UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE
To be published as HC 751-i

House of COMMONS

Oral EVIDENCE

TAKEN BEFORE the

transport Committee

EU transport policy

Tuesday 1 February 2011

Theresa Villiers MP, Tim Figures and Ann Sta

Evidence heard in Public Questions 1 - 114

Click here to view the Written evidence from the Department for Transport (EU20)

USE OF THE TRANSCRIPT

Oral Evidence

Taken before the transport Committee

on Tuesday 1 February 2011

Members present:

Mrs Louise Ellman (Chair)

Steve Baker

Mr Tom Harris

Julie Hilling

Paul Maynard

Gavin Shuker

Julian Sturdy

________________

Examination of Witnesses

Witnesses: Rt Hon Theresa Villiers MP, Minister of State, Tim Figures, Acting Director of Transport Security and Contingencies, and Ann Sta, Head of Galileo Programme Division, Department for Transport, gave evidence.

Q1 Chair: Good morning, Minister, and welcome to the Transport Select Committee. Minister, would your officials perhaps like to identify themselves for our records?

Tim Figures: Tim Figures, Director of Transport Security and Contingencies, Department for Transport.

Ann Sta: I am Ann Sta. I am head of Galileo Programme Division in the Department for Transport.

Q2 Chair: Thank you very much. Did you want to make any initial statements?

Mrs Villiers: No, I had not planned to. I am happy to go straight to the questions, if that suits you.

Q3 Chair: That’s fine. Perhaps you could start by telling us where you think the United Kingdom has made the greatest contribution to European transport policy.

Mrs Villiers: I think we have provided some very good ideas in terms of road safety and raising standards in the rest of the European Union. I think the involvement we have had in the technological side of transport has been impressive, both in relation to vehicle standards and manufacturing and also in relation to satellite technology on the Galileo programme, to which I think you will be coming later. I think that our perennial role in the EU to push for market liberalisation has made a significant difference, and, of course, the programme to deliver the freedom of the skies has had a very direct impact on people’s opportunities in terms of facilitating the growth of the low-cost airline sector. That has had a direct impact on people’s daily lives, and the UK played quite a significant role in pushing forward that programme.

Q4 Chair: We have received evidence from UK Transport in Europe, who say that the UK just isn’t pulling its weight on European transport policy. Would you agree with that?

Mrs Villiers: There is always more that can be done. I have not received that criticism in relation to the UK. The nature of the institution is such that there will be some issues where one gets what one wants and some issues on which one has to compromise. But, as I said, on a number of single market issues, there has been some real progress, and I cite the liberalisation of air services as one important one.

Q5 Chair: Are there any other areas you could identify where you think the UK has been involved in making progress?

Mrs Villiers: The UK was probably quite instrumental on the moves to liberalise the market in rail services, although again, as I presume we will probably cover later, there is more progress to be made on that because, so far, we have the legislation but it isn’t always enforced as effectively as it should be.

Q6 Chair: Could you explain to me exactly how British industry representatives are engaged in developing our transport policy in relation to Europe? How are they brought into things?

Mrs Villiers: We have very extensive contacts with industry groups right across the different transport modes. For example, we have been in contact with the freight sector and ATOC on issues relating to emissions from nonroad mobile machinery and in terms of the initiatives on aviation security that the EU has been looking at recently. Again, we keep in very close touch with representatives of the airports and the aviation and air freight sector. On a daytoday basis the Department for Transport is speaking to industry representatives day in day out and we do certainly listen to their concerns when it comes to the positions that we take on European matters.

Q7 Gavin Shuker: You mentioned that there were some areas where you felt we were getting results but other areas where you were dissatisfied. When it comes to EU transport policy, where are we, as a Government, currently dissatisfied with the current position?

Mrs Villiers: In terms of opening up access for cross-border competition on rail services, I certainly think the current directive has not been properly enforced to deliver genuine opportunities, particularly for rail freight to compete across Europe. There is some anxiety in the rail freight sector that in theory there is a single market, but the reality is that incumbents find it quite difficult to access those markets. We would certainly strive for more progress there.

On aviation, I would not say we were dissatisfied, but I do think that there is considerable value in member states working together to coordinate our response to terror threats like the cargo bomb plot. Also, of course, key to delivering our carbon emissions targets and key to reducing emissions from transport is successful action at an international level. The EU can play a significant role in that and it has been working hard on that, but we all know that securing those global agreements has proved to be frustratingly difficult. So there is more that I think the EU together can do to try and push forward achieving that extremely difficult task.

Q8 Gavin Shuker: On those issues what progress has been made in the last nine months?

Mrs Villiers: There was a discussion on aviation security in December. The Commission put forward an action plan which had a lot to recommend it. This was broadly welcomed by the Council and it is a good basis for cooperation in this area. We have been very pleased with the progress that has been made on coordinating the response to the cargo bomb blot. In terms of the market for rail services, the Commission is pursuing infringement actions against a number of member states.

On a related issue, there is of course the controversy about the Eurostar decision on its new rolling stock. There, we have been pressing and working with colleagues in Germany and France, with a view to ensuring that Eurostar is indeed entitled and able to buy whatever rolling stock it wants.

On carbon emissions, rather than going through it, there was obviously some progress made at Copenhagen. I’m sorry, it’s not Copenhagen. It’s the most recent of the summits.

Gavin Shuker: In Mexico.

Mrs Villiers: Forgive me. Copenhagen was the one that didn’t work. There was some progress there in Mexico, and I think the EU involvement in coordinating the positions of the member states was very positive. Those would be the areas that I would pick out relating to the last nine months.

Q9 Gavin Shuker: Finally for now, are those three areas on which you shared the same concerns with the previous Government, or are any of the three areas that you mentioned-carbon reduction, aviation strategy and rail liberalisation-new agenda items?

Mrs Villiers: I am not sure I know the detail of the previous Government’s position on those, but I would expect, pragmatically, there to be a lot of common ground. Certainly, when I was an MEP, I found that there were a whole range of issues where my approach and that of my Conservative colleagues was very much in line with the approach taken by the then Government. There are a whole range of issues on which Governments of whatever hue tend to take the same approach in Europe, particularly in relation to market liberalisation. Obviously, issues on future treaties and sovereignty are very divisive and there are polarised opinions, but on the single market side, the sort of areas I have described, there is obviously a lot of common ground across the parties.

Q10 Chair: The priorities of the Hungarians and those of their President now on this don’t include economic growth, which is one of the UK’s priorities for transport policy. Is that creating a problem? The Hungarian Presidency has sustainability, safety and integration as its priorities, and that does not include economic growth, which is one of the UK’s three priorities.

Mrs Villiers: I don’t think it has caused any kind of significant problem so far. The Secretary of State made it clear that growth is a major priority for us in relation to transport policies as it is across the board. We are continuing to press forward with that agenda in relation to transport in the Hungarian policy, as we are in other areas of Government policy.

Q11 Paul Maynard: You mentioned earlier the importance of the changes that Eurostar is currently undergoing in securing new rolling stock and so on. Do you have any concerns regarding the transparency of the cost structures that Eurostar faces, in particular that it is more transparent in the UK than in France and Belgium on how the costs have been divided? Is it not essential that the Belgian Government in particular becomes more transparent over its cost structures to match with the UK, in order that we can have a better understanding of how Eurostar is being funded?

