Earl Attlee
My Lords, I start by congratulating the committee, which was so ably chaired by my noble friend Lady O’Cathain. The Government welcome the sub-committee’s thorough report on the European rail market and the role of the Channel Tunnel and have provided a full response. As ever, I am on a strict timetable.
We believe that a truly open, fair and liberalised market would increase competition in international passenger services across the EU. We support the Commission’s overall aim of clarifying and strengthening the regulatory framework for rail access through the first railway package recast. In particular, we endorse the need to ensure that there are adequately resourced and properly independent regulatory bodies in order to facilitate market entry and competition.
The Government recognise that the Channel Tunnel is a unique piece of international transport infrastructure and that it is in the country’s interests that it remains in operation. By virtue of the 1986 treaty of Canterbury and the ensuing concession agreement, the Government are directly concerned with the Channel Tunnel.
The UK strongly supports the growth of cross-Channel rail services. The provision of international services and their service patterns is a commercial matter for operators. In order for a train to transit the Channel Tunnel, the operator needs to comply with the relevant European, national and Channel Tunnel-specific requirements.
My noble friend Lady O’Cathain and other noble Lords talked about the proposed Deutsche Bahn service. DB applied to the intergovernmental commission in October 2011 to amend its Part B safety certificate, which covers management of safety issues, to include operation of passenger services through the tunnel. Since the intergovernmental commission has been unable to reach a decision, the application has now been referred to the British and French Governments for consideration. That process is ongoing. Deutsche Bahn will also need to obtain an interoperability authorisation to place its new trains into service in the tunnel. Although IGC officials from the UK and France have been working positively with Deutsche Bahn and Siemens to help them prepare the necessary dossier, as yet no formal submission for authorisation of new rolling stock has been made to the IGC by either Deutsche Bahn or Siemens.
The noble Lord, Lord Brooke of Alverthorpe, and, I think, another noble Lord asked me about the purchase of SeaFrance Ferries. It is a matter for the competition authorities, either DG Competition at the EU or the Office of Fair Trading, to determine whether any change in market dominance raises competition issues. The noble Lord, Lord Brooke, also asked about the 2011 report of the IGC. I do not expect inspiration to arrive and therefore I will have to write to the noble Lord.
My noble friend Lady Scott of Needham Market talked about modal shift for passenger and freight. We recognise that modal shift from air and road to rail can generate important environmental and congestion benefits. However, rather than trying to force people away from car or air travel, we are working to support sustainable travel choices. A number of barriers can prevent behaviour change, including powerful ones such as habit.
Studies have indeed indicated that the Channel Tunnel has spare capacity to accommodate growth. Although there have been indications that the rail freight share of the cross-Channel market would be higher if rates were lower, pricing judgments are inevitably subjective and it is always difficult to make accurate volume and revenue forecasts. However, in partial answer to the question from my noble friend Lord Freeman, there is spare capacity for growth, as about 50% of capacity is being used at the moment.
The noble Lord, Lord Faulkner of Worcester, suggested that access charges for Eurotunnel are too high, and other noble Lords said as much. We have no clear evidence that Eurotunnel’s charges are inappropriate. However, the IGC is currently investigating the level and appropriateness of Eurotunnel’s charges, and its joint economic committee published a report on the first phase of its work in October 2011. Further work is under way but will take some time. Until those investigations are concluded, and on the basis of the evidence currently available, we would recommend caution in assessing whether the level of charges is appropriate.
In answer to another question from the noble Lord, Lord Faulkner of Worcester, the Government support long-distance high-speed rail. At present, services on HS1 and the Channel Tunnel are relatively inaccessible for those outside London and the south-east. By providing direct access to the wider European network for services from Manchester, Birmingham and other cities, a link between a national high-speed rail network and the current HS1 could address this. In January this year, the Government announced that phase 1 of the HS2 network will include a direct link to the continent via the HS1 line to the Channel Tunnel. The Government’s view is that the strategic case for a direct link between the proposed high-speed rail network and the HS1 line to the Channel Tunnel is strong.
My noble friend Lord Freeman asked about the Waterloo International terminal. I had been briefed on this but, sadly, some time ago. My noble friend will recall that the connection to HS1 was slow, and there are also technical issues regarding bringing the platforms into domestic service.
I should like to say a few words about the role of the Channel Tunnel Intergovernmental Commission and the IGC legal framework and governance. The governance structure for the Channel Tunnel has been sufficiently flexible to accommodate subsequent developments in European, UK and French law and regulation, and it is expected to continue to be so. The Channel Tunnel Intergovernmental Commission and the Channel Tunnel Safety Authority are currently seen as providing an effective structure for regulating the Channel Tunnel in line with the European framework. If a need is identified to improve the effectiveness of the IGC or to adjust the powers available to it as regulator, the Government will promote any necessary legislative changes.
