Eurotunnel: Structure and Charges

Wednesday 7th May 2014 Lords Chamber

Question

15:29

Asked by

[Lord Berkeley]

To ask Her Majesty’s Government what action they plan to take to conclude the European Commission’s infraction proceedings in respect of Eurotunnel’s structure and charges.

[Lord Berkeley (Lab)]

My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In doing so, I declare an interest as chairman of the Rail Freight Group.

[The Minister of State, Department for Transport (Baroness Kramer) (LD)]

My Lords, I should like to take this opportunity to mark the recent 20th anniversary of services through the Channel Tunnel. The British and French Governments will move economic regulation of the tunnel from the Channel Tunnel Intergovernmental Commission to the Office of Rail Regulation and its French equivalent, and put in place a charging framework by March 2015. We are working with the French Government and anticipate that those commitments will be resolved by March next year.

[Lord Berkeley]

I thank the Minister for that Answer. First, I thank so many noble Lords who have campaigned for many years to get the charges for the Channel Tunnel down. It looks as though the figure for freight will come down by between 25% and 40% which is a great achievement. I congratulate the Commission, the two Governments and, of course, Eurotunnel for reaching this agreement. Will the Minister now turn her attention to France, where there is a big problem? We can get through the Channel Tunnel more quickly and cheaply, but reliability and the general obstruction from the French railways are putting a serious stop on further traffic. Will the Minister encourage the Commission to go for the liberalisation package that is currently before Parliament and the Council to try to ensure that France is not the blockage to more traffic that Eurotunnel used to be?

[Baroness Kramer]

My Lords, the Government are very committed to the single market. We have been strong supporters of the freight corridor strategies that will now extend from the Channel Tunnel through to London, as well as extending the reach across the continent. I take very much to heart the words expressed by the noble Lord, Lord Berkeley, and I will follow up on his proposal.

[Lord Bradshaw (LD)]

I am pleased to hear what the noble Lord opposite said about freight charges. Charges for passengers using the Channel Tunnel are so high that I ask my noble friend to consider whether Eurotunnel is abusing its monopoly position so that the market might be open to more providers and better services.

[Baroness Kramer]

As my noble friend Lord Bradshaw knows, part of the agreement that predated the infraction, which is the subject of this Question, is that the Channel Tunnel Intergovernmental Commission will be replaced by the Office of Rail Regulation for the UK side of the tunnel and by its equivalent, ARAF on the French side. Their powers will be enhanced and they will put in place a charging strategy. My noble friend will be aware, however, that when the tunnel was built, to achieve that financing, certain concessions and rights were given, which obviously predate the relevant European directives. We recognise that we must honour those contractual commitments, although they have changed somewhat over time, as has the EU. I do not want to give too strong a commitment to my noble friend Lord Bradshaw, but I can say that the issues he raises are being looked at seriously.

[Lord Davies of Oldham (Lab)]

My Lords, the Minister can bask in the congratulations to the Government and all those involved on the progress that has been made recently on the operation of the tunnel. Will she concede that progress has been due partially to the threat from the European Commission to take infraction proceedings against the British and French Governments unless there was improvement? In the areas of improvement that are scheduled, is she able to include the possibility in the near future of train services to Frankfurt operated by Deutsche Bahn?

[Baroness Kramer]

My Lords, I am aware that a number of train companies are now looking at potential services through the Channel Tunnel. We would obviously welcome that as it expands the range of choice for people in the UK who wish to use the train. It would obviously create another avenue for tourism into the UK. As we build HS2, which will extend high-speed lines in the UK, it will enhance the use of high-speed and rail travel to the continent as well. I understand that there are no significant barriers; it is a matter of finding appropriate commercial arrangements, which I would leave to the commercial parties involved.

[Lord Dobbs (Con)]

Is my noble friend aware that some 300,000 French citizens live in this country? Some estimates put it even higher, and the number is growing. Indeed, the Mayor of London, Boris Johnson, reckons that he is in charge of the sixth largest French city on the planet. Does my noble friend put the great and growing attractions of this country in French eyes down to cheap fares, or might it have more to do with the cautious but creative economic strategy being pursued so successfully by her right honourable friend the Chancellor of the Exchequer?

[Baroness Kramer]

I can see that this is a wide-ranging question. Perhaps I may just say that, as a Londoner and as a true Brit, I find living in this country to be exceedingly attractive. I am not at all surprised that it is highly attractive to the French, especially those with an entrepreneurial turn of mind.

[Lord Lea of Crondall (Lab)]

Is the Minister aware that the real moral of this story is that strong EU rules are needed to make the single market work in the interests of the customer?

[Baroness Kramer]

I very much agree that a single market can exist only when there is effective regulation. The UK would have said that the prior arrangements had the necessary stamina, but we are very welcoming of the new shape of economic regulation that will have an impact on the Channel Tunnel as we go forward.