terms. Around the beginning of the 1980s,
on average the Member States were putting about 2 per cent of
their GDP into transport infrastructure investment. Today, from
the latest figures we have, it is about 1 per cent. We have this
increase in the demand for transport but we have not had a parallel
increase on the supply side for transport infrastructure. The
inevitable consequences are congestion and other problems. For
the future, and looking to the period 2010, with all the caveats
that you have to attach to long-term forecasts, we do not see
really any signs of a change. The demand for transport is continuing
to increase and, with the enlargement of the Community, it is
likely that there will be a continued push on the demand side
for transport. Our forecasts are that for freight transport we
could have up to a 40 per cent increase in the period up to 2010
in the Community as a whole. For passenger transport it is somewhat
less, more like 20 or 25 per cent because the Community is getting
older and congestion is affecting the urban centres in such a
way that there is very little opportunity for more trips to be
made. What can be done? I am afraid we have not come up with the
magic solution. There is not a magic solution. The only solution
is to look at the long term. What we aim to do in the White Paper
is to provide a way forward, which we hope around the year 2010
would have stopped the situation getting any worse. This does
not sound very optimistic. We are hoping to stop the situation
getting any worse and to allow the man and lady in the street
to see that existing politics is working to avoid a pressure building
up perhaps for rather more draconian solutions to transport problems.
So we are putting forward a package of measures using regulatory
means, which are standard - more efficient pricing and taxation,
research and best practice - to try to avoid the situation getting
any worse by 2010. The calculations that we have made indicate
that if most of the measures are put into force we will actually
have stopped the increase in greenhouse gases and the other emissions,
Nox, et cetera; sulphur will have come down considerably by 2010.
We think there is an opportunity now but the choices are difficult,
hence the title of the paper "A time to decide". The
choices are difficult; we have the opportunity to make these choices.
If the Community can succeed in putting in place the policies
and parallel policies are put in place at the national level,
then I think there is an opportunity to create a sustainable transport
system by 2010. With the very interesting research work that is
currently going on into hydrogen, the use of new systems to control
transport, plus the fact that we should have better planning to
involve transport much more closely with urban and land use planning,
et cetera, all these things can come into place after 2010. After
2010, I think we will really see a sustainable transport system
being built. What we are doing here is to put forward a policy
which we believe to be realistic and, if it is put in place, we
think it will stop the transport situation getting any worse;
it should get somewhat better. It will not be a solution but it
will give us the opportunity to put in place the real solution
in the period up to 2010.
4. That is very helpful but, before I begin
the questioning, I want to ask you one or two technical things.
Exactly what is the status of a White Paper with green edges?
Are you saying that it is a discussion document, that you would
expect all of the Member States to discuss the implications of
this, which are very far-reaching, because, after all, it does
have a great many implications? I hope we are going to go through
some of the points you have raised this afternoon. Can I just
be clear in my own mind what the status of this document is. Is
it something that will be put to the Member States or is it something
that you would regard as being your advice, your parameters that
you would put to Ministers in the Council of Ministers? What is
the status of this document we have in front of us?
(Mr Rees) I am sorry that possibly I was less than
clear. I was trying to think what would be the combination of
white and green and I could not remember.
5. Usually trouble, Mr Rees!
(Mr Rees) I am afraid so, but we hope that this is
not trouble. What we are doing is to spell out our view of the
problems that exist today.
6. And "we" in this case is the Commission?
(Mr Rees) Yes.
7. And "we" in this case have been
asked to produce the White Paper for general discussion?
(Mr Rees) We were not asked to produce a White Paper.
8. So "we", being the Commission,
have initiated this as a policy document, which will be generally
discussed before it is agreed at any level?
(Mr Rees) It does not necessarily have to be agreed.
9. So it is parameters; we can take it these
are the general parameters, the way that you see forward for the
present time?
(Mr Rees) Yes.
10. What is the estimated cost to the United
Kingdom of implementing all the White Paper proposals?
(Mr Rees) We do not know. We are not in a position
to cost all the proposals of this nature. We would like to be
able to do that ideally in terms of policy making. It would be
perfect to be able to say that we have a cost benefit analysis
for all the policies, and we then obviously would want to choose
the policy that gives the best cost-benefit ratio, but so many
of the things here are unknown that we have to make a judgment
with the best information we have available. We have not got a
comprehensive set of information that would enable us to tell
you exactly what these policies would cost.
11. And yet many of these recommendations in
the White Paper are written in very specific terms. They vary
from some of them being extraordinarily general to some extraordinarily
detailed. What financial systems would be available from the European
Union?
