3 Railways
| (a)
(31959)
13788/10
COM (10) 474
(b)
(32037)
13789/10
COM (10) 475
+ ADDs 1-2
|
Commission Communication concerning the development of a Single European Railway Area
Draft Directive establishing a single European railway area (Recast)
|
| Legal base | (a) —
(b) Article 91 TFEU; co-decision; QMV
|
| Documents originated | 17 September 2010
|
| Deposited in Parliament | (a) 23 September 2010
(b) 11 October 2010
|
| Department | Transport
|
| Basis of consideration | Two EMs of 1 November 2010
|
| Previous Committee Report | None
|
| Discussion in Council | Not known
|
| Committee's assessment | Politically important
|
| Committee's decision | (a) Cleared
(b) Not cleared; further information requested
|
Background
3.1 In the last decade legislation on EU railways has been adopted
in three so-called packages. The main aim of the First Railway
Package was to open up the trans-European rail freight network
to international goods services by 2008. The Second Railway Package
was designed to provide for a legally and technically integrated
EU railway area. The Third Railway Package aimed to revitalise
the international rail passenger market by extending competition
and establishing a harmonised system of minimum passenger rights,
to improve the interoperability of the EU rail system and to enhance
the performance and size of the EU rail freight market.
3.2 The First Railway Package consisted of three
Directives: Directive 2001/12/EC, which amended a 1991 Directive
on the development of EU railways, Directive 2001/13/EC, which
amended a 1995 Directive on the licensing of railway undertakings
and Directive 2001/14/EC on the allocation of railway infrastructure
capacity and the levying of charges for the use of railway infrastructure.
The package was aimed at creating "a single European railway
area" and the intention was to reform the regulatory framework
to ensure integration of the railway sector at EU level, therefore
opening up the market to competition to enable it to compete with
other transport modes. The First Railway Package was specifically
designed to:
- open up the international rail
freight market;
- establish a general framework for the development
of EU railways;
- clarify the formal relationship between the state
and the infrastructure manager, on the one hand, and between the
infrastructure manager and railway undertakings (train operators),
on the other;
- set out the conditions that freight operators
must meet in order to be granted a licence to operate services
on the EU rail network; and
- introduce a defined policy for capacity allocation
and infrastructure charging.
3.3 In May 2006 the Commission reported on implementation
of the First Railway Package — it had found that, although
Member States had introduced the necessary legislation, some countries
needed to take further measures to ensure an effective regulatory
framework as well as satisfactory functioning of the railway markets.
This report was followed up by a questionnaire to Member States
in May 2007 on their implementation of the directives of the First
Railway Package. In June 2008, following a detailed analysis of
national legislation the Commission sent letters of formal notice
to 24 Member States (that is, excluding Malta and Cyprus, which
have no rail networks, and the Netherlands) regarding their failure
to implement the First Railway Package properly. The Commission
is pursuing infringement action against those Member States (that
is the 24, excluding Bulgaria, Finland and the UK) who have not
correctly implemented the package.
The documents
3.4 In the Communication, document (a), the Commission
outlines a strategy for establishing a single European Railway
Area based on an integrated infrastructure network and interoperable
equipment, enabling seamless transport services throughout the
EU and neighbouring countries. The objective is to enable EU railway
operators to offer efficient services aimed at meeting passenger
and business expectations and to compete with alternative transport
modes, in terms of price, flexibility, journey time and punctuality.
The Commission's intention is to boost the competitiveness of
the rail sector and its environmental attractiveness and to build
on what has already been achieved in the rail market. It gives
a broad outline of further measures which could be taken in the
next few years to promote the development of an effective EU rail
infrastructure, establishing a truly open rail market, removing
administrative and technical barriers and ensuring a level playing
field with other transport modes.
