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EU Presidency: Transport Council

Lord Davies of Oldham: My right honourable friend the Secretary of State for Transport (Alistair Darling) has made the following Ministerial Statement.

I chaired the Transport Council in Brussels on 5 December. Stephen Ladyman was in the UK national seat.

The council received a progress report from the commissioner on the air transport negotiations between the EU and the US. The commissioner reported on the progress made in recent talks with the US. For the UK, Dr Ladyman stressed the need for a balanced package, in which changes on airline ownership and control are an essential element. Summing up, I welcomed progress so far, but noted that the council could not reach any decisions until the US has concluded its internal rule-making process.

The council discussed the Commission's request for a mandate to open air transport negotiations with China. While there was agreement about the growing importance of China as an aviation market, the view of the council was that it would be premature to give the Commission a mandate for community-level negotiations whilst the focus is on EU-US.

Following a progress report on the amending regulation on aviation security, I concluded that there were good prospects for early agreement.

The council reached political agreement on three proposals from the third rail package.

The rail market access directive was put to the council as amended in prior negotiation to take account of member states' concerns. The directive would open the market for international rail passenger transport in 2010, including allowing "cabotage"; that is, picking up and setting down passengers in the same member state, but enable member states to restrict competition where strictly necessary to protect public
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services. In reaching political agreement, the council accepted requests for member states to be allowed to impose a levy on all passenger train services on their territory to contribute to the financing of services provided under public service contracts, provided certain conditions are met; and for market opening to be delayed until 2012 in those member states in which more than half of the turnover is derived from international traffic.

Discussion of the market access directive has proceeded alongside consideration of relevant aspects of the proposal for a regulation on public service obligations (PSOs) in land-based public transport. This would provide an updated regulatory framework for award of public service contracts and the financial compensation provided to operators. A progress report was noted by the council on the PSO element. In addition, the council and Commission made a minutes statement stating that rail market opening can be achieved only step by step recognising public service needs, and committing the council to try to reach political agreement on the PSO proposal as soon as possible in 2006 on the basis, inter alia, that member states should continue to have the possibility to award directly without competition contracts for rail public services.

The council reached political agreement on the regulation on international rail passenger rights. This builds on the existing international convention (COTIF/CIV) and creates new rights for international rail passengers on access to tickets and information, a system of compensation and assistance for passengers in case of delay, and specific rights of access and assistance for passengers of reduced mobility.

There was political agreement on the directive on train crew licensing. It provides for a European licensing and certification system for train drivers, with the possibility for renewable derogations for "domestic" train drivers if it is demonstrated that application of the EC system would not be cost effective.

The council was unable to reach political agreement on the directive on driving licences. While there was recognition of the positive elements in the proposal, particularly regarding driving licence tourism and improved security, a significant number of member states still had problems with the proposal. In summing up, I reminded the council that there was support for the measure from several member states and that the council would need to return to it.

The Commissioner gave a progress report on the Galileo project. He reported that the first Galileo satellite would be launched later in December and that progress on the concession had been made. In summing up, I emphasised the importance of ensuring proper functioning of the public/private partnership to give value for money.

The council agreed conclusions on boosting employment prospects in the maritime sector. The conclusions aim at action by all stakeholders to sustain high quality maritime skills and assure continuation of
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European maritime know-how across the broader sector. This is an example of a non-regulatory approach to a timely issue.

The regulation on multi-annual funding for the European Maritime Safety Agency, for its work in responding to pollution caused by ships, and the regulation on information on the identity of air carriers were agreed without debate.

Four of the presentations under AOB referred to in my pre-council statement (Official Report, 1 December) were given as planned; namely, on road safety, the new maritime package, the air traffic management Single Sky project (SESAR) for which a PPP is proposed, and extension of the scope of the European Aviation Safety Agency.

There were a number of additional AOB points.

Ireland called for action on the current situation regarding ferry manning. The Commission recalled that there is no EC legislation on ferry manning at present, and that priority should go to achieving solutions through the social partner dialogue and to implementing higher standards based on the forthcoming convention text from the ILO.

The Slovenian Minister invited Ministers to a conference he is hosting in Ljubljana in January on "Motorways of the Sea".

