European Rail Market: EUC Report

Baroness O'Cathain Excerpts

Thursday 14th June 2012 Lords Chamber

Moved By

[Baroness O'Cathain]

That this House takes note of the Report of the European Union Committee on Tunnel Vision? Completing the European rail market (24th Report, Session 2010–12, HL Paper 229).

[Baroness O'Cathain]

My Lords, this report is the result of the work of the sub-committee on the internal market, infrastructure and employment, which I chair; work that was carried out engagingly, energetically and, dare I say, enthusiastically by all members of the committee. I pay tribute to them and thank them for their sterling work. The work programme and the final report could not have been completed in such a professional way without our clerks, John Turner and, from October 2011, his successor Mark Davies, together with our policy analyst, Michael Torrance. I thank them most sincerely on behalf of the whole committee.

The members of the committee recognise that the most important challenge facing this country, and indeed facing other European member states, is ensuring strong and sustainable growth. Ensuring a strong internal market with a well developed transport network to connect trading partners is critical to that growth. The European Commission’s 2011 report, Roadmap to a Single European Transport Area, identified rail as being central to that objective. This guided our choice of topic. Our committee also determined that as part of our inquiry we should have a consumer focus noting that, sadly, the consumer is left out of a great deal of the discussions on the European Union.

The Channel Tunnel opened in 1994 as a means to give fresh impetus to relations with France and mainland Europe but also as an important step in expanding the internal market, easing the movement of both people and goods. As an aside, let us never forget that the internal market is an enduring tribute to the Government of my noble friend Lady Thatcher following the publication of the White Paper on completion of the single market in June 1985. The committee felt that an examination of the challenges facing the operation of the Channel Tunnel and the obstacles to the fulfilment of its potential should act as the lens through which we focused our assessment.

Our first findings rocked us somewhat. Capacity utilisation for freight was around 10% and that for passenger services was around 50%. Not making too fine a point of it, this seems an abject failure to utilise an undoubted asset. Our overall conclusion was that there were many obstacles which should be addressed. Those with a suspicious mind could wonder whether some of the obstacles were based on the status quo position—the idea that “if it ain’t broke, don’t fix it”. Well, don’t fix it, it does work—but neither as efficiently nor as effectively as we think that it could. The continued fragmentation of the European rail market is a true barrier to trade. The remaining technical, administrative and legal obstacles must be addressed, and rapidly, as such action would surely encourage economic growth. The Government’s response agrees but there does not seem to be a huge sense of urgency.

I should like to explain briefly the nature of six of the obstacles. First, there is a need to establish strong and independent regulators. That does not mean more powers to Brussels. It simply calls for better use of existing powers. We did not recommend the creation of an EU-level economic regulator and the government response supports our view.

Secondly, we suggest that the actual governance of the Channel Tunnel should be reviewed. A figure on page 19 of the report shows the complicated structure. One of our witnesses, Professor Vickerman, was clear that the structure was,

“no longer fit for purpose”.

More than 25 years after the treaty of Canterbury, which established the model, now is an opportune time to examine it. The Government, though, are not convinced. They stated in their response that they see,

“no imperative to review the Treaty. Nor do we believe there is any appetite for renegotiation of the Treaty on the part of the French authorities”.

My third point is that there are almost certainly obstacles in the commercial operations of the tunnel. Obviously, the more operators running services through the tunnel, the greater the competition and the wider the choice both for freight operators and consumers. Although there is now more than one freight operator, Eurostar remains the sole provider of passenger-only services. Deutsche Bahn has applied to operate services, but I hear that there are further delays to the application process. That cannot be acceptable. We recommend that authorisation should be granted without undue delay. Many obstacles seem to have been put in the way, as detailed in the report, although I have to admit that I remain to be convinced of their validity based on the evidence that we received. I just hope that it is not one of those very old non-tariff barriers to trade that bedevilled my early career in both the motor and food industries.

The fourth obstacle we identified were the charges for use of the tunnel set by Eurotunnel, the company that won the concession to build and operate it. We appreciate that they comprise a significant part of Eurotunnel’s income, particularly as it is a private company that has to cover construction and running costs, but we concluded that a reduction in the medium term could serve as a powerful fillip for the development of passenger services, and a concomitant for growth. New entrants could be deterred from seeking authorisation to provide services if the access charges are not fair, predictable and more easily available.

For my fifth obstacle, we come to one of those words that does not exist in the very large dictionary that we have in the office upstairs—interoperability. Actually, it means what is says, I am told, and I suppose we will get used to it. The EU-wide technical standards for interoperability, known as TSIs, set out comprehensive safety standards, including for long tunnels. The Channel Tunnel, though, has distinct and unique standards. We were not convinced that the Channel Tunnel is a unique case. Two committee members, the noble Lord, Lord Bradshaw, who is sadly not in his place today and is unable to attend this debate, and the noble Lord, Lord Berkeley—together they are the most knowledgeable train experts in Parliament—paid their own expenses to go to Switzerland to investigate the justification. They were not persuaded and, when we heard their comments, neither were we. The Government's response was to state that:

“Detailed work is underway to address the remaining issues. Where this work demonstrates that specific requirements are no longer necessary, we anticipate that those requirements will be rescinded”.

When does my noble friend the Minister anticipate that the work will be completed and how long afterwards will the requirements be rescinded? This exercise is delaying the ability of other operators to provide additional services, thereby inhibiting competition; competition which would almost certainly benefit the consumer. Of course, safety is paramount, but it should not be used as a smokescreen.

