Letter from John Watts, MP, from the Minister for Railways
and Local Transport, Department of Transport, to Lord Geddes,
Chairman of Sub-Committee B
Following the Committee's Report on the European Commission
White Paper A Strategy for Revitalising the Community's Railways
and the conclusions and recommendations reached, I attach a Memorandum
setting out the Government's response.
We welcome the Committee's endorsement of the aims of the
White Paper and their recognition that there is scope to make
substantial improvements to the viability of the Community's railways
in the short as well as in the longer term. The Government is
committed to assisting the Commission in finding practical ways
to take positive action on its proposals.
27 March 1997
Government Response to Committee's Conclusions
100. We agree with the Commission and witnesses that rail
faces serious problems and that major change is needed if its
decline is to be halted. Such change, if it can be realised, may
take a generation and would require a concerted political will
to achieve. Although railway operators and Member States have
principal responsibility for effecting change, there is also
a good case for action at Community level.
Response: The Government agrees with the Committee
that major change is needed and is concerned to do all it can
to ensure that momentum on the Commission's initiative is not
lost. Political will is of paramount importance but it is inevitable
that at Community level some changes will be more difficult and
time-consuming to take forward than others. The UK's Presidency
of the EU during the first half of 1998 provides a timely opportunity
not only to encourage the Commission to bring forward specific
proposals as soon as possible, but to ensure that positive action
is taken when these are introduced. 101. Rail is an
important means of transport which imposes fewer social and environmental
costs than road, but its potential to reduce the volume of road
traffic is limited.
Response: Given the economic, safety and environmental
benefits that an efficient railway can bring, the Government
is keen to encourage reforms which will help to maximise the realisation
of those benefits. This should enable the railways to make a
valuable contribution to reducing dependency on the car and lorry.
102. We support the introduction of market forces into rail
but offer no opinion on the merits of privatisation. Member States
should be encouraged to negotiate public service contracts with
passenger rail operators.
Response: The Government welcomes the Committee's
support for the introduction of market forces in the rail sector.
Member States can achieve this in a number of ways, most importantly
by separating management and ownership of infrastructure from
operation of rail services. We agree that public service contracts
with operators are also important, as they make explicit the
level of service that passengers can expect. However common issues
such as level of debt and subsidy must be sorted out as it is
important to ensure that there is a level playing field for bidders.
103. We question the case for a uniform cut-off date
for historic debt. Measures to reform railway finances should
be applied on a case-by-case basis.
Response: The Government is not convinced that consideration
of debt on a case-by-case basis is the best way forward since
it could lead to protracted negotiations and difficulty in arriving
at solutions. Those Member States whose cases were taking the
longest to resolve, or who were among the last to be considered,
could benefit in the interim at the expense of those whose cases
could be dealt with quickly. By comparison, a uniform cut-off
date is a more attractive option but, in order to avoid distortion
of competition when debt is relieved, it will be necessary for
the Community to agree some basic rules; further work is therefore
required. The Government would argue that successful restructuring
does not depend on the relief of all past debt, but reduction
to a level which does not impede sound financial management.
104. We support the principle of open access for freight
and for international passenger traffic, but for domestic passenger
services dependent on subsidy we advocate a system of exclusive
concessions which should be open to Community-wide tender.
Response: We agree with the Committee's opinion that
we should support the principle of open access for freight and
international passenger services and therefore support the Commission
proposals for a Directive to amend Directive 91/440/EEC accordingly.
We also agree that moves towards greater open access should be
approached cautiously in the light of the need to maintain network
benefits, and of the continuing dependence of many services on
105. We are not convinced that it is necessary to divide
national railways into separate business units dealing with infrastructure
and train operators.
Response: The Government believes that clear separation
between infrastructure and operations is desirable to achieve
transparency in the railway industry and to aid the regulation
of those parts of the system that constitute the natural monopoly,
i.e., the network. For national railways, complete separation
is preferable to merely keeping separate accounts within a single
railway business. Totally separate companies encourage competition
and allow managements to focus more clearly on their objectives.
Other Member States which have also separated infrastructure
and operations into separate companies, or are in the process
of doing so, include Germany, France, Spain, Netherlands, Austria,
Portugal, Denmark, Sweden and Finland.
106. We welcome the Commission's proposal to establish
"rail freight freeways" as voluntary agreements among
infrastructure authorities in co-operation with train operators.
Response: The Government agrees and is participating
fully in discussions aimed at early introduction of rail freight
107. Member States should adopt track access charging arrangements
for international trains that are broadly compatible with each
Response: We agree with the Committee that track access
charges for international operators must be broadly compatible
but this is a very complex area and there should be no attempt
to lay down anything more than broad charging principles, the
most important of which is that charging regimes should be non-discriminatory
as between operators.
108. We attach great importance to the case for a Community
regulatory authority. Such an authority need not be a large bureaucracy,
but must have adequate powers.
Response: The Community is already a regulatory authority
on matters such as competition and state aids and has regulatory
powers in relation to Directive 91/440/EC which can be enforced
in the event of a Member State failing to observe its requirements.
These powers would be further enhanced nationally by new regulation
arising from the implementation of proposals in the White Paper.
The establishment of a further supervisory or regulatory body
with real decision making powers would require changes in the
Treaty. The Government believes that the first step is to identify
the tasks that need to be undertaken or regulated, consider how
best this can be achieved within existing powers and provisions
and only then, and if proved absolutely necessary, consider the
establishment of a Europe-wide body.
109. It is likely to be more cost-effective to pursue the
benefits of greater interoperability by developing compatibility
in systems and equipment than by aiming for total harmonisation.
Response: The Government warmly welcomes the Committee's
opinion on interoperability. Its view has been, and continues
to be, that technical and administrative measures to effect interoperability
should be kept to the minimum necessary to ensure the safe and
efficient running of through trains on the network and that the
potentially high costs do not outweigh its many benefits. The
UK is playing an active role in the preparation of technical
specifications for interoperability with a view to ensuring compatibility
rather than total harmonisation. In this way interoperability
will become a practical proposition, achievable in a realistic
timescale, to the benefit of rail service providers and customers
110. The Commission should promote common safety appraisal
techniques to achieve cost-effective safety, supervised by an
independent, Community-wide body.
Response: The Government agrees that common safety
appraisal techniques are a desirable objective, but only in those
areas where the Community has competence, for example in the field
of interoperability. However, even here technical and administrative
provision must be subject to cost/benefit and only laid down to
the extent necessary to achieve the overall goal. Responsibility
for applying safety appraisal techniques to specific areas, particularly
those which are not subject to interoperability requirements and
are therefore beyond the Community's competence, should remain
with the individual Member States.
111. The employment prospects of railway workers are more
likely to be protected by making rail more competitive. The Community's
Social Fund might be used to mitigate the impact of job losses.
Response: The Government agrees that employment prospects
are more likely to be enhanced by making rail more competitive.
The White Paper proposes ways in which to revitalise the Community's
railways and reverse their decline, which in turn should lead
to an expansion in services. Some job losses may be necessary
in the short term, as companies restructure in an effort to become
more efficient and cost-effective. But much will depend on the
pace of change and the way that Member States manage and provide
for their workforce; with careful management much reduction could
be achieved by natural wastage. In the UK for example, privatisation
legislation contains protection for employees in terms of pensions.
For railway employees, continuity of employment has been protected
by general employment legislation and the Community Acquired Rights
Directive. The Community's Social Fund should not be used to
benefit those Member States who have not provided for their employees,
at the expense of those who have.
Department of Transport