- The strategy outlined focuses
on four key areas. The first is promoting development of effective
rail infrastructure — the aim is to:
- mobilise international, EU, national and private
funds for the development of new rail transport projects;
- ensure that existing infrastructure is maintained
and optimised through an appropriate financial environment that
stimulates investment in the rail sector by Member States and
candidate countries; and
- make it easier to adapt existing infrastructure
to growing specialised demands, in particular high-speed rail.
Noting that a substantial part of the EU rail budget
is dedicated to the development of rail infrastructure, the Commission
says that:
- this will address the current
lack of interoperability of some Member State networks and the
presence of bottlenecks at cross-border sections;
- it is currently reviewing policy for the Trans-European
Transport Network (TEN-T) and will produce a draft proposal in
2011;
- any further increase in direct funding (over
and above that already provided from existing sources including
TEN-T projects and European Investment Bank loans and guarantees)
will depend on the next Financial Framework (for 2014-2020) and
the development of new funding instruments; and
- it intends to outline its approach in its forthcoming
White Paper on future EU transport policy.
3.5 The Commission's second key area is establishing
an attractive and genuinely open rail market — the Commission
believes that, despite the rail freight and international passenger
transport markets being open to competition since January 2007
and January 2010 respectively, competition between railway undertakings
is still limited by various factors, for example, protectionist
behaviour of incumbent operators and the lack of rail infrastructure
open to all applicants in an open, transparent, fair and non-discriminatory
manner. The Commission says that:
- it thinks that existing legislation
goes some way to addressing some of these issues;
- it is aware that problems will
persist if the existing EU regulatory framework is not implemented
correctly by Member States;
- this is the reason for its formal notice to 24
Member States regarding their failure to implement the First Railway
Package properly and for pursuing infringement action against
those Member States which have not correctly implemented the legislation;
- it understands, however, that existing rules
need to be modernised and clarified and that is why it has adopted
a proposal for a recast of the First Railway Package Directives,
document (b);
- it believes that market opening will remain incomplete
for as long as EU railway undertakings do not have the right to
provide domestic passenger transport services throughout the EU;
and
- it plans, therefore, to evaluate the overall
costs and benefits of competition for domestic passenger transport
in 2011 and then to adopt a new initiative to facilitate further
market opening by 2012 at the latest.
3.6 The third key area for the Commission is removing
administrative and technical barriers — it says safety requirements
and the lack of interoperability still impose significant barriers
to entry to the EU rail market. The Commission:
- argues that, although harmonisation
of safety certificates and introduction of common safety methods
and targets has laid the groundwork for making progress on overcoming
these barriers, there is a need for strong, efficient and independent
national safety authorities interacting with each other to prevent
duplication or multiple checks;
- says that it will continue to monitor Member
States' compliance with EU legislation governing the creation
of such bodies;
- says that it will look at how the European Railway
Agency (ERA) role can evolve in a gradual fashion to complement,
or even to take on part of, the activities of national safety
authorities in the certification and authorisation process; and
- comments that, in terms of the lack of interoperability,
it has required the ERA to develop tools that will make it easier
for existing rail vehicles to be brought into service in all Member
States under the principles of cross-acceptance of national rules.
3.7 The last of the Commission's key areas is ensuring
a level playing field with other transport modes. The Commission
says that:
- while the proposed revision
of the Eurovignette Directive, Directive 1999/62/EC, will allow
the internalisation of external costs to reflect the level of
external environmental and congestion costs which lorry operators
impose, the proposed recast of the First Railway Package would
introduce a scheme of harmonised noise-differentiated track access
charges which would apply under specific conditions; and
- it would also facilitate adaptation of the charging
schemes to take into account other environmental effects throughout
the EU;
- this would help to make EU transport more sustainable
and efficient; and
- it is, however, also considering whether further
measures may be needed to stimulate the energy efficiency of the
rail sector.
3.8 The Commission says that it intends to consult
interested parties on the initiatives outlined in the Communication.
3.9 The draft Directive, document (b), is to recast
(consolidate and amend) the First Railway Package legislation
in order to address the failure, the Commission perceives, of
the package to achieve its declared objective of market opening.