Mrs Villiers: I have to say that problems of that nature have not been drawn to my attention. I was not aware that there was this concern about differentials in the approach to transparency, but certainly we are content with the way transparency works in the UK. If other Governments wish to follow the lead and amend the approach they take to the cost structures of Eurostar, I think that would be positive, but as I am slightly unsighted on the issue I don’t have a strong view one way or the other.

Q12 Mr Harris: Following on from the question that the Chair asked about the different priorities of the UK and the Hungarian Presidency, there is another glaring mismatch in that one of the UK’s priorities is deficit reduction. There is deficit reduction and economic growth. What do you have to talk about, because the Hungarian priorities don’t seem to match up with ours at all?

Mrs Villiers: I think we have considerable common ground with the Hungarian Presidency. For example, as I have said, we think more progress needs to be made on market liberalisation, particularly in the rail sector. The Hungarian Presidency have focused on that. They also recognise the importance of sustainability in a low-carbon transport system, and that is something that is a priority for us as well.

Q13 Mr Harris: Sorry, Minister, we may be misinformed, but the papers we have been given don’t suggest that market liberalisation is one of the priorities of the Hungarian Presidency.

Mrs Villiers: But in terms of the specific work they are doing, they are working on rail liberalisation, which was what I had in mind.

Q14 Mr Harris: Do you think that your other partners in the EU share this Government’s prioritisation of deficit reduction? Is that something that you have in common both with the Presidency and with other members-not only deficit reduction but the rate of it?

Mrs Villiers: You will appreciate that Governments around Europe are addressing themselves to deficit reduction. The issues we face in this country are by no means unique. Countries like Ireland are having severe problems in relation to their public finances, which was one of the reasons why the Council of Ministers was very sceptical about the major increases in the EU budget that the European Parliament was initially calling for. So I think there is some support for the UK’s position that we need to get a grip on the EU budget and not allow it to escalate in the way that other institutions in the European Union would want to see it do.

Q15 Mr Harris: I have one last question. How do you respond to criticism of the DfT from representatives of the domestic transport industry when they say that they feel they are not consulted early enough in terms of EU policy, and by the time the DfT gets around to consulting them, the consensus on the direction of policy has already been established in Europe? Basically, UK partners are being brought in at a fairly late point, at which point their own contribution really doesn’t matter very much because it has already been decided. Does that have any validity? Would there be any process that could be changed to accommodate that criticism?

Mrs Villiers: I have to say they haven’t come to me with that criticism. If there were specific instances, I would be very keen to hear about them because of course we want to engage at an early stage. The work that the Government are doing across Departments with their Cabinet Committees on European affairs is very focused on earlier alerts so that we can get involved in decisions in Europe at an early stage. Of course, once we are aware of a decision then we can go out and consult on it, whether formally or informally.

Q16 Julian Sturdy: Minister, moving on to finance, you have touched on that slightly already, and I agree with your statement that we have to get a grip on the EU budget. But do you think within the EU budget we are getting our fair share, as a country, of EU transport funding?

Mrs Villiers: I think we don’t do badly. We have had a reasonable amount of the TENs funding, although, because we are geographically on the periphery of Europe, it is always going to be more difficult to make the case for funding in the UK than it is perhaps in the more central areas. On some of the funding areas like Marco Polo we have had a degree of funding. It doesn’t strike me as an area where there is a manifest unfairness, but of course we are always going to press hard to get as great a share as we can of these kinds of funding programmes.

Q17 Julian Sturdy: Do you think it is going to be a priority to push for more EU transport funding?

Mrs Villiers: Our priority is economic growth, so one facilitates that via high-quality transport infrastructure and market liberalisation. It is important that we take part in these programmes and apply for funding where we may potentially be eligible for it, but overall I think the higher priority has to be opening up a market and securing and using that to help secure growth and economic recovery in the UK and across the rest of the EU.

Q18 Steve Baker: Minister, just in terms of the transport funding policy, from what you have said it seems that the Government accept the principle that all European nations should pay into an EU fund so that the EU can then redistribute that transport funding around the EU nations. Is that right?

Mrs Villiers: It’s a fact of life of our EU membership. Whatever we may think of the individual merits of that, that is a pretty fundamental part of the way the EU treaty works. I know there is a debate about whether it should be like that, but that’s the way it is.

Q19 Steve Baker: I understand that, but is that actually compatible with liberalisation of transport markets?

Mrs Villiers: Yes, I think it is; yes, certainly. The idea of EU member states paying into a central pot which is paid out by the EU on different projects doesn’t stop or have a direct impact on efforts to complete the single market, including liberalising transport markets.

Q20 Steve Baker: We are going to accept both central planning and redistribution as well as market liberalisation.

Mrs Villiers: It is possible to do the two at the same time.

Steve Baker: Yes.

Q21 Julie Hilling: I want to carry on with this market liberalisation. What do you actually mean?

Mrs Villiers: It means giving British companies the opportunity to compete on a level playing field for customers across Europe, whether it is providing rail freight services or aviation services, those kinds of things. That is at the heart of what the single market is about, whether it is the transport sector or others.

Q22 Julie Hilling: What are the actual blockages now?

Mrs Villiers: I have already talked about some of the rail blockages. I am trying to think of a specific example in another context. The concerns over Eurostar are causing a degree of anxiety at the moment. Certainly in the past there has been concern that we have a single market on paper, but because directives are not properly implemented and enforced that has meant that, in reality, people have experienced barriers in trying to access European markets.

Q23 Julie Hilling: You have mentioned aviation a few times, so specifically in terms of aviation?

Mrs Villiers: To be honest, I can’t think of an example at the moment where there is a specific blockage which is preventing UK-based airlines from competing in the rest of Europe. There may well be examples but none springs to mind at the moment.

Q24 Julie Hilling: In terms of that liberalisation, you are saying the only actual thing is freight.

Mrs Villiers: No, I am not saying that. I am sure if you had the airline business here they might well have some examples of where they felt they were not able to compete on an even playing field. I am afraid I just don’t have to hand examples of that in the rest of Europe. The single market process is a continuing one. No matter how much one does to set it up, there is always more that one can do to make sure that people are genuinely fairly treated on an even basis.

Q25 Chair: I want to ask you about the TransEuropean Transport Network funding. Do you have any plans for any new projects that could be financed under that?

Mrs Villiers: We are taking part in the reform of the TENs programme that the Commission has under way. Part of that is to focus Commission funding on our core strategic corridors. Of course, one option is to try and secure Commission funding on a high-speed rail line, should it go ahead. That would be one of the areas where we think it may be possible to make a TEN-T application in the future.

Q26 Chair: What about looking at ports and airports as intercontinental hubs? Has any thought gone into that?

Mrs Villiers: There has been some success on that with Felixstowe. The rail freight route from there was successful, with Network Rail, in obtaining some TENs funding. No doubt we could build on that and seek to do the same sort of thing in the future. That has been one of our successful recent applications for TENs.

Q27 Chair: You don’t give the impression of being very proactive in trying to secure funding under that scheme. Is my impression right?

Mrs Villiers: We are certainly very supportive of the private sector in seeking to make those applications. As I say, there have been some successful applications. It is something that we take very seriously.

Q28 Paul Maynard: Would you consider Heathrow as being a potential candidate as an intercontinental hub that ought to be attracting TEN-T funding perhaps, to help modernise and improve its services yet further?

