Examination of Witnesses (Questions 660-679)
MR GRAHAM
SMITH
16 JUNE 2004
Q660 Chairman: Yes, but how do we get
from where we are to that marvellous nirvana?
Mr Smith: Case-by-case, issue-by-issue,
slowly and steadily.
Q661 Chairman: So how long is it going
to take to develop these interoperability standards?
Mr Smith: It will depend on the
ease of introduction and the amount of equipment that will come
up for renewal. There will be some that are easy to achieve—compatible
braking systems—between rolling stock, particularly on the
freight side, there are some that would be extremely desirable,
such as compatible loading gauge standards which, in the United
Kingdom, are much smaller through reasons of history than we have
in mainland Europe, but the physical infrastructure changes there
will take many years and much expenditure.
Q662 Chairman: Do we need an interim
system? Do we need a nationwide, country-specific standard for
a kind of transitory period?
Mr Smith: the European Union,
I think, has addressed this through the concept of the trans-European
rail network and freeways by identifying specific routes linking
the United Kingdom with mainland Europe and within mainland Europe
where through common standards, more effective border crossing
can be applied. So that, in the United Kingdom, routes such as
the West Coast Mainline, which will take a lot of international
freight traffic, need to have some compatibility with elsewhere
in Europe. Routes on the periphery of the United Kingdom network
probably do not need that.
Q663 Mrs Ellman: What about the European
Rail Agency? Is it really going to bring benefit?
Mr Smith: The European Rail Agency,
in terms of setting common standards and safety, can bring benefit
providing it is not just another administrative body which duplicates
activity. The introduction of the ERA needs to be matched with
a diminution in the role of the national agencies. Self-interest,
I am sure, will be difficult to overcome. However, for a Europe
that still cannot decide on its operations Technical Standard
for Interoperability—whether trains should have one red
lamp at the back, two red lamps at the back or, as the North Americans
would have, you can do a lot of things with reflectors—perhaps
getting to a point where national agencies are willing to close
themselves down in favour of the European Rail Agency may take
a little while to get to. However, I believe that an ERA which
dictates standards of activity across Europe, in the same way
that the Association of American Railroads has managed in North
America, Canada and Mexico, must bring ultimate long-term benefit
if rail (particularly rail freight) is going to compete with road
haulage which can run throughout any state in Europe, and on ferries
or through the Channel Tunnel into the United Kingdom without
let or hindrance.
Q664 Mrs Ellman: Do you think there is
enough consultation to get these points right?
Mr Smith: There is an awful lot
of consultation. The problem we have is the capability and the
capacity to consume that consultation and to give a sensible and
timely response. The European commission does not struggle to
issue consultation documents of great length with a number of
assessments in them. Unfortunately, as a non-government organisation,
we are not properly equipped to deal with that; to some extent
we have to rely on other administrative bodies within the United
Kingdom, such as the Department for Transport, to represent our
interests. We try and focus on the issues that are key for us
in making our views known.
Q665 Mrs Ellman: Do you feel that the
Department for Transport does represent your interests?
Mr Smith: The Department for Transport,
I believe, does do a good job in representing our interests. In
this area, as in many others, they are not dealing exactly with
homogenous, domestic interests. Those operators who do not, and
have no prospect or desire to, operate internationally will have
one view, we may have another. That is why on the issues that
we believe are important we will represent our own views and make
our views directly known to those Members of the European Commission
involved in the legislation.
Q666 Mrs Ellman: There are different
European Union and United Kingdom approaches to improving equipment,
are there not?
Mr Smith: There are.
Q667 Mrs Ellman: Is that going to lead
to confusion, looking at standards?
Mr Smith: It will while they remain
different. Perhaps that, again, is another argument why standardisation
at a sensible level, neither careless nor over-prescriptive, is
something that we would welcome. A lot of our international services
and domestic services will be hauling wagons which are approved
in various countries, throughout the United Kingdom. Some of these
wagons will spend a few weeks solely moving around the domestic
network. If they have standard approval, standard equipment and
standard braking systems then that helps us to reduce the cost
and improve the efficiency of rail freight.
Q668 Mrs Ellman: Do you think that is
likely to happen under the present arrangements?
Mr Smith: Yes, it will happen
but as was described earlier, and I repeat, when one is trying
to get agreement between a number of still, essentially, national
railways, let alone the 300 small private sector operators and
ourselves, that is not an overnight task. To some extent I do
not envy the Commission in trying to negotiate a common view amongst
so-called railway experts who, even if the Commission was not
present, would probably struggle to agree which was the best system
for the future.
Q669 Mrs Ellman: What about the plans
for common driver licensing arrangements? Is that likely to reap
benefit to the United Kingdom?
Mr Smith: We believe that common
driver licensing does have advantages. At present our drivers
have to leave the train in Calais and the train has to be taken
over by a French driver and taken to the German or Italian border.
There is some inter-working, for example, between the Belgian
railways and the French railways. We believe driver licensing
will increase the ability to have inter-working and it would,
we would anticipate, see SNCF drivers probably working as far
as London. What we are trying to do is be competitive with road
to offer a more competitive product to the end customer. If that
means that the train does not stop merely to change train crew
and means we can offer faster end-to-end journey times, that must
be of benefit to the end customer.
Q670 Mrs Ellman: Would you say that in
general European transport legislation is beneficial to your industry?
Mr Smith: It is something of a
pick-and-mix. The opening up of mainland European railways to
new operators, the ability to expand our business in due course
in operating in mainland Europe is something that we find attractive.
