Select Committee on European Communities Eleventh Report



Letter from Lord Tordoff, Chairman of the Committee, to Baroness Hayman, Parliamentary Under Secretary of State for Roads, Department of the Environment, Transport and the Regions

  The above proposal, which was sifted to Sub-Committee B for scrutiny, was considered at the Sub-Committee's meeting this morning. In addition to the previous Government's EM of 12 March, the Sub-Committee took account of the views of the Confederation of Passenger Transport UK (CPT) (together with a statement by the International Road Transport Union (IRU)), the Freight Transport Association (FTA), the National Union of Rail, Maritime and Transport Workers (RMT) and the Road Haulage Association (RHA) which had been submitted in response to the Sub-Committee's invitation.

  The witnesses broadly support the proposal, insofar as it aims to raise the threshold for entry to the profession. The FTA is the least enthusiastic, believing the draft Directive will do little to enhance the system already in force in the United Kingdom. The witnesses vary, however, on some of the points of detail. Their concerns can be briefly summarised as follows:

   -   The removal of the existing weight threshold in Article 2(1) of the existing Directive is opposed by the FTA and the RHA, the former describing it as impractical, undesirable and counter-productive". By diluting substantially the resources available for enforcement, the FTA believe this change would only benefit the cowboy fringe which both the Government and the industry wish to see stamped out".

   -   The proposed changes to Article 3(2)(a), which would disqualify an operator on grounds of loss of good repute after only one serious criminal offence or repeated minor offences, are accepted by the CPT, but both the IRU and FTA regard them as too harsh, preferring no change to the existing criteria.

   -   The CPT/IRU, the FTA and the RHA all welcome the proposed increases to the financial requirements set out in Article 3(3)(c), the FTA with some reservations about the complexity of the criteria proposed. Mr Watts, in paragraph 9 of his EM, was much more doubtful that this aspect of the proposal would strike an appropriate balance between maintaining ease of access to the industry and improving levels of service.

   -   The changes to Article 3(4)(1) relating to the examination of professional competence are broadly welcomed by the witnesses, though with some reservations. The IRU stresses the importance of management, marketing and accountancy skills, while the RHA emphasises understanding of the financial implications of entering the profession. The RMT would welcome the addition of clear and precise guidelines for Member States on the content of the examination questions.

   -   The proposed removal of the distinction between national and international operators in Article 3(4) is accepted in principle by the IRU, but opposed by the RHA and the FTA, which describes it as unrealistic. Mr Watts was also unconvinced, saying it seems unnecessary to impose the Directive on small, local transport operators.

   -   The proposed new sub-paragraphs in Article 6(1) imposing regular checks on operators' financial standing and good repute are approved by the RHA but the CPT and IRU regard them as too inflexible. The FTA opposes any change to the principle of continuous licensing, and regards the requirement to re-assess operators' financial standing between the second and third years as arbitrary and unnecessary.

  The Sub-Committee endorsed some of the concerns expressed by witnesses and in Mr Watts' EM. In particular, it questions the removal of the weight threshold and the consequent extension of the scope of the Directive. The Sub-Committee regards the Commission's own justification for this change (set out in paragraph D.1 of the document) as entirely inadequate in view of the very substantial cost implications to which Mr Watts referred. It believes however, that there is merit in lowering the threshold, perhaps to the three and a half tonne limit set by the goods vehicle operator licensing system in the United Kingdom.

  The Sub-Committee supports increases to the financial requirements in Article 3(3)(c) on the grounds that this will discourage cowboy" operators. It recognises that some genuine new entrants may also be affected by such change, and we would hope that some discretion could be exercised in such cases. Overall, however, the Sub-Committee believes that the proposed increases will contribute to the development of a more professional business approach in the industry. The Sub-Committee also believes that regular checks on the financial standing and good repute of operators are, perhaps regrettably, necessary to maintain high standards.