Mrs Villiers: Heathrow is a hugely important hub not just for the UK but the EU as a whole. Yes, potentially it might well like to apply for TEN-T funding. I don’t think it has any applications ongoing at the moment.

Q29 Paul Maynard: In all the briefings I have read so far, from indeed both the EU and the Department for Transport, there seems to be a lack of mention of coach terminals, yet, surely, if the transEuropean networks are about connecting the continent, one of the most common forms of travel is indeed coach travel that spans the continent. Yet a company like Eurolines, for example, has very grave concerns that the market is not operating to ensure a level playing field, particularly with access to terminals. Do you think the Department should be being more proactively perhaps?

Mrs Villiers: I can certainly look further into coach terminal issues. You are right; it is an important form of transEuropean travel. I would be happy to look at that.

Q30 Gavin Shuker: How much TEN-T funding has the UK achieved in the last nine months?

Mrs Villiers: I believe I have that here somewhere, if you would bear with me one second. Apologies, I may have to write to you with that information. I do not think I have the information here. Since 1996, 100 projects have received funding of over €600 million, which includes €226 million for the HS1 Channel Tunnel rail link during the last EU financial perspective. I don’t have the full figures but I can certainly send you full details. I am helpfully being passed some more information. In 2010, four UK proposals were successful in receiving more than €12 million in funding. Last year it was €12 million.

Q31 Gavin Shuker: I have just copied that down. Is it €226 million for High Speed 1 that was achieved?

Mrs Villiers: Yes.

Q32 Gavin Shuker: You mentioned High Speed 2. On the business plan for High Speed 2, I am not aware that there is any idea about TEN-T funding within those proposals. Is that something you have looked at in detail?

Mrs Villiers: No. The business plan doesn’t focus specifically on this issue but it is a possibility we are bearing in mind for the future, and we are doing some work on that. It wasn’t any kind of detailed part of putting the proposal for HS2 together; it is just one option that we think is well worth pursuing.

Q33 Gavin Shuker: The criteria for TEN-T funding, as I understand it, has not changed dramatically since the funding was achieved for High Speed 1. Would you consider that it would be important to apply for TEN-T funding for High Speed 2?

Mrs Villiers: We believe that there could be a good case for supporting High Speed 2 via TEN-T funding because it will be a very important link within the UK and we believe our strategic national corridors in the UK have significance in relation to travel across the European Union. We think, potentially, there is a good case. So, yes, I think it is something that we will be pursuing in the future.

Q34 Gavin Shuker: Do you think it is important to achieve TEN-T funding for High Speed 2 in the light of the fact that for High Speed 1 we achieved it before?

Mrs Villiers: It would certainly be great if we could achieve funding for High Speed 2. I don’t think there is a straight equivalence between the two, because of course from year to year budgets will vary, and the merits of competing projects will also vary. HS2 may be competing against a completely different set of alternatives to HS1.

Q35 Gavin Shuker: Finally on High Speed 2 in relation to TEN-T funding, how would that affect the running patterns or services that run on High Speed 2-for example, through trains into Europe as one possibility? Would achieving that funding have a knockon effect on how the business would be run-the service pattern?

Mrs Villiers: I don’t believe it would. I am not sure I am that sufficiently focused on the detail, but as far as I know it would not affect the running patterns of projected services on HS2.

Q36 Chair: Minister, you do give the impression that you are reluctant to seek European funding on the TEN-T programme.

Mrs Villiers: Not at all.

Q37 Chair: Is that a wrong impression?

Mrs Villiers: No, no.

Q38 Chair: Because each time you answer a question on this you don’t seem very enthusiastic. You are saying you think something might be possible. You don’t sound as if you are really going for it.

Mrs Villiers: I am sorry if I have given that impression. I think it is very important for the UK to be competing for its fair share of funding from the EU, whether it’s on TENs or whether it is on other projects. I think it is very important; it is something the DfT takes seriously. There are a whole range of other issues in relation to the EU and transport on which we also need to focus, but certainly it is important for projects which might attract TENs funding to put together an application, and we are very supportive of the projects going ahead to do that.

Q39 Steve Baker: To return to both of these questions: is it right to judge the Government on its ability to secure the return of funds from the European Union or are there some better criteria by which we could judge the Government’s performance?

Mrs Villiers: Your question gets at what I was trying to say to the Chairman. TENs funding and getting our fair share of the cake is important, but there are other things which are also important, if not more important, and that’s ensuring that the European Union helps us deliver growth. One of the ways that we can do that is by ensuring that any action at EU level doesn’t impose disproportionate costs or additional and unnecessary red tape on UK businesses. That kind of issue is crucially important. TENs funding may be important, other funding streams may be important, but I agree they are not the most important way to judge the success or otherwise of the UK’s relationship with Europe.

Q40 Steve Baker: I am just conscious that if it is the right principle that we pay money to the European Union and then seek to get it back in grants for our own policy objectives, why not pay money to the United Nations and then compete with Africa and South America for transport projects? Why not just move that central planning and redistribution to the global market, because I am sure we would all agree that Africa, East Asia and South America could do with better transport infrastructure? Why not redistribute on that scale?

Chair: I don’t know if you feel this is within your remit.

Mrs Villiers: Certainly I think the UK does contribute to aid programmes via the United Nations, so there is an element of that already happening. But you will appreciate the difference is that the 1972 European Communities Act sets up a structure by which European nations agree to pool certain areas of funding and redistribute it via the centre, as I said. There may be a debate about that, but the reality is that it is in the treaty so we need to operate and make sure the UK gets the best out of it.

Q41 Steve Baker: I have a tiny question. I should know, but in terms of an order of magnitude how much funding do we seek to get back from the EU? Is it hundreds of millions?

Mrs Villiers: We contribute, I think, roughly 14% of the EU budget, so we are net contributors to the EU.

Q42 Steve Baker: But how much would you seek to get back in transport? What are you looking for-£1 billion, £10 billion?

Mrs Villiers: I am not aware of any target that we seek to get back from the EU. Our priority is to make sure that we get value for money from the EU. We think it is very important that the EU budget is kept under control. That will be a priority when we are negotiating the next financial perspective.

Q43 Steve Baker: But we have accepted the principle of an unelected Commission carrying out redistribution in transport on a vast scale.

Mrs Villiers: A consequence of our EU membership is that we pay money to the EU and in certain circumstances the Commission will redistribute it. That is a part of EU membership.

Q44 Chair: But how proactive is the UK in relation to transport in developing European transport policies which benefit the UK in securing maximum funding to support what we want to do?

Mrs Villiers: As I say, we are supportive of applications for TENs funding. We are supportive of a range of initiatives. For example, we have been heavily involved in the negotiations on the Eurovignette principle, which we believe will be positive for the UK because it may help us, in the future, address the problem whereby UK hauliers, when they travel to the continent, in general have to pay to use the roads, whereas European hauliers in the UK do not make any contribution to the upkeep of our road network. The Eurovignette proposals, which are currently under discussion in Europe, may help us resolve that problem and assist us in delivering the lorry road user charging proposals to which we are committed.

Chair: I think we may be coming on to that a little later in looking at roads.