There are hurdles to overcome, which the Commission is seeking
to address. There are other issues, on which we commented in our
evidence and referred to earlier, where sometimes the European
Commission tries to achieve a policy objective through inappropriate
legislation—for example, the proposal to forcibly impose
performance standards in contracts between rail freight operators
and their end customers. It is not just one way because end customers
will also be obliged to pay up to 25% of the amount they were
going to pay the train operator if they fail to load a train on
time. In the United Kingdom we have grown our rail freight business
significantly without a standard performance measure between ourselves
and our customers; we agree performance regimes on a bespoke basis,
depending on the balance of risk. We can see where the European
Commission is trying to get to because the performance standard
in some parts of mainland Europe is very poor. So they are trying
to produce a mechanism which just encourages rail freight operators
to run more punctually and more reliably. Whether you do that
through imposed contractual mechanisms I am not absolutely convinced.
It is an issue that we have, and on some other things as well,
that something which is targeted at the mainland states, particularly
the larger states in Europe, catches the rest of the European
Union because we are part of the Union. The Commission does not
seem able to be selective in its approach. That is the nature
of the way it is constructed.
Q671 Mrs Ellman: Would you say, overall,
the United Kingdom has benefited or not?
Mr Smith: I cannot speak for the
entirety of the United Kingdom but I can speak for English, Welsh
and Scottish Railway and I can speak for rail freight. It is the
view of English, Welsh and Scottish Railway and our rail freight
operators that we have benefited from European legislation which
has opened up the European market and it will, in time, attract
more traffic to rail away from other modes.
Q672 Chairman: You mentioned the whole
question of licensing drivers. Is your attitude towards domestic
drivers the same as your attitude towards your own international
drivers?
Mr Smith: It should not be a significant
difference, providing that what we end up with is not over-prescriptive
and over-bureaucratic.
Q673 Chairman: The point is it will be.
One of the things in the European suggestions was that nobody
who left school at 16 could become a train driver. Without being
working-classist, or whatever it is, that would wipe out something
like 90% of the train drivers that I know.
Mr Smith: Yes, it would certainly
wipe out a considerable number of English, Welsh and Scottish
Railway drivers.
Q674 Chairman: It would be a very good
job-creation scheme for fast-track graduates looking for a change
of pace!
Mr Smith: Yes. It certainly took
my daughter nine months to find a job after leaving university,
but she never aspired to be a train driver.
Q675 Chairman: There is a want of something,
Mr Smith! If you never aspired to be a train driver you must have
been a most unnatural boy.
Mr Smith: She saw her dad spend
25 years on the railways and thought she would try something else.
I think the point here is that the European Commission do sometimes
try to dot too many "i"s and cross too many "t"s.
They do try to be over-prescriptive in the way they achieve something.
We do not have any problem at all with both our domestic and our
international drivers. We do not object to having a driving licence
which is accepted throughout the European Community when we are
driving our cars and there is no reason why train drivers should
not do the same; if they wish to become mobile throughout Europe,
again, I do not see why we should stand in their way to do that.
The point that you make, which is that the European Commission
does have this tendency to be a little over-prescriptive in what
it requires, is something clearly we have to tackle through our
conversations with the Commission.
Q676 Chairman: You do not think we are
getting into the odd situation where people talk a lot about subsidiarity
but, in effect, are constantly looking to concentrate powers in
the centre? Why should the European Rail Agency micro-manage the
rail system?
Mr Smith: I suppose it comes back
to the European Commission's underlying principle, which is that
they see the use of rail, both passenger and freight, diminishing
in the vast majority of mainland Europe states. They believe,
as a policy objective, that albeit for environmental or economic
reasons there should be more use of rail, they do not see the
railways in most Member States being able to tackle that problem
and are, therefore, taking it upon themselves to try and set standards
and prescribe activity so they do get more use of rail. Taking,
for example, the freight compensation proposal. In conversations
with the European Commission, where we have queried the benefit
of this in the United Kingdom, their view is it could easily be
withdrawn and may well be withdrawn if they could see that their
overall policy objective was achieved in different ways. If performance
improvement—be it in Germany or France or any mainland European
state—was being brought about through competition, or there
was improved performance through an incentives regime, or improved
performance through investment by government, then you do not
need the freight compensation package. It is a means to an end;
they are not wedded to it of itself.
Q677 Chairman: They are all fairly subjective
judgments, are they not?
Mr Smith: I think when you are
dealing with that number of Member States and very different principles
it will of necessity be subjective because what you are trying
to do is forecast the performance of individual groups and managers
and the preferences of end customers in reaction to different
stimuli.
Q678 Chairman: There would presumably
be quite marked differences between one Member State and another.
Mr Smith: There are marked differences,
but given that, for example, two-thirds of the traffic in Holland
and Belgium is international and 60% of the traffic crossing through
Germany is international then one can see that the European Commission
has the view that it cannot build rail freight solely on the back
of domestic demand, it has to build it on the back of international
demand because that is what road haulage is offering as well.
Q679 Chairman: Let me put it this way
round: were I, as a German national, to be told by the European
Commission exactly what road surfaces, what road widths and what
differences between motorways and domestic roads I should have
because a high proportion of my traffic was international traffic
I might resent it. Why should they do the same thing in rail?
Mr Smith: You may resent it—again
this is subjective—but presumably in being a willing member
of the European Union—
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