The sixth of the identified obstacles that I choose to deal with in this debate relates to security. It is an obstacle to expansion. Of course, we are much more security conscious today than we were when the Channel Tunnel first opened for business and, sadly, concerns in this area are unlikely to decrease. All areas of our lives are affected but there is a widespread feeling that the measures and methods employed in this area seem to be somewhat inefficient. The tunnel uses what are called “juxtaposed border controls”—yet another strange phrase—involving the checking by both UK and French officials before authorisation for departure. With the hoped for extension and expansion of services, this process could be unsustainable. The Government must look again at their approach here and their commitment to reviewing these arrangements is very welcome.

I return to the need for customer focus. Consumer interests must be brought to the fore. Chapter 6 of the report details all the current “irritant factors”, including through-ticketing problems and opaque information on passenger rights. These, coupled with some language difficulties, can make the wished for wonderful experience of travelling to and from the mainland of Europe a potential nightmare. We are unanimous that the customer should feel valued and hope that our report will make a move in that direction a reality.

Having touched the surface of the scale of the challenge ahead, I hope I have convinced noble Lords that something should be done. The Channel Tunnel could, should, and indeed must be an important part of a thriving European rail network—one that is popular, efficient, easy to use and promotes growth. There is much to do and we need a real sense of urgency to do it, especially when the possibilities for the Channel Tunnel fall into the win-win category.

I thank in advance all who are taking part in this debate and I am looking forward very much to their contributions. In particular, I look forward to the response of my noble friend Lord Attlee, hoping that he gives the report strong support and shows a commitment to adopting an urgent approach to the recommendations.

--- Later in debate ---

[Baroness O'Cathain]

First, I thank everyone who took part in this debate. It has been a fantastic debate and the enthusiasm of every single Member, whether or not they are members of Sub-Committee B was palpable. I think that we achieved a lot in bringing the report to this state. However, as I said in my introductory remarks, we as a committee could never have done it without the help of the clerks and policy analysts. My noble friend Lord Freeman also paid tribute to their work. It was a great joy to have the noble Lord taking part in this debate because he was the previous chairman of Sub-Committee B and gently reminded the whole House of the debt we owe to the noble Lord, Lord Roper, for the gentle but firm way in which he guided us through paragraph after paragraph of all the reports that came before him. He is an amazingly hard worker and a very nice person to work with. I thank him.

Noble Lords spoke today in so much detail that I know I will learn even more about the Channel Tunnel by reading Hansard. I was particularly thankful for the history lessons we were given. The one from the noble Lord, Lord Faulkner, was terrific. I was about to say that he was not in his place, but he is in a superior place—on the Woolsack. He took us back to 50 years ago and made me feel that perhaps there is nothing negative about being a techie. We also had a history lesson from the noble Lord, Lord Walpole, and I doubt if anybody in the Chamber will now forget the date of his birthday. In various meetings of Sub-Committee B, the subject of Norwich and the trains of East Anglia came up, and he was absolutely right—it is a disgrace that we do not get on and use and improve the railway system.

As the noble Lord, Lord Davies of Oldham, said, one has only to go across to Europe to see how trains can work. We in this country have the enthusiasm to try to get the Channel Tunnel to work properly. It is not doing so at the moment. That is not a destructive critical point; it is being absolutely constructive, and our report was written on that basis. I look forward very much to the redraft of the first railway package. Instead of talking about the fourth, let us get on with it.

I also thank the noble Baroness, Lady Scott, who has only just joined our committee but who has taken on board the report that was written long before she joined. She will be a marvellous member, judging by her contribution today. I thank and welcome her.

I referred to the noble Lord, Lord Berkeley, in my speech. The fact that he and the noble Lord, Lord Bradshaw, went across to Switzerland and did all that work was amazing. It was a clear example of how to motivate the experience and expertise of the House, and how noble Lords become enthused about something to the benefit of the country and of the Government. When they read the committee’s report and the report of this debate in Hansard, they will realise that there is great support for what they are doing to try to get the railways to work properly so that we can go for growth while keeping the focus on the consumer.

I know that the Minister will write to noble Lords, and probably I shall have to as well to ask for additional information on some points, because this has been a fascinating debate. I will mention also the noble Lord, Lord Brooke, who has a great ability to keep us on the rails and heading in the right direction. He does that at every meeting. I thank him for it and am so glad that he is still on the committee.

The noble Lord, Lord Davies of Oldham, paid us a gracious compliment by referring to the telling contribution of the members of the committee, and to the significant points made by non-members. His one objection was to the title of the report. We debated that. Certain of us—I will not say who—thought “Light at the End of the Tunnel” would be better. Others said perhaps not. I am sure that the noble Lord, Lord Roper, would agree that there has been quite a lot of discussion about the titles of reports. Perhaps one does all the hard work and then comes to a point where one can introduce a bit of levity. However, I do not think that our title is too cheeky; I think that tunnel vision is something we have experienced and will have to address.

I thank the noble Lord, Lord Haskel, for the depth of his knowledge. He is so precise, which was obvious today in his contribution.

I am sure I have missed out someone; I have just been scribbling. No, I do not think I have.

I thank the Minister, who had a very difficult job to do. He knows where we are coming from and we know where he is coming from and that he supports us. We have got to try to get matters moving. It would be in order to have further discussions about the treaty of Canterbury but, in the mean time, I thank all noble Lords.

Motion agreed.