Q45 Mr Harris: Moving on to Galileo, can I offer you my sympathy, because I remember this was an issue that gave the last Government and the last DfT a great number of headaches? Have you had any discussions with your colleagues at the Ministry of Defence, because it seems to me-and I would appreciate your comments on this-that, if the same logic were applied to Galileo that has been applied to the Nimrods, then the Government would have decided not to throw good money after bad and would have cancelled Galileo? I am not saying that is necessarily the right way of doing it, but if one philosophy has been used in the MOD, why is it not being used at the DfT and in Europe?

Mrs Villiers: One of the main differences is that the decision on Nimrod was down to the UK Government. A decision on Galileo is subject to a qualified majority, and there is clearly a majority of member states who want to see Galileo continue. As far as I am aware, there wouldn’t be a conceivable way to get a qualified majority together to cancel Galileo even if it were decided that that was the best option, and I am not sure it is.

Q46 Mr Harris: Is that the realpolitik of this? Is that the reason we are going ahead? Are there any other benefits to continuing with it?

Mrs Villiers: I think there are some benefits. As a former Transport Minister, I am sure you will know just as much about them as I do. I know the European Union have come out with some very big figures in terms of the potential GDP benefits, but there is no doubt that extra satellite capacity will be useful for all sorts of reasons. The fact that the technology is an advance on the current GPS systems which are publicly available will give rise to some opportunities in terms of applications, not just for the sort of personal navigation we are all used to with GPS but applications in agriculture, to make it more efficient, and applications in energy, law enforcement and banking. There is a range of ways in which, at the end of the process, Galileo could deliver some services which are useful to the public and could help generate some economic growth. It is not a programme without value.

Q47 Mr Harris: At that stage, when all of these many benefits are being realised, will it have been worth the money?

Mrs Villiers: That is a completely different question. I am obviously concerned about the amount of money that has been spent on it already, as I am sure you were when you were a Minister. Our key priority is to ensure that the Commission stays within the budget that it has. We do not want to see the budget for Galileo increase. We believe that the Commission must look at how to de-scope the project so that they can deliver benefits within the limitations of the budget that they have already been given.

Q48 Mr Harris: I have one more question, Chair. I don’t want to dominate this, but I think the Minister and I are probably speaking from the same hymn sheet on this. Is it not the case that, even if the current budget is exceeded, by that stage the thinking will still be, "Well, we’ve spent so much money on it up until now that we have to continue going, regardless of how much the budget is actually exceeded by"? We are past the point of no return, are we not? No matter how much the budget is exceeded-and, frankly, there is every possibility that it will be-there will never be a point where anyone will say, "Let’s just cut this loose now," because we have spent so much money on it in the past. It is now an infinite blank cheque.

Mrs Villiers: I don’t think it has to be, because de-scoping could deliver an 18-satellite system connected up to GPS, which could deliver some really useful benefits within the limits of the budget that is already set. It is possible to deliver something that is usable within the budget; it just needs to be a project with reduced scope as compared to what was originally contemplated.

Q49 Mr Harris: But politically we are stuck with it, aren’t we? No politician anywhere in the EU is going to say, "Right, enough is enough. That’s it." It is guaranteed now, isn’t it, that it will continue to the end of the project irrespective of how much it costs?

Mrs Villiers: It depends what you mean by "the end of the project". I don’t think it is guaranteed that it will continue to the end of the project of the scope which was originally contemplated, because of the budget concerns. I think the Commission should rethink the scope of the project and reduce it so that it is deliverable within the budget that has already been agreed.

Q50 Mr Harris: Is that a proposal that you have given to the Commission?

Mrs Villiers: We have made that very clear to the Commission on a number of occasions and continue to do so.

Q51 Chair: Which companies are committed to using Galileo?

Mrs Villiers: I don’t believe that any companies have committed to using it as yet, because it is by no means clear as yet what the charging structures are going to be. There is a proposal in consideration in Brussels at the moment about the public regulated services, which would be primarily focused on the public sector and law enforcement and those kinds of things, and again the charges for that are not set. We don’t know as yet exactly who will be using this system, although there is some interest from the commercial sector in using it, as illustrated by the fact that they would be very keen to get information they need from the Commission which would enable companies to start manufacturing or designing devices that could use the Galileo signal.

Q52 Chair: But at the moment there is no one committed to using it?

Mrs Villiers: I will just check with Ann in case there are some. Ann, perhaps you would like to answer that.

Ann Sta: No company, as such, commits to a satellite system. What they are doing is building receivers that will be able to use Galileo, and they have been doing that for a while.

Q53 Chair: How many companies are doing that, and what would the uses be?

Ann Sta: I think there are only five chipset manufacturers making these little chips in Europe, and a number of those are, but I am not sure who or which ones because it is commercially confidential information.

Q54 Chair: Who would know?

Ann Sta: The companies themselves and the people who go around asking and then get the information. We know there are at least two. That is, I think, more than a third of the market.

Q55 Chair: While the cost of Galileo is going up, nobody really knows who is committed to using it. Is that correct?

Ann Sta: You don’t know at the moment what you are using in your mobile phone, do you? I would suspect that you are probably using GPS and possibly the augmentation system that is part of the Galileo system-EGNOS-because they are just in phones. Nobody knows. The customers don’t know. What the downstream manufacturers want to give you is a service, not, "We are using these satellites." Therefore, they are looking for what satellites will give them the best services that they can offer.

Q56 Chair: Yes, but I am trying to work out what the actual usage of this is likely to be. The costs are going up, we are committed to the project and I am trying to work out what its actual use is likely to be and I am getting a very fuzzy answer.

Mrs Villiers: I will come in here. Chair, you are absolutely right to ask this question. Frankly, this is one of the very major anxieties about Galileo. We have certainty in that it has cost a lot of money and it continues to be an expensive project. We have certainty that it will be an expensive system to run. We do not have certainty about exactly who will use it. I am advised that, once a system is up and running, there will be an appetite amongst UK industry to use it. I think we can expect that. But, no, Chair, I am afraid we don’t have certainty and I can understand why the Committee would be concerned about that. I am afraid that was the way the project was designed at the outset within the European Union.

We are certainly continuing to press the Commission for more information about how they would envisage services working and the charging structure, but of course the more information we have and the more information we can disclose, the more certainty we can get as to who would want to use this.

Chair: Ms Hilling, did you want to ask a general question, as I would like to move on to aviation?

Julie Hilling: Mine is attached to the end of the last section.

Chair: You ask that, and then I want to move on to aviation matters.

Q57 Julie Hilling: It was related to the EU financing and a question, from what you said, you probably can’t answer today, but perhaps you would write to us about it. Where do we sit with other European countries in terms of the amount of money that we are getting from the transport fund?

Mrs Villiers: Yes, I think it is probably better if I respond in writing to make that clear. Of course, it tends to be quite a complicated question because it impacts on the rebate we get as well, but I am happy to write to you with the details on that.

Q58 Chair: It is an important question though. We would like an answer on that. I would like to turn now to more detail on aviation. We have received some disturbing evidence from a pilot, and indeed from BALPA. The evidence from the pilot that we have received says that EASA’s draft legislation could increase maximum pilot duty by over 40% in one day and reduce minimum rest for pilots from 12 hours to 7.5 hours. He says that pilots will be flying more intensively than lorry drivers are working. If correct, this is a great concern to aviation safety standards, and currently UK aviation safety is at a very high level. Can you tell us what is happening in relation to the draft legislation from Europe on pilot times of work and rest times, what position the UK has taken, and what is happening on that?

