House of Commons - Transport - Written Evidence

Select Committee on Transport Written Evidence

Memorandum by the Railway Forum (EU 05)

EUROPEAN UNION COMPETENCE AND TRANSPORT

THE RAILWAY FORUM

The Railway Forum is an industry-wide body sponsored by and paid for by most of train operating companies, the rolling stock leasing companies, the Passenger Transport Executives, Network Rail, London Underground and many manufacturing and infrastructure companies, as well as other businesses connected with the railways. In all we have some 70 members. Our key role is to act as a think tank, information exchange and point of contact for those committed to and interested in the rail industry.

INTRODUCTION

1. The Railway Forum has a keen interest in any legislation or proposals that affect the UK railway industry. In this respect the European Commission in particular (and the Parliament) is increasingly a key player in shaping the future of European railways. Legislation on a wide range of issues has been implemented in recent years and more is planned. Fundamentally European proposals will have far-reaching impacts upon the way in which the UK's railways are managed and operated. In light of this it is important for both the Commission and Parliament ensure that the principles of proportionality and subsidiarity remain integral to emerging legislation.

RAILWAYS AND THE SINGLE EUROPEAN MARKET

2. The European Commission has powers to develop a common European transport policy (subject to European Parliament and Council of Ministers co-decision making) [12]and the most recent White Paper[13] identified an integrated, deregulated transport network as vital to the effective functioning of the Single European Market (SEM). However, more importantly, the development of a successful common transport policy has been severely limited by the inability of the Commission to take forward the proposals on intermodal pricing[14]. It is clear that, on this issue, there is a rationale for the EU to act to ensure a Europe-wide solution to intermodal pricing both in terms of the levels of charges and the technological means of their collection. National solutions in this scenario will not be successful. However it is clear that the Commission has, to date, failed to produce a convincing case acceptable to all member states. There is thus a huge hole at the centre of Commission transport policy that no amount of activity on secondary issues can disguise.

3. The lack of progress on intermodal pricing thus has clear implications for the success of railway policy. Without the framework provided by an agreed set of infrastructure charges, policy in relation to rail (and other modes) exists in something of a vacuum. Infrastructure charging will have significant and far-reaching effects on the relative mix of modes and patterns of travel. In this sense, investment decisions taken in the context of intermodal pricing are significantly different to those that would occur under the present circumstances (where there is little or no market correction).

4. Nevertheless, despite the slow progress on pricing, the Commission has pursued three key strategies with respect to the railways:

— implementation of measures aimed at opening up the rail sector to competition; and

In addition, the White Paper also identified other areas where the Commission should act to bring railways in line with other regulated transport industries across Europe. In this regard it has introduced legislation regulating:

— noise and atmospheric emissions from rail vehicles; and

— safety management on the railways.

EU COMPETENCE AND THE RAILWAYS

5. Overall the success of these strategies has been patchy. There have been notable reforms, particularly with regard to the development of an interoperable European rail system and the further opening of the rail sector to competition. Reform in these areas is generally progressing well. However other areas have either seen limited improvement and/or will require further consideration. In particular:

— development of the TEN-T has been problematic in particular as several projects have been delayed due to funding and/or management difficulties;

— legislation to open up European railway monopolies has resulted in unintended outcomes;

— legislation regulating atmospheric emissions has caused significant difficulties due to the distinctive nature of rail operations in the UK; and

— legislation to reform safety management on the railways.

The first three areas are the most problematic and in many respects suffer from the inconsistent application of the principles of proportionality and subsidiarity whilst the fourth (the reform safety management) is welcome but will require careful application within the UK. These are discussed further below.

THE TRANS-EUROPEAN TRANSPORT NETWORK (TEN-T)

6. The TEN-T comprises a large number of "priority projects", the majority of which are rail solutions. The UK projects include the West Coast Main Line upgrade and the Channel Tunnel Rail Link. However by 2002, only 20% of the initial list of priority projects had been completed. There is currently much work being undertaken at the European level to ensure that the TEN-T process is accelerated as a result. Nonetheless establishment of such a network has not developed well:

— too many projects are included more on the basis of ensuring fair shares rather than transport need;

600 billion between now and 2020, funds are just not available on this scale; and

— the imbalance of costs and benefits accruing to countries involved, particularly in cross-border projects.