  The Sub-Committee strongly supports the Commission's objective of enhancing the examination to establish professional competence, and recognises the concerns expressed that the existing multiple choice examination is inadequate. It regards the Commission's proposal to be ill-considered, however. A detailed list of the subjects to be covered is never likely to secure universal agreement, while specifying a high pass mark when it is left to individual Member states to determine the nature and difficulty of the questions asked is surely meaningless.

  Where the Sub-Committee differs from the views expressed by most witnesses and by the previous Government is on the removal of the distinction between national and international operations. Since the point of a single market is to allow any operator who has satisfied the initial entry qualifications to operate freely throughout the Community, the Sub-Committee believes it necessary that all operators should be required to demonstrate a competence in international as well as national operations. It recognises that this would impose an unreasonable burden on small-scale local operators, but would argue that this objection would best be met by preserving an appropriate vehicle weight threshold in the Directive and so limiting its application to those firms which are equipped to undertake cross-border business.

  The Sub-Committee would therefore urge you to press for amendments to the proposal during negotiations to meet the points outlined in this letter. A scrutiny reserve will be maintained for the time being and I look forward to hearing from you in due course on the progress you make. You may also wish to comment on the extent to which your own negotiating position differs from that of the previous Government, as set out in Mr Watts' EM.

3 July 1997

Letter from Baroness Hayman, Parliamentary Under Secretary of State, Department of the Environment, Transport and the Regions, to Lord Tordoff, Chairman of the Committee

  Thank you for your letter of 3 July, in which you asked to be kept informed of the progress of negotiations on the draft Directive amending Directive 96/26/EC on the admission to the occupation of road haulage operator and road passenger transport operator and on the mutual recognition of qualifications.

  I enclose a Compliance Cost Assessment [not printed], as promised in the previous Explanatory Memorandum which was submitted by the former Department of Transport on 12 March.

  A further Supplementary EM will be submitted later in the year to advise you of developments in the Working Group meetings that are taking place this summer.

  The Transport Council expects to hold an initial debate on the proposal at its meeting in October, and to reach Common Position in December.

28 July 1997

Letter from Baroness Hayman, Parliamentary Under Secretary of State, Department of the Environment, Transport and the Regions, to Lord Tordoff, Chairman of the Committee

  When I wrote to you on 28 July enclosing a Compliance Cost assessment in respect of this proposal for amending Directive 96/26/EC on admission to the occupations of road haulage and road passenger transport operator I promised to advise you about progress with negotiations in the Working Group during the summer. I was particularly grateful to you for your letter of 3 July in which you recorded your Committee's concerns about the proposal as it existed at that stage.

  I am writing now to let you know that the negotiations have made good progress, to the extent that at the forthcoming Transport Council, on 9 October, the Presidency hopes to reach political agreement. Since our concerns in respect of the Commission's original proposal have largely been met - as I explain below - we intend, subject to the satisfactory resolution of one or two outstanding points, to vote in favour, notwithstanding that it has not been possible to complete the scrutiny procedure. The proposed text takes account of amendments contained in the opinion of the European Parliament.

  Our principal concern about the proposal was removal of the weight threshold for goods vehicles, currently 6 tonnes, below which an operator licence is not required. This would have brought all vehicles used for hire or reward into scope, with significant cost implications for users and particularly for small businesses. This was a point you picked up on in your letter. I am pleased to say that it has now been agreed that a weight threshold should apply. It has yet to be agreed what this should be. In the Presidency's compromise text it is given as 3.5 tonnes, the same limit as applies in the UK. Some Member States are unhappy about extending the scope of operator licensing below the present 6 tonnes level and that is the figure we may settle on, but, as now, it would be open to Member States to apply operator licensing to vehicles of a lower weight limit, so our arrangements would not be affected.

  The other issue with financial implications for operators is the proposal to raise the standard of the qualifying examination. I note that your Committee supported this proposal, which also has the support of the industry associations as a way of raising standards generally. We are satisfied that the relatively small additional cost to new operators will be justified and not burdensome. One change which we have succeeded in negotiating is retention of the option to apply a less all-encompassing examination for operators who do not work internationally.