Mrs Villiers: I would emphasise that no final decisions have been made on what changes will be made by EASA. They have issued a consultation document. In some ways, the regime that they are proposing is different from the current rules in the UK. The EASA approach is similar, though, to the approaches in a number of other European countries. We are taking part in the consultation by asking the CAA to do a proper evaluation of this. We believe that it is possible to make these new proposals work. There is an important scope in terms of the fatigue risk management system to assist in securing safety, but I would emphasise that the CAA is going to look at this issue carefully and we would of course insist that safe working practices are maintained. We believe that we are going to be taking part in the process fully up until the time when EASA makes a final decision. That will be by QMV. It will certainly be difficult to resolve these issues. They are always controversial, there is always anxiety on the part of the union, and there is always a difference of view between what airlines and the unions would like to see. Our job is to make sure that we end up with a regime which continues the same high standards of safety as we currently use. That might not necessarily mean retaining exactly the same regime as we do now. It might need to change in response to these proposals, but I have every confidence that the regime that is going to be ultimately approved as a result of this process will be a safe one.

Q59 Chair: We have been told that the Moebus report on safety has not been considered in these draft proposals. Is that correct?

Mrs Villiers: I am not familiar with that report, but I will certainly draw it to the attention of the CAA to ensure that they take it on board in looking at this issue.

Q60 Chair: The current position, if I can be clear, is that the CAA are looking at this.

Mrs Villiers: Yes, they are. They are the experts. They are the people with the real knowledge. We feel it is much better for them to be focusing on this rather than the DfT directly.

Q61 Chair: I would like to turn to security scanners. The Manchester Airport Group are very confident about the use of security scanners, and their scheme is currently a pilot one. Is the UK pushing for the type of security scanners that they are using to be used across Europe?

Mrs Villiers: We believe that member states should have the option of introducing security scanners as a primary method of screening. EU law doesn’t currently permit that, apart from in pilot schemes. We have been very impressed with the results of Manchester Airport’s use of scanners. The surveys that have been done in relation to their use have indicated that the public have been pretty supportive. They have only had a handful of refusals of scans-I think five-in the entire course of the pilot scheme they have been running. We think they could be a really useful addition to our means of keeping air passengers secure, and that is why we have been pressing the European Union to give member states the option of using scanners across Europe.

Q62 Chair: Where is that up to with the European Union? Where is that discussion up to?

Mrs Villiers: I have discussed it with the Commission, and the Secretary of State has raised it in the Council of Ministers. We hope that the Commission may be prepared to introduce a proposal for consideration in the European Parliament soon. We think the Commission has some sympathy with our position, so we are reasonably optimistic on this and we are going to continue to press for progress.

Q63 Chair: Are there any health risks in the use of body scanners? Again, we have had some representation from pilots, in particular, concerned at the levels of radiation they are exposed to in the course of their work and possibly being added to by body scanners. Is that a concern?

Mrs Villiers: The research that has been done-there has been quite a lot of research in the UK and elsewhere in Europe-is that the health risk is so small as to be unquantifiable. I am advised that the radiation that one experiences as a result of a scan is broadly equivalent to that which one would receive from two minutes’ flying time at altitude or for about an hour or so as a result of general background radiation that we all experience day to day from all sorts of sources. We are content that the research demonstrates that any health risk is so small as to be unquantifiable. It shouldn’t prevent our going ahead with using security scanners.

Q64 Gavin Shuker: On another area of aviation here, what’s the Government’s position on air traffic control liberalisation across Europe?

Mrs Villiers: That is quite an important area where the EU can add some value by pressing ahead with the Single European Sky project, which would set some performance targets for national aviation services and which would also have better contact and more integration between air traffic control services in different member states. I think we will end up with a more resilient system. It could help us add capacity. It will help reduce emissions and, very importantly for customer service, it will help deal with delays and make aviation services more efficient in Europe. We are already making some very good progress with our colleagues in Ireland in creating what is known as a UK and Irish functional airspace block, which is a much more integrated air traffic control system. Those functional aerospace blocks are due to be created across the European Union. We are further ahead than any other member states in actually delivering on that.

Q65 Gavin Shuker: Are you fully supportive, as a Government, of the Single European Sky?

Mrs Villiers: Yes.

Q66 Gavin Shuker: What efforts have you made to lobby on behalf of Single European Sky, to get that implemented?

Mrs Villiers: We have been focusing on delivering ourselves. As I say, we and the Irish have made more progress than any other Member State. I have been in contact with Mr Jarzembowski at the European Parliament, who is looking at this issue for the Commission. I know that my officials in the Department for Transport are in regular touch with the Commission about these issues. Recently we invited Michael O’Leary to take part in a debate on air traffic control issues and the Single European Sky, with a representative from the Commission, because you will appreciate that he has a very robust way to put the case for a better service for passengers and airlines from air traffic control in Europe. So there are a range of ways in which we are trying to push this agenda forward.

Q67 Gavin Shuker: Is it acceptable that flights have to be diverted around different countries within Europe and can’t fly directly?

Mrs Villiers: I am not quite sure I understand your question.

Gavin Shuker: I am characterising the current position whereby significant additional carbon and additional time is taken by planes because we fail to secure a direct flying agreement, the kind of thing that Single European Sky is hoping to tackle but doesn’t go far enough, many would say.

Mrs Villiers: I would certainly hope that the Single European Sky would start to address that issue. To be honest, I am not sure how much of a problem it is at the moment, but that is just the sort of problem which Single European Sky is designed to address. Another big concern is the fact that so many holidays are disrupted by industrial militancy amongst air traffic controllers in France and Italy. If we had a more resilient integrated system, I think there would be less disruption caused by those kinds of strikes because it would be easier to deal with them.

Q68 Gavin Shuker: How does the UK Government view the tension between greater pooled sovereignty, with greater working together amongst different countries to tackle air traffic control, versus the need to retain control over our own aerospace?

Mrs Villiers: The Single European Sky programme is already contained within, and the competence in this area is already envisaged by, current treaties. So one doesn’t need a treaty change or to cede additional sovereignty to make the Single European Sky operational. I certainly count myself as someone who is a sceptic about a number of aspects of the European project, but of all areas where cooperation with our European partners can really add value I think this is one of them. There are obvious ways in which air traffic control can work better if there is more cooperation and collaboration between member states than if we all do our own thing.

Q69 Steve Baker: Returning to scanners, would they be compulsory for passengers, and if so, who would be compelling them? Would it be the Government having a blanket requirement or would it be a contractual requirement to fly with a particular airline that a passenger should use them?

Mrs Villiers: In terms of the pilot at Manchester, it is no scan, no fly. We would like to see that continue. I am not quite sure whether that would be a legal requirement. I suspect we would envisage it being legal rather than just contractual, but maybe Tim can help me on that.

Tim Figures: Yes. It is currently a legal requirement that is placed on those airports where scanners are in force, so that if one is selected for scanning-because not everybody will be selected for scanning-they are required either to submit to the scanner or, if they are not willing to do that, then they are not able to fly.

Q70 Julie Hilling: On that point, I am somewhat confused, because my understanding in Manchester is that everybody walks through the scanners. That seems to be what is happening there. I am sorry, I am just a little bit confused.

Chair: Mr Figures, you are shaking your head. Would you like to explain?

Tim Figures: Perhaps I could explain; it might be helpful.