7. Overall The Railway Forum supports the establishment of the TEN-T as it will ultimately benefit both "UK plc" and UK railways, through improved links (particularly rail) to the continent. However, we remain concerned that the TEN-T process does not adequately reflect the need for further development of rail infrastructure in the UK in order to better link with continental Europe. In particular, of the most recent list of 22 new priority projects, only one UK project was included. It is clear that the UK interest in this area must be better coordinated to ensure that the UK has the best possible chance of securing priority projects and related funding.

8. In addition there are clearly issues of subsidiarity and proportionality with regard to the development of the TEN-T and the methodology for project selection. In particular there are a number of priority projects that do not appear to have any significant pan-European benefit[17]. Whilst the recent High Level Group[18] has clarified the methodology for the selection of priority projects we are not convinced that a number of such schemes require concerted action at EU level. In any event the Commission will always find itself constrained when it comes to project delivery. It would be helpful if there were more recognition of this.

OPENING UP EUROPEAN RAILWAYS TO COMPETITION

9. A large proportion of Commission activity is aimed at increasing competition, particularly amongst the "traditional" European monopolies (eg France, Germany etc). Whilst this is to be welcomed—as it is an area where the Commission can and should act—the outcome in many cases is further bureaucracy, particularly for those railway systems that have progressed farthest in terms of competition. A recent example is the attempt to introduce a common method of train driver licensing across Europe. Whilst initially intended to ensure greater competition by allowing the free movement of drivers across European railways, it is seemingly developing into a bureaucratic solution and particularly so for the UK which currently has a simple and flexible process. This is however an ongoing debate in which the UK is strenuously making the case for simple and straightforward procedures.

10. Clearly, the Commission's efforts to improve competition between and within European railways must take better account of the conditions prevalent in individual member states, the proportionality of their actions and the likely consequences. Any policy that results in outcomes sub-optimal to those that existed previously needs to be reconsidered.

ENVIRONMENTAL REGULATION

11. In terms of environmental measures the Commission has recently enacted legislation aimed at limiting atmospheric emissions from the railways. More specifically the Commission recently proposed an extension of the existing 97/68/EC directive[19] to cover emissions from new rail vehicles. The proposals incorporated demanding new limits on the exhaust gas emissions. The impact of the proposals on the UK would have been significant due to the very high proportion of diesel operation in the UK compared with the rest of the EU. Recent lobbying by The Railway Forum and others has succeeded in reaching a compromise on this issue however it is clear that the manner in which the legislation was proposed has highlighted some key problems:

— the measures were disproportionate to the desired outcome; the UK is the largest diesel operator in the EU by some margin and the original proposals would have incurred significant cost to the industry; and

Again, European legislation in this area, whilst justifiable, needs to be proportionate given the operating mix in each member state. Similarly, the Commission (and Parliament) has not demonstrated a joined-up approach to emissions reduction. The use of two separate legislative measures to achieve the same goal is a reflection of this.

SAFETY MANAGEMENT

12. In light of the drive towards interoperability, the move towards a harmonised safety regime for the railways is a logical step. The Railway Safety Directive and Regulation establishing a European Railway Agency[21] are a reflection of the need to ensure that an interoperable railway system works to common safety and technical objectives. In light of this it is crucial that the UK application of this legislation does not lead to a situation where several layers of safety regulation exist (eg a national approach overlaying the agreed EU policy). The present divergence between our current national approach to railway safety and the emerging EU interoperability model must not be underestimated. Nevertheless the HSC/HSE, working closely with the industry, must plan for the adoption of new safety management techniques in the most effective manner.

13. Similarly, with the establishment of a European Rail Agency (ERA) there is a danger that EU strategies promulgated by the ERA do not mesh with those of the Strategic Rail Authority (SRA) in the UK. As with the HSC/HSE on safety, the SRA must begin to engage in the process of establishing the ERA and ensure that UK rail strategies broadly fit within the overall EU framework.

19 December 2003