  The proposal that the financial standing of operators should be checked every two and a half years, which we thought was unnecessary, has been dropped; this check will be made at five yearly intervals coinciding with the payment of operator licence fees. There has been some recent concern, because of the UK system of continuous licensing, that operators not meeting the new requirements might claim that they had a legitimate expectation that licences would continue indefinitely. However, exempting such operators might conversely lead to challenges from their competitors who had met the new requirements. Consequently we support the proposed increases in capital and reserves, as do the Traffic Commissioners and the industry. Most Member States would like to bring in the new limits quickly. But in negotiations we have agreed to two years from the date of implementation, which when added to the year allowed for domestic implementation will in practice give hauliers three years' notice.

  The new financial limits may place a small additional burden on businesses. However, the proposals must be seen in the context of continuing efforts to provide a level playing field within the Single Market. The raising of the thresholds generally will of course have the effect of improving professionalism and safety standards within the industry. While it may be the case that some companies, in particular small firms, could have difficulty meeting the new limits, the disadvantages are outweighed by the long term benefits to the industry as a whole.

  One point that we have conceded is the proposal that good repute would not be met if a single serious criminal offence has been committed. Our initial thought was that this was excessively rigid. The Traffic Commissioners, however, would welcome a tightening of the standards of good repute so as to raise the standards of the industry. Each Member State has its own definition of serious criminal offence. We shall need to consider whether our definition in this context needs amendment so that operators are not unnecessarily put out of business, or new operators prevented from setting up.

  Whilst it is unfortunate that it has not been possible to obtain scrutiny clearance it is felt that it would be sensible to secure the negotiated improvements in the proposed measure. I will, of course, write to you after the Council to let you know the outcome.

3 October 1997

Letter from Baroness Hayman, Parliamentary Under Secretary of State, Department of the Environment, Transport and the Regions, to Lord Tordoff, Chairman of the Committee

  I wrote the you on 3 October explaining that it was our intention to vote in favour of this proposal at the Transport Council on 9 October, subject to the satisfactory resolution of one or two outstanding points. In doing so I promised to write to you again, to let you know the outcome of the debate at the Council.

  I am pleased to say that the Council reached a unanimous common position on the proposal. It was agreed that the threshold for operator licensing in respect of goods vehicles should be lowered from 6 tonnes to 3\5, although Member States could, after consulting the Commission, exempt purely local traffic between 3\5 and 6 tonnes. Since the three and a half tonne limit already applies in the UK, this will not affect our system of goods operator licensing.

  The financial adequacy requirements were agreed at 9,000 ECU's for the first vehicle and 5,000 ECU's for every subsequent vehicle. It was agreed that these higher figures would apply two years after implementation so as to give existing operators time to adjust.

  We negotiated one change with respect to the examinations which prospective operators have to take. The Netherlands, Finland and Ireland pressed for the right to impose a supplementary exam on resident operators who obtain qualification in another Member State. This was agreed but in accordance with advice from the Council Legal Services was time limited, to a maximum of eight years, with an initial review after three.

  Finally, the good repute requirement is to be tightened as proposed, so that it will no longer be met if a single serious criminal offence is committed.

  We are satisfied that UK concerns, including those of your Committee, have been met in the agreed text, which will have the effect of raising standards in the industry. I will send you the consolidated common position text as soon as it is available.

21 October 1997

Letter from Lord Tordoff, Chairman of the Committee, to Baroness Hayman, Parliamentary Under Secretary of State Department of the Environment, Transport and the Regions

  Thank you for your letter of 21 October in which you set out the terms on which a common position was reached on this proposal at the Transport Council on 9 October.

  As you know, the proposal was considered by Sub-Committee B and I wrote to you on 3 July to express the Sub-Committee's views, based on written evidence it had taken from interested parties.

  I have passed your latest letter, together with that of 3 October, to the Sub-Committee for information and I expect they will be encouraged to note the extent to which its concerns were met by the common position text agreed. I am grateful to you for keeping us informed of developments.

29 October 1997

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