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Lord Tomlinson: My Lords, does my noble friend agree that the noble Lord, Lord Pearson of Rannoch, is peddling his usual line of nonsensical proposals and that if we followed it we would be committed to competing in a single market from which we were excluded from making any of the rules? The rules would apply to us and we would have to sit outside and accept them, even if we still traded. At the same time, the noble Lord would inflict enormous damage on British agriculture which currently receives support from the European Union.

Lord Davies of Oldham: My Lords, I agree with my noble friend. I emphasise that the single market brings significant advantages to this economy. How else can we explain the significant investment by the Japanese motor industry, for example, if we were not part of the single market? When the Opposition produce their frequent rants about so-called red tape in the United Kingdom and from Brussels, perhaps they should bear in mind that the moment we withdraw from the EC and negotiate fresh terms, the amount of red tape in Customs alone would be enormous.

Lord Marsh: My Lords, I declare an interest as European adviser to a large Japanese company. Surely this is a time when we should stop the politicking about such a serious subject. If we lost 60 per cent of our trade, that would be total disaster. Can the Minister list the three major sectors about to go bankrupt?

Lord Davies of Oldham: My Lords, I cannot do that, but I can agree with the noble Lord that this is a serious debate. He will recognise that the essence of political debate in this country is about serious issues. We are not selling our people short when we engage in this debate with a degree of seriousness that the nation expects.

If at times that looks as though a government Minister might be prone to a little point scoring on the Opposition, that is merely part and parcel of the necessary debate on this serious issue. I have no doubt
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that it will feature prominently in the next general election and will certainly feature in the subsequent referendum.

Lord Newby: My Lords, does the Minister agree with the director-general of the CBI, who said earlier today that leaving the EU would be a disaster for British industry as it would deny it a voice at the table at which the regulatory framework, in which it has to operate in relation to 60 per cent of its exports, is determined? If he agrees with that, can he urge on his Cabinet colleagues rather greater effort and energy in making the case which he has made so eloquently this afternoon?

Lord Davies of Oldham: My Lords, I could not possibly suggest that my right honourable friends in the Cabinet could be more energetic in prosecuting the essential case before the British people. However, I agree very much with the noble Lord and the director-general of the CBI that it is clear that a substantial amount of British exports from our manufacturing industry is dependent on our participation in the single market. Should the country make the tragic mistake of following the suggestions of the noble Lord, Lord Pearson of Rannoch, we shall risk that being put in jeopardy.

Lord Forsyth of Drumlean: My Lords, does the Minister accept that governments must govern with consent and, given the results in the European elections, would not a little humility be in order? I share the Minister's view on the importance that he attaches to our continued membership of the Community. Can he therefore confirm that the Government will now abandon their plans to adopt the European constitution, given the clear voice expressed by the people? If we are to govern with consent, should we not react to the clear concern in the country at the continued integrationist stance in Europe when people wish to be in a Community that provides prosperity and free trade?

Lord Davies of Oldham: My Lords, the noble Lord is putting his own gloss on, and giving his own interpretation of, the events of last week. But I certainly agree that it ill behoves any of us not to be responsive to the votes expressed by the people. I emphasise to the noble Lord that, so far as concerns the proposed treaty, the Prime Minister has made it clear that, when a Labour government are re-elected at the next general election, the people will be consulted and will have the right to vote on these issues after they have been duly considered by the British Parliament.

Cross-Channel Rail Freight

Lord Berkeley asked Her Majesty's Government:

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Lord Davies of Oldham: My Lords, the Government's proposals for rail freight will be announced as part of the conclusions of the rail review. Current arrangements for cross-Channel freight services derive from the contract between Eurotunnel, British Railways Board and SNCF. The Government hope that the parties can agree a way for services to continue for the benefit of freight users.

With regard to the long term, we await the new Eurotunnel management's plans for the development of freight services through the tunnel. Until those are available, no definitive proposals can be put forward by other interests.

Lord Berkeley: My Lords, I am very grateful to my noble friend for that reply. I declare an interest as chairman of the Rail Freight Group. Is my noble friend aware that, as part of these negotiations, there is a good chance that all services will stop from next April or May unless someone finds about £25 million to bridge the gap in the serious contractual situation that he has outlined? Given the Government's duty under the Transport Act 2000 to promote rail freight, will he take that into account and ensure that there is no disruption in service?

Lord Davies of Oldham: My Lords, the present situation is serious but perhaps not quite as serious as the total suspension of freight through the tunnel envisaged by my noble friend. However, we are in a very difficult position. My noble friend will recognise that, in these circumstances, the Government's scope to play a role with state aid is very limited. But he will also know that we are about to announce our general proposals regarding rail services, including freight, and we shall seek to safeguard as far as possible, and, in fact, enhance, freight services through the tunnel.

Viscount Astor: My Lords, does the Minister remember that it was John Prescott, the Deputy Prime Minister, who created the Strategic Rail Authority, and Stephen Byers, the then Minister for Transport, who created Network Rail, but that the structure of the railways has just been called a "crazy bureaucracy" and an "absurd system" by Kim Howells, the current Minister for Transport? Does he agree with those statements and, if that is the case, how can anyone plan a proper rail service in the future?

Lord Davies of Oldham: My Lords, the development of those two concepts relating to rail services was derived from the fact that, following the previous government's privatisation, we found rail services in chaos. The noble Viscount will recognise that we are not satisfied with the position. That is why the rail review is currently being carried out, the results of which will be announced in June or July. We intend to identify a structure for the railway system which enhances its performance and enables it to recover from the years of underinvestment by the previous administration and the chaotic system that they left behind them.

Lord Bradshaw: My Lords, perhaps I may return to the Question. Freight services through the Channel
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Tunnel face a real crisis because of the need to conclude a new arrangement for the financing of Eurotunnel. If that has to be done by next year, we do not want to send out an uncertain message to freight forwarders. Can the Minister give some kind of assurance that there will be no increase in the amount of money which freight forwarders must pay for the use of Channel Tunnel freight services, whatever the outcome of the negotiations between the Government and the owners of Eurotunnel?

Lord Davies of Oldham: My Lords, the noble Lord is asking for an assurance from the Government which would involve a degree of subsidy, but that would cause real difficulty in the way in which provision for the Channel Tunnel is managed. I accept what the noble Lord says. This is a serious situation. There are two aspects to it: there is a short-term dimension, to which the noble Lord alluded; and there is the long-running issue of freight services through the tunnel. I assure the noble Lord that these are major issues which concern Ministers.

Lord Faulkner of Worcester: My Lords, does my noble friend agree that, while SNCF has many admirable qualities, a willingness and a determination to promote interoperability between the different railway systems of Europe is not terribly high on its list of priorities? When my noble friend's colleagues in government speak to their French counterparts, can they do their utmost to ensure that the French are prepared to move on the issue of interoperability?

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