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Select Committee on European Communities Seventh Report


SEVENTH REPORT

18 February 1997


  By the Select Committee appointed to consider Community proposals, whether in draft or otherwise, to obtain all necessary information about them, and to make reports on those which, in the opinion of the Committee, raise important questions of policy or principle, and on other questions to which the Committee considers that the special attention of the House should be drawn.

ORDERED TO REPORT


COMMUNITY RAILWAY STRATEGY

9654/96 COM(96) 421 final European Commission White Paper, A Strategy for Revitalising the Community's Railways

PART 1  INTRODUCTION

  1.    The railways in Europe are an important mode of transport, but they carry only a small and declining proportion of traffic. Rail passenger traffic grew at around 1 per cent per year between 1970 and 1994 but, in relation to overall growth in passenger travel of around 3 per cent per year over the same period, this amounted to a decline in rail's share of the passenger market from 10.3 per cent to 6.2 per cent. The amount of freight carried by rail, measured in tonne-kilometres, fell by around 1 per cent per year between 1970 and 1994. In the context of a 2 per cent per year growth in the freight traffic market by all modes, however, rail's share declined from 31.7 per cent to 14.9 per cent.

  2.    According to the European Commission, which published a White Paper entitled A Strategy for Revitalising the Community's Railways in July 1996, the railways could and should play a much greater role in meeting the transport needs of the European Community. The main reasons it gives for this are that the road system is overstretched, and that road use has increasingly serious adverse environmental effects which are not fully reflected in the prices paid by road users. On present trends, road use and its costs in the widest sense are set to increase. Although Member States' rail systems are well-placed to alleviate these adverse effects by carrying more traffic, the Commission believes that they will not do so unless drastic action is taken to revitalise them. In addition to their role in taking traffic off the roads, the railways represent a major asset both in terms of capital and labour, and the Commission is concerned that this asset should be exploited to its full potential.

  3.    The Commission claims that railways have been "largely insulated from market forces", and so have not had the ability or incentives to respond sufficiently to customers' requirements, especially in competition with other transport modes. Most of the proposals in the White Paper are aimed at increasing the exposure of the railways to market forces so that they are able to compete in the market on equal terms with other transport modes. The White Paper argues that the relationships between the State and railway operators need to be redefined to give operators more managerial autonomy, and to establish new and transparent financial relationships whereby once the State has paid for all the obligations it imposes on the railways, the railways then act on a commercial basis. Finally, the Commission believes that the national railway systems of Member States should be more closely integrated, so that they can offer a better and more competitive service for international traffic, particularly freight.

  4.    The main proposals in the White Paper are as follows:

Section III-Finances

    --   Member States should relieve the railways of debts incurred in the past, so they have a sound financial structure for the future (paragraph 28)[1].

    --   Member States should pay full compensation for loss-making public services and exceptional social costs (paragraph 26).

    --   With the exception of this compensation and support for infrastructure investment, the railways should operate without financial transfers from the State (paragraph 26).

    --   Member States should retain general responsibility for promoting the development of railway infrastructure, which may be financed either publicly or privately (paragraph 31).

Section IV-Introducing market forces into rail

    --   Access rights for new operators to provide rail services should be extended from the present limited rights under the existing Directive 91/440/EEC[2] to cover all domestic and international freight traffic, and international passenger traffic (paragraph 36).

    --   On some domestic passenger services, where open access would be inappropriate because of the need for coordination of services and the preservation of "network benefits", there should be a system of Community-wide tendering for exclusive rights to operate such services (paragraphs 42-43)[3].

    --   Trans-European "rail freight freeways" should be developed to give priority to freight on specified international routes with attractive prices and reduced frontier formalities, and "one-stop-shops" established to handle demand (paragraphs 37-40).

    --   Infrastructure owners need adequate incentives to improve efficiency and reduce costs (paragraph 48).

    --   Clear principles for infrastructure charges are necessary, and the Commission will consider these further (paragraphs 49-50).

    --   To ensure that open access to the infrastructure is provided on fair terms to all operators, integrated railway companies should be required to create distinct "business units", with separate management and accounts, for infrastructure and train operation (paragraphs 53-54).

    --   A European Railway Agency might be created to deal with European-level issues, including allocation of infrastructure capacity, technical harmonisation and interoperability (paragraph 55).