France introduced a memorandum calling for a strengthening of oversight of aviation safety: nationally, within the Community and within the International Civil Aviation Organisation. The commissioner welcomed this approach.

France presented a memorandum to the council and expressed its concern about the impact of high fuel prices on road transport.

Future Aircraft Carrier

The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Drayson): My right honourable friend the Secretary of State for Defence (John Reid) has made the following Written Ministerial Statement.

The Ministry of Defence has today taken a major step forward in its plans to acquire two new Future Aircraft Carriers (CVF) for the Royal Navy. These carriers will provide mobile, flexible, independent bases from which to deploy the Joint Combat Aircraft (JCA) and other capabilities. They will provide a step change in capability—enabling us to deliver significant strategic effect and influence around the world at the time and place of our choosing.

I am pleased to announce agreement on an innovative ship build strategy for these vessels, bringing together a number of shipyards in a type of partnering arrangement that will be central to the forthcoming defence industrial strategy.

Key to this ground-breaking approach will be the innovative Aircraft Carrier Alliance: a single integrated team formed from MoD and industry. I am pleased to announce that today also marks a major
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stage in the development of the alliance with the shipyards VT and Babcock now joining BAe Systems, KBR, Thales UK and the MoD as full members. To mark the commitment to the alliance approach, these five companies and the MoD have signed an alliance charter committing to this arrangement. The alliance has also agreed the best allocation of roles and responsibilities between them to achieve overall success for the project. In doing so all the alliance members will share in the risks and rewards of delivering this challenging project to time and cost.

Having completed detailed assessment work, we have now decided to commit to the demonstration phase, amounting to some £300 million of further work: an essential step before we commit to and contract for manufacture of these two ships. This is the first of a two-stage incremental approach to "Main Gate". The second stage of "Main Gate" approval will set the time, cost and performance envelope for the manufacture phase. Shifting the point at which we make the main investment decision has no effect on the in service date. We are undertaking work now that we had originally intended to undertake during the demonstration phase after full commitment to manufacture.

We will now refine the detail of the adaptable CVF Delta design for these new carriers, including the ship systems, ahead of rather than after the signature of manufacture contracts. By this innovative approach we will ensure the commitment of the maritime industry to supporting this vital project. This further approval also includes commitment to long lead materials, where this is necessary to maintain the momentum of the build programme.

In addition, we are now able to maintain momentum and give the industry a greater degree of planning stability. I can announce that subject to satisfactory contract and demonstration of value for money we have already allocated some 60 per cent of the carriers to be built in separate "super blocks" at BAe Systems yards at Govan and Barrow; and at VT in Portsmouth and Babcock in Rosyth, with final assembly of both carriers at Rosyth. The structure above the hangar deck will be open to competition and will allow an opportunity for the many shipyards and suppliers with the ability to undertake this work, but not currently involved, to compete and win work. These blocks will then be joined to the base structure at Rosyth. We will also aim to maximise the level of subcontract competition within the "super blocks". Early indications suggest that CVF associated work could sustain and create some 10,000 jobs in the UK across its design and manufacture period.

The expansion of the alliance partnership provides an important launch pad for further innovation on this project. We have agreed that we will jointly consider, subject to negotiation, how the build contract can be extended to encompass not only the carriers' initial support but also the support for the "Invincible" class carriers until their out of service dates. This approach will ensure coherency in maintaining continuity in our carrier capability, with the same companies
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responsible for ensuring the continuation in service of the "Invincible" carriers also managing the introduction into service of their replacements.

In parallel with this approach, we are continuing our discussions with France, with which we are jointly examining areas of mutual benefit and opportunities to deliver economies in our respective carrier programmes. For any co-operation to work, however, it must deliver cost savings and do so without delaying UK or French programmes; we look forward to receiving industry's proposals.

Taken together, therefore, our approach provides a key stepping stone towards the developing maritime industrial strategy which we intend to outline in our forthcoming defence industrial strategy. It is already clear that the CVF programme, as part of the wider carrier strike capability with the Joint Strike Fighter, will offer the enhanced power projection capability required by our Armed Forces in the future. This announcement reinforces our commitment to this flagship project for the Royal Navy and represents a significant step on the route to re-shaping our maritime industry and providing this vital expeditionary capability.

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