Chair: I think it is certain people, isn’t it? I have actually been to see them operating. Perhaps you could explain exactly how it works.

Tim Figures: Yes, and I am sure, for those of you who haven’t been, Manchester Airport would be delighted to host a visit so that you could see it in practice. In Manchester, a proportion of passengers-that is those who have passed through a metal detector and where the metal detector has alarmed-are then asked to proceed through to the scanner. A majority of passengers, where that is not the case, do not go through the scanner.

Q71 Chair: That is actually how it works. I have seen it operating. What concerns do you have that relaxing liquid restrictions, that is the carrying of liquids on aeroplanes, by April 2011 is too soon? The aviation industry is concerned that that is too soon.

Mrs Villiers: I am aware that the airports and airlines industry is concerned about whether the partial relaxation of liquids restrictions is feasible by the 29 April deadline. We believe that it is certainly possible for airports to purchase the scanning equipment they need. It is available, and we are working with them to try and ensure that they meet that deadline. I think it is important that we try and stick to this deadline, because of the impact on passengers that the liquid restrictions have. But we are listening to the concerns of airports and very much focusing on this issue, and we will be working with them to try and ensure that they meet the deadline.

Q72 Chair: Does that mean that you would only impose the deadline or let the deadline happen, because its provision runs out unless it is reaffirmed, with the agreement of the aviation industry?

Mrs Villiers: Sorry, could you possibly repeat the question, Chair?

Chair: Yes. Would you make sure that that deadline is not removed unless the aviation industry agrees?

Mrs Villiers: We want them to meet that deadline. It’s the deadline set by the European Union. We believe that it’s possible for the airports to meet it. We expect them to do that. We are working with them to do what we can to help them meet that. If that deadline were to be changed, it would be a matter for the EU to decide. We want to see that deadline met.

Q73 Chair: What about the costs of aviation security? There are calls from the aviation industry for Government support for those costs.

Mrs Villiers: I am aware that the aviation industry would like to have support in terms of the cost of aviation security, and there are also similar calls in the European Parliament. Our approach is that this is a cost of doing business and that the user should pay for the security costs.

Q74 Julian Sturdy: On that point, I can understand the principle of keeping the deadline in place, but what is the scenario if an airport fails to meet the deadline? You might get the majority to meet the deadline, but just say, for example, there is a scenario where one of them doesn’t. What is the position there? What happens at that point?

Mrs Villiers: We want them to meet the deadline. We think it is possible for them.

Q75 Julian Sturdy: I accept that, but there has to be a fallback position if one doesn’t. Obviously security is paramount. Is there a fallback position at that point?

Mrs Villiers: I don’t believe the airports have a fallback position. I think it is important they meet the deadline.

Q76 Chair: Can I return to one of the longstanding issues of this Committee and our predecessor Committee, which is consumer protection for air passengers? What plans does the Government have for addressing that problem?

Mrs Villiers: We hope to be making an announcement shortly on reform of the ATOL scheme, to modernise it so that it is better adapted to the realities of the modern holiday market. We are not quite in a position to make an announcement yet, but we hope to shortly. Certainly, as and when I do make the announcement, I will be writing to you, Chair, to set it out for you.

Q77 Chair: You can’t tell us any more about what that means? What does "modernise" mean?

Mrs Villiers: The concern is, for example, on socalled flight plus holidays, which in many ways look rather like a traditional package holiday, where a flight is sold with another element of the holiday, such as hotel accommodation. We are looking at that very closely to see how we can ensure that those holidays are brought into ATOL. That is one of the things we have been looking at closely and expect to make an announcement on shortly.

Q78 Chair: How soon is shortly?

Mrs Villiers: Certainly very soon. I can’t really be more specific than that. But, as I say, on the day that the announcement is made, I will certainly be writing to this Committee.

Q79 Chair: Thank you. I would now like to turn to rail issues. You argue that the Commission should focus on ensuring that member states implement existing legislation in respect of the first railway package before it goes on to new measures. What are the problems with the first railway package?

Mrs Villiers: The reality is that, in theory, as a freight or indeed a passenger operator, it is supposed to be possible to run train services on rail networks in France, Italy or wherever. But it has proved to be quite difficult, for example, in France, where I don’t think there are many other rail companies other than SNCF necessarily operating on French railways, whereas in this country we have a number of different companies operating on the same railways. Indeed, we are looking forward to Deutsche Bahn running new services in from Germany on HS1. That is not the case in all other European countries. Despite legislation to say that in theory the company that is running the tracks must allow competition from other operators to run trains over them, in reality that is quite difficult to do in some European countries.

Q80 Chair: How is this going to impinge on the McNulty review, which is going ahead at the moment, looking for better value in our rail service?

Mrs Villiers: Obviously, whatever reforms we pick up and take on board from the McNulty review, we believe that it is vitally important they comply with our obligations under the EU treaty to allow access for other operators from the rest of the European Union. We believe that there are a number of options in terms of a better alignment of incentives between the managers of track and train which are entirely consistent with our EU obligations. So we don’t see a conflict here.

Q81 Gavin Shuker: That’s a brilliant point to jump in. You say you don’t see a conflict between the conditions of the first railway package and the current position of this Government in terms of longer franchises and more focus from TOCs in terms of the stations they look after, but isn’t it true that in order for us to come into compliance with the first rail package we would end up seeing train companies outsourcing their facilities such as stations and rail depots? Could you say a few words on why those two things are consistent?

Mrs Villiers: I don’t believe there is anything in EU legislation which would stop train operators from investing in improving stations. That could be an important result of our rail franchise reform programme. Greater train operator involvement in stations could be productive in terms of it being useful to put the passengerfacing side of the industry in charge of stations, and, as I say, it could encourage investment. I don’t believe there is anything in the EU legislation that would outlaw that.

Q82 Gavin Shuker: Are you aware that the Association of Train Operating Companies are concerned about the Commission’s "unwieldy and costly" proposal for enforced legal separation of the train operating and station/depot functions-in other words, the service facilities?

Mrs Villiers: Certainly one takes on board the points raised by stakeholder groups. As the negotiations go forward on the current railway package, we would obviously be striving to ensure that it doesn’t impose any unnecessary burdens on the UK industry. As I have said, that is an important priority for us in terms of our relations with Europe generally. But, as I say, I don’t believe that the current rules would prevent train operators from investing in stations, and, if proposals come forward to bar train operators from investing in stations, that is something I would argue against. I think we need to retain the possibility to enable train operators to run stations and invest in them.

Q83 Gavin Shuker: Are you aware that the RMT have expressed concern that the recast of the railway package would only exacerbate the already fragmented state of the British rail industry, for example, by requiring the compulsory outsourcing of rail services? Do you have any representations from the RMT on this?

Mrs Villiers: So far as I am aware, I haven’t had any direct representations from the RMT on this, though if they chose to send me any I would certainly consider them. What is very important to appreciate is that we are at a pretty early stage with this second rail package. No one knows what, ultimately, the end result is going to be. With every debate on European legislation there is a lot of anxiety about potential problems that could be generated and we will be negotiating with a view to ensuring those potential problems are not manifested in the final resolution.

Q84 Gavin Shuker: Finally on this, is it your position that train operating companies should be able to operate rail services, service facilities and depots where there is more integration going on across the network, without requiring compulsory outsourcing of those?