Section V-Public service in rail transport

    --   Member States have the right to ensure that rail services are provided in the public interest, but should compensate railway operators for the financial burden involved (paragraph 58).

    --   Transparency and efficiency should be increased by the negotiation of public service contracts between Member States and operators and by the introduction of market forces into the operation of services (paragraphs 62-63).

Section VI-Integration of national systems

    --   Common European standards for railway equipment will continue to be developed to promote a single market in the provision of such equipment (paragraph 68-71).

    --   Progress made on the interoperability of high speed trains should be extended to conventional rail, with greater harmonisation of electrical systems, signalling, operational rules and train crew qualifications, and reduced delays at national frontiers (paragraphs 73-76)

    --   Work should continue on the selective development of infrastructure capacity to link together the national rail systems, especially for freight (paragraphs 77-80).

    --   Common rail safety appraisal techniques should be developed (paragraph 81).

    --   Railway noise should be reduced by both research and policy incentives (paragraphs 82-83).

    --   Community-level research should continue to promote innovation in the railway industry (paragraphs 84-87).

Section VII-Social aspects

    --   Railway workers can expect overall employment in the industry to continue to decline, but should recognise that their job security depends on making rail more competitive and that this will require a more productive and flexible workforce.

    --   The Commission will consider how the European Social Fund can be used to facilitate redeployment of railway workers (paragraphs 95-96).

  5.    The Commission has made similar proposals before, notably in its 1989 Communication, A New Structure for Community Railways (4478/90). That document was the subject of a 1990 report by this Committee (3rd Report, 1990-91, HL Paper 11). The Committee endorsed the Commission's general approach, though it did have some reservations, noting in particular that there were technical constraints on the degree to which open access could be provided for operators to run railway services (paragraph 104).

  6.    At the time of the Commission's earlier proposals, the only experience of the separation of rail infrastructure from rail operation was in Sweden[4]. Since then, a number of Member States, including the United Kingdom, have implemented changes to the structure of their railways. The proposals in the White Paper are broadly in line with most of the changes made, including those in Great Britain[5]. The United Kingdom is therefore able to offer some experience of many practical issues raised in the White Paper, such as the regulation of access to railway infrastructure, and some of the evidence received by the Committee reflects this fact.

  7.    Not all Member States have made changes, however, and the market performance of rail has deteriorated rather than improved in the last few years, in both passenger and freight markets. The Commission therefore considers that action to revitalise the Community's railways is much more urgent now than it was in 1989.

  8.    This report is based on an enquiry undertaken by Sub-Committee B (Energy, Industry and Transport), whose membership is listed in Appendix 1. Oral and written evidence was taken from the witnesses listed in Appendix 2 and the principal points raised in evidence are set out in Part 2 of the Report. The Committee's conclusions are given in Part 3 and summarised in Part 4. The Committee is grateful to all witnesses, particularly those who travelled from overseas or who, in the case of the Commissioner, Mr Kinnock, and his officials, kindly agreed to meet members of the Sub-Committee in Brussels. The Committee would like to thank those who assisted with the organisation of that visit, particularly Martin Jones and Ceinwen Jones of the United Kingdom Permanent Representation to the European Union (UKREP) and Saverio Solari of the European Parliament's Division for Relations with National Parliaments. Finally, the Committee wishes to record its appreciation of the assistance provided by the Specialist Adviser, Professor Andrew Evans, London Transport Professor of Transport Safety at the University of London's Centre for Transport Studies.

1   Paragraph references in this paragraph of the report are to the White Paper. Back

2   Council Directive of 29 July 1991 on the development of the Community's railways (91/440/EEC), OJ No. L 237, 24.8.91, p 25. Back

3   Network benefits are those customer services which require co-ordination across a railway network, such as the provision of train information and through ticketing. Back

4   During the enquiry that led to the Committee's 1990 report, members of Sub-Committee B visited Sweden, and an account of their visit was published as an appendix to the report. Banverket, the Swedish infrastructure authority, has now provided an update on the situation in that country as an annex to its written evidence (printed below, pp 100-4) Back

5   The restructuring and privatisation of the former British Rail, effected by the Railways Act 1993, applies in most respects only to Great Britain and not to the whole of the United Kingdom (see s.154). Back


 

© Parliamentary copyright 1997
Prepared 26 February 1997