The intention is to increase transparency of rail market access
conditions and improve access to rail-related services, for example,
station, freight and maintenance facilities, with explicit rules
on conflicts of interest and discriminatory practices. Adoption
of the proposal would also:
- extend the competence of national
regulatory bodies, their independence and powers;
- provide for increased co-operation between regulators
on cross-border issues;
- offer more certainty to investors; and
- adapt charging rules to stimulate investments
in green and interoperable technologies.
3.10 The draft Directive has three strands:
- simplification and consolidation
by merging the three Directives, 2001/12/EC, 2001/13/EC and 2001/14/EC
and their subsequent amendments, eliminating existing cross-referencing
and harmonising terminology;
- clarification, that is addressing the issue of
interpretation of rail access provision — some existing
provisions are ambiguous, which has resulted in different interpretation
and application in Member States; and
- modernisation, by adapting the legislation to
new market conditions, that is eliminating outdated provisions,
which were related to the former structure of the rail industry
in the EU, and by introducing new provisions which better align
to today's market.
3.11 The draft Directive is accompanied by the Commission's
impact assessment and a summary of that assessment.
The Government's view
3.12 In her first Explanatory Memorandum, on the
Commission Communication, document (a), the Minister of State,
Department for Transport (Mrs Theresa Villiers) says that the
Government:
- considers that competition
between rail undertakings in the rail freight and international
passenger market is limited and that securing further market opening
by 2012 is desirable;
- notes that the UK has seen remarkable growth
in both freight and passenger traffic since privatisation, as
a result of market opening;
- is in favour of developing more effective links
between the TEN-T and the transport networks of neighbouring European
countries and accession countries, as this will aid the free flow
of trade from EU to neighbouring countries and regions at the
same time enabling and aiding regional co-operation in the given
area — this should have no financial impact on the UK;
- believes that the Commission should focus on
ensuring that Member States implement existing legislation correctly
before it proposes new measures;
- notes, however, that it is pursuing infringement
action against those Member States that have not correctly implemented
the First Railway Package; and
- will need to carefully consider any forthcoming
proposals or initiatives arising from this Communication and will
work with the Commission and other Member States to ensure that
the actions taken are proportionate and are consistent with the
subsidiarity principle.
3.13 On more detailed points the Minister comments
that:
- the Commission refers to proposals
relating both to the safety and interoperability of EU railways;
- the Railway Safety Directive (2004/49/EC) facilitated
the introduction of a common approach to safety to help support
the development of a single market for rail transport services
in the EU whilst ensuring that safety levels are maintained and,
if possible, improved and the first Interoperability Directive
(96/48/EC), required Member States to use harmonised Technical
Specifications for Interoperability, as the set of standards to
build and renew the Trans-European Transport Network;
- both the Interoperability and Safety Directives
were revised in 2008 and will allow the extension of the scope
of these regimes to encompass the whole rail system;
- whenever any new subsystem (vehicles or infrastructure)
is to be put into service on the Trans-European Transport Network
railway network in the UK, the design has to comply with the relevant
Technical Specifications for Interoperability and any applicable
national rules and be authorised by the National Safety Authority
(for Great Britain this is the Office of Rail Regulation, for
Northern Ireland the Department for Regional Development Northern
Ireland and for the Channel Tunnel the Inter-Governmental Commission);
- the European Railway Agency was established as
a technical body and advisor to the Commission in the areas of
rail interoperability and safety — its mandate includes
the development of Technical Specifications for Interoperability
as well as common safety targets, common safety methods and common
safety requirements for safety certification;
- the Commission indicates that it intends to examine
how the European Railway Agency's role might evolve to take over
some activities currently undertaken by National Safety Authorities
such as the processes for the certification and authorisation
of subsystems;
- the Government will oppose extensions to the
competence of EU bodies if the proposals do not reflect the spirit
of the original Directives' intentions — new proposals must
preserve the principles of subsidiarity and it will seek the retention
of national flexibility if it provides a better solution for the
UK;
- with regard to access charges, the Government
has concerns relating to the difference in treatment of noise
compared with other environmental impacts and about the complexity
and potential regulatory burden of this proposal;
- the existing structure of track access charges
in the UK has successfully encouraged competitive market-entry
and investment in efficient wagons with track-friendly bogies
and quieter braking systems — it is unclear what benefit
there would be in introducing further complexity in infrastructure
charging;
- additionally, and given the significantly lower
carbon emissions of rail compared with road freight transport,
it is not yet clear what the overall environmental impact of the
suggested measures might be were route noise emission ceilings
to have the effect of limiting rail freight traffic growth on
major routes; and
- the Government will need to examine in detail
any Commission proposal for further measures to stimulate energy
efficiency to ensure the UK is not disadvantaged.