Mrs Villiers: I am not aware of the compulsory outsourcing anxiety that you are talking about, but I certainly think, yes, train operators should be empowered to run depots and stations as they do at the moment.

Q85 Julie Hilling: Does this have a consequence for the whole notion of vertical integration as well?

Mrs Villiers: As I said to the Chair, in terms of the potential savings that we think we might get and improvements to the way the railways run, with getting better cooperation between the management of track and train, there are a whole spectrum of options which we can use which would be entirely consistent with our obligations under EU rail directives. Maintaining the access opportunities which are required by our obligations under the EU treaties is very important and must remain the case both before and after the McNulty reforms. What I am saying is that we can, I believe, make some significant reforms that could improve the way our railways operate and reduce costs, which would still be entirely consistent with those access requirements that we are obliged to retain under EU rules.

Q86 Julie Hilling: Including the proposals, then, that seem to be coming forward now?

Mrs Villiers: Yes. But, as I say, we don’t have the final McNulty reforms, but Sir Roy and his team are very much aware that, if they come out with proposals which are inconsistent with our obligations in terms of Europe, then they wouldn’t be feasible. They are very much working towards producing pragmatic solutions which will achieve our aims but achieve them within the framework to which we are subject by the EU.

Q87 Paul Maynard: As I am sure you know, Minister, the heritage railway and tramway sector in the UK is by far the largest in the EU. Over recent times it has had to seek derogation after derogation from EU legislation through the help of Ministers, DfT officials and sympathetic MEPs, very much on an ad hoc basis. It has made quite a strong case to me that it believes there should be a blanket derogation from EU legislation affecting heritage railways. Is that something that you believe the Government should be promoting via the Commission?

Mrs Villiers: I suppose I am slightly wary of the term "blanket" because obviously there are basic safety requirements that everyone has to comply with. But we will certainly continue to make the case strongly for a differentiated approach so that we look both at home and in Europe at the heritage railway sector in a proportionate way and recognise that the sort of requirements that are essential if you are running very fast trains up the West Coast Main Line, simply may not be applicable, necessary or appropriate for the North Yorkshire Moors Heritage Railway. That is our position and we will continue to pursue that, as I said, at a domestic and EU level.

Q88 Steve Baker: Turning to the Single European Railway Area, it seems to me that technically that requires harmonisation of track gauges right across Europe. Is high-speed rail and the high-speed rail network content to do that?

Mrs Villiers: I don’t think the Single European Railway Area would necessarily require further gauge harmonisation. Our decisions on HS2 and high-speed rail are not taken with a view to gauge harmonisation in Europe. I don’t see that the two issues are connected. Our decisions on high-speed rail are based on the factors we have discussed in this room-the economic benefits we believe it will deliver, particularly in relation to addressing the prosperity gap and the growth gap between north and south in this country.

Q89 Steve Baker: If I recall, you said Deutsche Bahn will run services on to High Speed 1.

Mrs Villiers: Yes.

Q90 Steve Baker: So, presumably, they would have a commercial wish to run high-speed services on to Birmingham and, say, link Frankfurt and Birmingham on the high-speed network. Would that not be a deal-

Mrs Villiers: That may well be something that they would want to do. That will be a commercial decision for them.

Q91 Steve Baker: That would create that Single European Rail Area, with gauges harmonised right the way across Europe and services running in a beautifully integrated way at high speed from one European country to another. Is that right?

Mrs Villiers: Obviously when one is talking about high-speed services, yes, there is compatibility between gauges, but that is a different issue from looking at consistency of gauge right across the European Union, which would obviously be a much bigger project.

Q92 Steve Baker: The first railway package, as I understand it, was intended to create that Single European Rail Area. Would you characterise it as a failure?

Mrs Villiers: It certainly hasn’t delivered because it hasn’t been properly enforced yet. So far as I am aware, it has generated some benefit but it has not delivered all of the benefits which were promised.

Q93 Steve Baker: Bearing in mind both that package and Galileo, would you think it is fair to say that European transport policy manufactures expensive white elephants?

Mrs Villiers: I think I have set out my position on Galileo. I am anxious about the amount of money that has been spent on it. I am very concerned that the Commission is asking for more money. I do think it is vitally important that we retain the current limits on the budget but instead the Commission de-scope the project so that it delivers benefits for the public across the EU without demanding further additions from the European taxpayer. So I would not characterise it in the way you have, but I do acknowledge that there are significant concerns about the way the project is working.

Q94 Chair: I would like to turn to roads now. We have had evidence from London Councils, who say that 2% of the traffic in London is undertaken by foreign registered vehicles but these account for 5% of the penalty charges, which cannot be enforced at the moment. Would the current discussions on crossborder proposals deal with that issue?

Mrs Villiers: I am afraid they wouldn’t. The current proposals on crossborder enforcement, should the UK decide to opt into them, would require other EU member states to produce evidence in relation to the keeper of the vehicle which had committed the offence in the UK. Our law only enables us to prosecute the driver of the vehicle. The crossborder enforcement directive, as proposed, would not give us the information that we need to prosecute the offenders about which London Councils are concerned.

Q95 Chair: What is the UK’s position on that directive? Are we trying to change it? Are we opposed to it? What is happening?

Mrs Villiers: The parliamentary scrutiny has just completed and Ministers are considering whether to opt into the directive, having taken on board the parliamentary scrutiny process. The terms of the directive are broadly agreed in Europe. We have signalled that we want to exercise our parliamentary scrutiny processes in order to decide whether to opt in or not, and my colleague Mike Penning will be making an announcement on that in due course, after he has had a chance to consider the scrutiny process which we have just been through in the last few weeks.

Q96 Julian Sturdy: Minister, I am not sure whether this is probably in your area, but we have had evidence given us to before about the cost of the process and the fact that the level of fines you would get back would not offset the cost of the process. I’ve not got my head round this. Is there anything you can explain on why the crossborder road safety enforcement is so expensive?

Mrs Villiers: The problem is linked to the concern that I just raised, in that the information we could get back on overseas offenders in this country would not enable us to prosecute, but were we to opt into the directive we would be obliged to supply the information about UK drivers to our overseas counterparts and that, in itself, would involve a considerable degree of cost to the Ministry of Justice. That would be one of the ways in which costs would be incurred.

Q97 Julian Sturdy: It is the cost to the Justice Department that is going to be the key thing here with the process?

Mrs Villiers: That is an issue which my colleague will take on board in deciding whether we should opt in or not.

Q98 Chair: Why wouldn’t it work the other way round and address the situation where there are problems with foreign drivers committing offences here?

Mrs Villiers: As I have said, the main concern with that would be that the directive doesn’t provide a way in which we can compel the keeper of the vehicle to disclose the driver at the time of the offence, so we wouldn’t be able to prosecute the overseas offenders, even in the UK. That would be the concern. We wouldn’t have the information that we would need for the enforcement of the penalties.

I suppose the other anxiety about whether it would have an effect as well is that the directive doesn’t cover mutual enforcement of penalty points and, as this Committee will be aware, the deterrent effect of accumulating points is much more considerable than a fine.

Q99 Chair: It doesn’t cover that?

Mrs Villiers: No.

Q100 Julian Sturdy: I would like to come back on this, because I am trying to grasp the complexities of the process. If you take the haulage industry, for example, so foreign hauliers coming over to the UK, if they committed an offence, what you are saying is we couldn’t prosecute the driver. It would have to be the haulage company itself. Is that correct?