(Mr Rees) If you were talking particularly about transport
infrastructure and the Trans-European networks, there we have
a fairly clear idea about what the projects will cost because
they are all projects that have been developed by the national
authorities that are responsible for them.
12. There are also existing systems and although
you talk, for example, about Trans-European networks and how they
should be dealt with in the future, what I am asking you is: is
there a specific type of set-aside within the European budget
that is meant not for existing systems but for support of the
changes that are envisaged in this policy document?
(Mr Rees) You have the existing lines for support
for infrastructure. In the context of this particular paper, in
relation to the development of multi-modal policies, we will be
proposing before the end of this month a new line which we call
Marco Polo, which is specifically designed to support the development
of multi-modal services, services involving more than one mode
of transport. The proposal is currently under discussion within
the Commission services. We hope it will be approved by the Commission
by the end of this month, and then we will be going to the Council
and the Parliament next month.
13. What consideration have you given to the
impact of the ten-year plan for transport on your proposals in
the White Paper?
(Mr Rees) The ten-year plan for transport in the UK
seems to start from much the same premise from which we started
with the analysis of the Community as a whole, in the sense that
there is a problem with the increasing demand for transport and
there is also a problem that the public sector resources are not
available to provide the steel and concrete solutions to this.
So you have to look for a complex mixture of policies, and the
ten-year plan in the UK seems to me - and I am speaking for myself
rather than the Commission - to be a good example of how to tackle,
in the case of one Member State, the UK, the sorts of problems
that are affecting the Community as a whole.
14. Have you got a timetable for your own proposals?
(Mr Rees) Yes; we would like to see the measures adopted
before the end of the decade.
15. Let us be quite clear about which decade
we are talking about. Are you saying 2010 or 2020?
(Mr Rees) 2010.
Mr Grayling
16. May I ask you about the railways and the
issues of interoperability? There is a considerable amount of
paperwork sitting on the Directive table in Brussels about interoperability
but we have the enormous challenge that this country operates
to an entirely different gauge to continental traffic. Can you
start by addressing the question of what assessment the Commission
has made about the cost and the logistics of requiring Britain
fully to meet interoperability standards?
(Mr Rees) Perhaps, in reply to Mr Grayling, I should
say that this morning the Commission approved a new package of
railway measures, which is the second package. One of the specific
proposals that the Commission approved this morning concerns interoperability,
both for the high-speed network and the conventional network.
It may be useful, if you would allow me, just to clarify that
when we are talking about interoperability, basically we are talking
about the interoperability of new systems and we are not supposing
that the UK would convert from the kinetic envelope, which is
the technical term.
Chairman
17. That is fine as long as you are not suddenly
going to come up with a timetable that says a new system must
be in operation by the end of the decade. I am sorry, Mr Grayling,
but the Committee is at a bit of a disadvantage because we do
not know what the wording is. Does it say on this new programme
on interoperability that this must apply to new systems and does
it define what it means by new systems because, frankly, if you
are going to require changes in gauge and changes in practically
the whole of the railway system of the United Kingdom, then I
think we would expect you not only to provide the cash but also
to have a very clear idea of what you are talking about. It may
be rather bigger than even the Community's budget.
(Mr Rees) It certainly would be. There is no such
proposal and there never will be because clearly it would be quite
out of court in terms of any sensible economics.
Mr Grayling
18. Can I press you? You say it never will be
but can I ask you to think of a hypothetical. There are two or
three principal routes to the Republic of Ireland: the route that
goes via Holyhead; and two routes that go southerly in that direction
through Wales. Those routes clearly tie in through the British
network to the Channel Tunnel to provide proper interoperability
of services all the way across the UK to a point where they are
close to Ireland. So effectively the Irish can hop on a ferry,
whether with freight or with passengers, and then benefit from
a through-service right the way through into continental Europe.
That could require the upgrading to continental gauges of a very
substantial part of the British network. Are you actually saying
that is never likely to be a requirement the Commission would
make?
(Mr Rees) I cannot commit the Commission for ever
and a day. I would only say that I would be astonished, on the
basis that the 1996 Directive required projects to be subject
to a cost-benefit analysis. If you are talking about the routes
to Fishguard Harbour and to Holyhead —
Chairman
19. They would not say no to a dual carriageway
all the way round. If you wanted to give them large amounts of
money other than for the route to Holyhead, you would be very
popular.
(Mr Rees) The Community has provided in the past substantial
support for both of those routes actually but in this particular
case for the railways, let us think of what the reality is. To
Fishguard Harbour we probably have two trains a day; we have the
same to Holyhead, with maybe three in the summer. To justify substantial
work on the north Wales coast mainline, even to electrify it,
apparently does not meet the Treasury requirements in the UK,
as I understand it.
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