3.14 In her second Explanatory Memorandum, on the
recasting Directive, document (b), the Minister first discusses
fundamental rights, saying that the draft Directive includes proposals
whereby operators of service facilities (such as maintenance depots)
which are owned by operators occupying a dominant position in
a railway service market for which the facility is used, must:
- operate the service facility
independently of the remainder of the undertaking;
- make the service facility available to competitors;
and
- advertise the service facility for rent or lease
if it is not used for two consecutive years.
She comments that:
- in principle, these provisions
may be seen as an interference with the free enjoyment of property
thereby potentially engaging Article 1, Protocol 1 of the European
Convention on Human Rights;
- the provisions are however designed to promote
competition in the general interest and therefore if proportionate
and necessary to that end would not be incompatible with the requirements
of Article1, Protocol 1; and
- on the other hand, there is uncertainty as yet
as to how these provisions would operate (for instance whether
operators of service facilities would be required to keep capacity
open) and hence it is not yet possible to reach a final view on
the likely effectiveness and proportionality of these measures.
3.15 Turning to the policy implications of the draft
Directive the Minister says that:
- the Government considers that
the First Railway Package has not achieved its declared objective
of market opening;
- it does not appear that the separation of infrastructure
management and train operations, as transposed by and practised
in a number of Member States, has achieved the desired intention
of ensuring transparent, equitable and non-discriminatory access
to rail infrastructure for non-incumbent, independent operators;
- the Government supports the Commission's overall
aim of clarifying and strengthening the regulatory framework for
rail market access;
- in particular, it endorses the need to ensure
adequately resourced and properly independent regulatory bodies
in order to facilitate market entry and competition as well as
to develop rail service markets, including those linked to the
provision of rail freight transport services;
- the Government believes that the Commission should
focus on ensuring that Member States implement existing legislation
correctly before it proposes new measures; and
- it does note, however, that the Commission is
pursuing infringement action against those Member States that
have not correctly implemented the First Railway Package.
3.16 The Minister continues that the Government is
still in the process of considering the detail and implications
of the draft Directive, but it has identified a number of areas
which are of potential concern to the UK:
- Article 13, conditions of access
to services — which includes provisions requiring legal,
organisational and decision-making independence of facility operators
from their owning companies, if these companies have a dominant
position in any rail transport market. The Government will need
to understand the scope of these proposals and their effect on
the existing market structure;
- Article 13, introduction of "use-it-or-lose-it"
provisions — these would give the regulator powers to require
part of a facility's capacity to be reserved for alternative operators
if it is unable to accommodate all the capacity requests which
arise and no viable alternative site is available. Such a decision
would appear to require some facilities to either keep capacity
spare or be prepared to displace existing customers; either of
these requirements could have the potential to deter third party
investment in these facilities;
- Article 14, cross border agreements — this
would give the Commission a role in examining agreements between
Member States to check their compliance with the recast Directive.