Mrs Villiers: No. Our legal approach is that we can only prosecute the driver. The problem is the directive doesn’t give us information about the driver.

Q101 Julian Sturdy: I’m talking about the driver.

Mrs Villiers: It only gives us the information about the keeper.

Q102 Julian Sturdy: So, in essence, that is a problem. So the keeper would be the haulage company?

Mrs Villiers: To be honest, I’m not sufficiently up to speed on the way haulage companies organise themselves. It may work for some oneman operations. The driver and the keeper could be same, but as you say, for many companies the keeper may well be the company as opposed to the driver.

Q103 Julian Sturdy: There have been some very high-profile cases with foreign truck drivers coming over and being involved in quite serious accidents in the UK, but what you are saying is that that would give us some difficulty then within this regulation.

Mrs Villiers: My understanding is that the crossborder enforcement proposals wouldn’t solve that problem, though we are very much aware of it, which is one of the reasons why we take very seriously the task of trying to check the vehicle safety for overseas haulage operators.

Q104 Chair: I turn now to the Eurovignette directive. What is happening there? What is the UK’s position and what is happening with the dispute within the EU and how that should progress?

Mrs Villiers: My understanding is that there is agreement in the Council on this now. We have been careful to pursue the issues of removing any reference to hypothecation of revenues and we argued for higher daily charges. That wasn’t accepted, but I think we can still support the broad agreement that has been reached. We are also pleased that provisions in relation to the Commission interfering in minimal rates of vehicle excise duty were also removed. So there is some progress on the Eurovignette directive, but it has not concluded its parliamentary stages because it will need to be considered by the European Parliament. That is my understanding of where we are at the moment.

Q105 Paul Maynard: Do you have any concerns regarding the EU Commission’s intention to extend the Eurovignette into urban areas, because that would appear to run counter to some of our localism agenda, as it would deprive local authorities of the ability to impose their own congestion charges or to shape congestion charging according to their own local needs?

Mrs Villiers: My understanding with this proposal is that it is optional; it is not mandatory in any sense. I am not aware, therefore, of a conflict with decisions that local authorities might take on charging schemes. My understanding of the position is that it would still leave local authorities with the same choices as they have at the moment.

Q106 Paul Maynard: Would you be concerned if the EU Commission sought to intrude further upon local authorities’ abilities?

Mrs Villiers: Certainly the idea of the European Commission mandating some kind of charging scheme would not be acceptable. I would have very grave concerns about that, because apart from anything else we have made it clear that this Government won’t be introducing a national road user charging scheme. We do want to pursue lorry road user charging as a way to ensure that foreign hauliers pay their fair share towards the upkeep of our roads, but it must be a decision made in this country as to whether we introduce any types of charging schemes. The Eurovignette, I think, is designed to be facilitative, and if any moves were made to try and mandate any kind of charging scheme then obviously we would resist that.

Q107 Chair: What are the emerging plans for lorry road user charging?

Mrs Villiers: I probably can’t give you much more information than you will already be aware of. We are committed to doing it; we are looking at various options. We want it to be a simpler, less expensive scheme to run than the previous Government considered. I think the previous Government’s plans simply got too complicated and too expensive, which was one of the reasons why they were not eventually delivered. We are looking at options which will either be a daily charge or a distancebased charge. Certainly, I think the Eurovignette proposals might make it easier for us to deal with any EU issues. Even if the Eurovignette proposals don’t go through or don’t go through in their current form, we think it is possible to come up with a scheme which is consistent with EU law and will still achieve our objective of ensuring that foreign hauliers pay their fair share for the upkeep of the UK’s roads, but we will also produce a compensation package for UK haulage companies so that the overall effect of the charges would be broadly neutral in terms of the amount of tax they pay.

Q108 Steve Baker: If we were to resist the EU’s plans for the Eurovignette and we found that the plans included aspects that the Government just did not wish to accept, would there be any point resisting or would we be compelled to adopt them anyway?

Mrs Villiers: My understanding is that it is a qualified majority issue. Conceivably we could be outvoted, but my understanding is that there’s no proposal on the table to mandate any kind of charging scheme and, if there was, we would resist it.

Q109 Steve Baker: But it sounds like resistance is futile.

Mrs Villiers: Not necessarily. A lot of people’s anxiety about the Commission’s involvement in infrastructure charging is whether this would be used as a stalking horse to try and give the EU a stream of revenue to get them involved in a kind of taxation. That is something we would resist very strongly and that is one of the reasons why we have resisted any attempt to hypothecate these revenues, in case that was seen as a step on the way to hypothecating revenues to the European Commission. I can’t say anything more clearly than we are not going to accept something that would mandate road charging. We think that is a decision that should be made in this country.

Steve Baker: Super. It sounds like we can look forward to it in our reference.

Q110 Julie Hilling: How does cabotage fit into all of this?

Mrs Villiers: There are a lot of factors that we have to consider carefully on this. Yes, there are important benefits for liberalising the haulage trade, but also we need to take on board the concerns of our localised and domestic industry. In terms of the pace of liberalisation and enabling further involvement of EU-based haulage companies in domestic transactions, I think we need to take on it a pragmatic, stage-by-stage basis, which recognises the concerns of the UK haulage industry.

Q111 Julie Hilling: Can I push you a bit further on that, because it is a huge concern of the haulage industry that there are wagons that are able to come over that are much cheaper to fill up because of the price of our fuel and that they are at an advantage over British firms in all sorts of ways. It does seem to me that there is a real question whether the Government are going to be able to do anything about all of that and give our hauliers a better chance. I just want to push you to see if there is anything else that you have got in line that you are thinking about doing to assist our hauliers.

Mrs Villiers: As I said, one of the reasons why we want to introduce lorry road user charging is to try and even out the playing field to ensure that overseas haulage companies do contribute to the use of our roads in the way that UK haulage companies do in many other European countries. We also recognise that there are competition issues. The differential between the cost of fuel in the UK and other European countries does raise competition issues for UK haulage companies, and we will take that on board in terms of assessing proposals for liberalisation of the haulage market. That is one area where, as I say, where we need to proceed with caution, recognising and taking on board the concerns of UK haulage companies.

Q112 Julie Hilling: But you think you would be in support of that liberalisation?

Mrs Villiers: There are some benefits to ultimate liberalisation, but we need to proceed with caution because of the competitive imbalance and the competitive issues which are inevitably the case because of the differential levels of fuel duty.

Julie Hilling: I would urge you not to-

Mrs Villiers: As I say, we fully recognise the concerns of the UK haulage industry. That is why we take a different approach in this sector. It is very different from airlines or aviation. There are different issues in play, which is why we need to be much more cautious when it comes to liberalising the market-much more cautious.

Q113 Chair: When can we expect to have your proposals on lorry road user charging?

Mrs Villiers: Although we have a deadline in our business plan for implementation, I don’t have the date for the announcement of how the scheme will operate.

Q114 Chair: What is the deadline for implementation?

Mrs Villiers: If you will bear with me for one second, I will just see if I can find it. April 2014 is the proposed date of introducing the system, so obviously we will need to make the announcement in advance in order to do whatever consultation we need to do in relation to the proposals.

Chair: Thank you. Are there any further questions? Thank you very much for coming and answering our questions.

Click here to view the Written evidence from the Department for Transport (EU20)