The speed of IGC decision-making is conditioned in part by EU regulatory processes and requirements and by the processes and responses of the concessionaires and other stakeholders. The IGC process with regard to the authorisation of proposed new services through the tunnel cannot start until the relevant documents have been submitted.
I think that I will have to part company with my noble friend Lady O’Cathain and the rest of the committee at Canterbury. The Channel Tunnel is a binational infrastructure and therefore needs some form of binational governance. This is necessary regardless of which authorities have, in law, the regulatory functions. Even when the IGC is exercising legal powers in its own name, its decisions are, in practice, informed by discussions between the French and British national authorities. In this connection, we are working with our French colleagues to conclude as soon as possible transposition of the revised railway safety and recast railway interoperability directives for the Channel Tunnel. We see no need to renegotiate the treaty, and I suspect that the French have no appetite to do so either, as observed by my noble friend Lady O’Cathain. The noble Lord, Lord Davies of Oldham, referred to the treaty and to direct governance of the tunnel but I do not think I heard him say what the policy of Her Majesty’s Opposition is.
I turn to the tunnel-specific safety rules for passengers and freight. The IGC has made significant progress in reviewing its rules to check that all the safety requirements currently in place continue to be justifiable on safety grounds and to remove those which are not. The IGC will continue to hold this view unless the evidence demonstrates otherwise.
The tunnel authorities and Eurotunnel are working together to address the consequences for the tunnel’s rules of the opening of the European rail market. This includes a programme of work to address the European Rail Agency technical opinion, which has already led to a number of requirements being removed. The UK Government accept the principle that the IGC must justify, by robust risk analysis, any requirements that are additional to the European harmonised technical specifications for interoperability.
The safety concerns that underpin the tunnel’s safety requirements reflect the difficulties of getting firefighters in and other people out of a 54-kilometre undersea tunnel in the event of a fire. My noble friend Lady O’Cathain asked when the work on the TSIs will be completed and whether the TSI requirements will be rescinded. The Safety in Railway Tunnels TSI is expected to be revised in mid-2013. Some specific requirements in the Channel Tunnel rules have been removed—for example, the 30-minute running time for freight locomotives. Other remaining tunnel rules are expected to finish in September 2012.
I turn to economic regulation of the Channel Tunnel. The UK considers that the Channel Tunnel’s regulator’s independence from any railway undertaking is properly preserved as regards the UK. No one in the UK IGC delegation or working at the Office of Rail Regulation in support of the IGC has any responsibility for Eurostar. Within the Department for Transport, policy responsibility for Eurostar is vested in a separate command that has no locus in or responsibility for the IGC.
My noble friend Lady O’Cathain, the noble Lord, Lord Davies, and many other noble Lords talked about border and immigration controls. Rail liberalisation presents a number of border control challenges which the Home Office and the border force are seeking to resolve with colleagues from across government, the police, rail operators and the Governments of other European countries. It is occurring against a background of rapid changes in border control technology, which will help to meet some of those challenges. But these challenges will only become more significant with the increase in international services. That is recognised in respect of HS2.
Lord Berkeley
Will the noble Lord explain what border controls are planned for HS2? That seems a bit odd as I thought it was within the UK.
Earl Attlee
My Lords, I think the hope is that passengers will get on HS2 on an international journey further up the country, maybe from Birmingham.
The noble Lord, Lord Faulkner, asked about Schengen. The position of the UK outside Schengen means that exit checks also need to be completed for all passengers leaving the zone prior to immigration arrival controls in the UK. The noble Lord, Lord Berkeley, raised the UK’s possible infraction for non-compliance with the first railway package in respect of the Channel Tunnel. I am unable to discuss the infraction procedures with respect to the first railway package and the Channel Tunnel but we consider that the railway usage contract does not breach the requirements of directive 2001/14—the first railway package—for the duration of a framework contract, and complies with Articles 17.5 and 17.5a in that it relates to a uniquely large-scale and long-term investment which is covered by contractual commitments. The noble Lord, Lord Haskel, also asked about the Commission taking further action against member states for non-compliance of the first railway package. The European Commission is currently taking infraction action against those member states that have not correctly implemented the first railway package.
I am grateful for your Lordships’ comments and, where appropriate, I will certainly draw them to the attention of my right honourable friend the Rail Minister, Theresa Villiers.