The Government will need to understand whether this has any implications
for the Channel Tunnel Rail Usage Contract, although its understanding
is that this will apply only to new agreements;
- Article 17, which sets out requirements under
which railway undertakings can only apply for licences if Member
States or nationals of Member States own in total more than 50%
of the undertaking and effectively control it. This would affect
on the ownership of some existing UK train and freight operating
companies and potentially could block some current proposals for
new operators;
- Article 31, principles of charging — this
includes provisions for noise-related track access charging which
would now become obligatory for rail if road-related measures
were introduced. The Government has concerns about the complexity
and potential regulatory burden of this proposal and the justification
for its mandatory application to noise;
- Article 32, exception to charging principles
— this provides detailed rules which would appear too rigid
and simplistic to cater for UK's complex rail industry and the
markets within it;
- Article 36, reservation charges — which
includes a proposal that a reservation charge shall be levied
if there is more than one applicant per path. This appears to
have a disproportionate effect on rail freight services which,
by their very nature, run only when there is a demand from the
customer;
- Article 55, regulatory body — in respect
of its effect on the scope of powers of the Office of Rail Regulation
and the consequential increase of regulatory burden on the rail
industry, as well as the implication for economic regulatory role
of the Inter-Governmental Committee for the Channel Tunnel;
- Annex III, services to be supplied — the
Government will need to understand the effects on current UK practices
covering a number of services including ticketing and information
systems, port facilities and relief/towing facilities; and
- Annex VIII, requirements for costs and charges
relating to railway infrastructure — these may be too detailed
and inflexible to be aligned with the current UK charging structure.
3.17 The Minister discusses the financial implications
of the proposal in the context of the Commission's impact assessment,
saying that:
- in terms of competition, the
Commission considers that implementation of the package of modifications
will have a slight impact on freight modal share, halting the
decline or leading to a slight increase in the market share of
rail freight, that the proposed modifications should be capable
of generating an up to 4% increase in the number of railway undertakings
and up to 3% more market share for non-incumbents, as well as
saving some fatalities in road freight transport and that operating
costs could be reduced by about 6%;
- two types of administrative cost have been taken
into account — one-off administrative costs, defined as
start up-cost or costs incurred when re-designing the way administrative
obligations are met or actions carried out, and recurrent administrative
costs, defined as annual costs;
- these costs primarily consist of new publication
requirements for Member States (charging rule framework and medium/long-term
development strategy), infrastructure managers (new information
in network statement), managers of terminals (access conditions)
and licensing bodies (license conditions);
- the Commission expects the proposal to generate
1,000 new jobs across the EU, the modal shift from road to rail
would result in a slight decrease of employment in road transport
and there would be general demand for more skilled personnel and
a higher demand for training centres;
- the Commission expects that implementation of
the modifications will provide benefits in reduced carbon dioxide
emissions and improved air quality, that increased rail traffic
may create more noise, but this would be off-set by proposed noise-abatement
measures, and that benefits due to a reduction of energy consumption
are expected to have maximum effect in the year of full implementation
and then decrease slightly because of improved energy efficiency
expected for lorries.
3.18 The Minister tells us that:
- the Government is obtaining
industry stakeholder views on the recast proposal to help inform
its policy stance and negotiating position;
- a formal public stakeholder consultation will
be launched as soon as possible;
- the Government is not yet in a position to comment
on the methodology or robustness of the Commission's impact assessment;
and
- it will produce its own full impact assessment
with a robust evaluation of options, costs, benefits and the wider
effects of the proposals for the UK once it has stakeholders'
initial views and better understands the implications of the proposal.
Conclusion
3.19 Both these documents are important steps
in efforts to achieve an integrated railway system for the EU.
Although we clear the Commission Communication, document (a),
we note the Government's caution about some of the suggestions
in the paper and that any proposals based on it will need careful
examination. However before considering the draft Directive, document
(b), further we should like to hear about:
- any resolution of whether
the rights of operators of service facilities are infringed under
the European Convention on Human Rights;
- progress on the several matters of concern
to which the Minister has drawn our attention;
- the outcome of the Government's consultations
on the proposal; and
- the results of its impact assessment.
Meanwhile this document remains under scrutiny.
|
