European Rail Market: EUC Report

Lord Faulkner of Worcester Excerpts

Thursday 14th June 2012 Lords Chamber

[Lord Faulkner of Worcester]

My Lords, I congratulate the noble Baroness, Lady O’Cathain, on the excellent way in which she introduced this debate. I do not think that she said a word with which I disagreed. I also congratulate her and the other members of the sub-committee on producing a very impressive report.

As many of your Lordships know, I am a passionate supporter of the railways and I am keen always to see their role in the provision of national and international transport expand. It is clear that the sub-committee shares that view. Fifty years ago, the railways of Europe looked very different from how they look today, but common specifications set out by the International Union of Railways meant that rolling stock could cross the continent regardless of national boundaries, albeit with a change of locomotive at frontiers.

Some of us are old enough to remember the blue sleeping cars drawn up at Calais Maritime behind a steam locomotive ready to take British passengers from Calais to the south of France or to Venice. You could take a direct train from Paris to Istanbul or from Ostend to Moscow. Trains of fruit from Spain, motor scooters from Italy or manufactured goods from Germany and France crossed on train ferries, as did the night ferry sleeping car train each night from Paris and Brussels to Victoria. Then, in the 1970s, with the development of high-speed routes, new multiple-unit trains and the move to containers, this universal compatibility broke down. The market failed to deliver a common solution, national railways focused on internally set objectives and the European Commission was slow to react to those changes.

From being the odd one out in Europe in the 1960s, Britain is now at the heart of railway technical and operational development. Eurostar shows how trains can cross frontiers seamlessly, not just between Britain and France but on into Belgium as well, and soon further into Germany and the Netherlands. Far from changing the locomotive at the frontier, the train crews themselves work right through to Paris and Brussels. In this case, the different technical standards in each country have been overcome with the remarkable trains that can, at the turn of a selector in the driver’s cab, handle four different types of traction current and signalling systems.

Today’s debate is important because, as the noble Baroness said, there is scope to attract more people to use international rail services and because much more needs to be done to encourage rail freight through the tunnel. The sub-committee’s report makes an important contribution to moving this argument forward.

Cross-channel services are always going to be more complex to operate than domestic services because of the involvement of Eurotunnel, which has its own shuttle services to consider, and the fact that the only link to the rest of Europe requires the active co-operation of SNCF between Coquelles and the Belgian border.

On the freight side, international traffic via the Channel Tunnel seems not to be a priority for SNCF. In the past, this has been reflected in poor reliability and problems in arranging additional trains at short notice. Whatever technical or legal solutions are proposed, clearly a lot of work needs to be done to encourage a different approach by SNCF.

On freight, it is always going to be difficult to build rail market share when the cost of taking a container through the tunnel can be lower using a lorry on Eurotunnel’s shuttle compared with a freight train, and this reflects the usage charge. There needs to be a move towards charging avoidable costs for freight—as is the case on Network Rail at home—if market share is to have a chance to grow.

There is little in the way of fair competition between road and rail freight. European hauliers do not pay towards UK infrastructure costs, for example, nor do they pay fuel duty if they fill up before crossing to Folkestone. The choices are difficult: there needs to be either some form of subsidy or cross-subsidy for rail freight operators to use Eurotunnel’s infrastructure or a charge for other European hauliers to use the infrastructure that Britain currently provides at no cost to them.

The sub-committee is right to draw attention to the inherent contradictions surrounding Eurotunnel’s operation. This is Britain’s only fixed link to mainland Europe. It is a privately owned concession where the concessionaire also runs a shuttle service for freight and passengers, and, at the same time, it is the infrastructure authority for through trains, which themselves have to fit both Eurotunnel’s train paths and the available paths on Network Rail and its French equivalent.

Up to now, this process has been left to the market. The sub-committee’s report shows that this is not working and, as demand increases, action will be needed to optimise the use of the one pair of tracks that link the British and French rail networks. Our own British experience on the east coast main line is that the only way to optimise capacity on a constrained railway with multiple operators is by strong focused planning of the way in which that capacity is used. In the case of the east coast main line, this has been done by the Department for Transport as the specifier of franchised services on the route, but the needs of freight and two open-access passenger operators have been protected as well.

The question therefore is: can Eurotunnel perform that role or does this need action by the IGC or a specially convened group of train planners from Network Rail, Eurotunnel and the French infrastructure owners? I am advised by Eurostar that Eurotunnel declines to take part in any of the intra-European path allocation discussions and it has not been keen on changing passenger train paths, even when that would reduce journey times or allow more trains to use the tunnel at peak times.

Eurostar also makes the point that the current structure of access charges needs to be reviewed. The per-passenger toll is preventing new markets from being developed which would otherwise be able to cover the direct operational costs. There needs to be a lot more openness and transparency in the allocation and recovery of costs and there needs to be a proper policy for discounts.

As an example, if we compare a London to Paris journey, the total infrastructure charges—that is, terminal costs, handling fees and landing charges—for a flight are around £2,400; for a Eurostar train to Paris they are £21,500, of which the tunnel accounts for £12,500. Even taking account of the fact that a Eurostar train tends to carry two and a half times as many people as a plane, that is still a huge difference.

The sub-committee is right to draw attention to the spare capacity that exists in the Channel Tunnel, to which the noble Baroness referred, but it is not hard to see why that exists. It is my belief—I think that the Government share this view—that the future lies with longer-distance high-speed rail travel. I hope that the Minister will say that when he replies. The desirability of building a new high-speed railway obviously has not been part of the sub-committee’s remit for this inquiry, but I suggest that it is relevant when taking a rather longer view, particularly taking into account the Government’s decision to abandon the building of a third runway at Heathrow or to expand other capacity at other airports in the south-east—a policy that I support, as the Minister knows. The correct approach, in my view, is to manage demand for short-haul air travel and for us to follow other countries by building high-speed rail capacity. The central part of that approach will be to make proper use of the Channel Tunnel, which is why I think that the sub-committee is on the right lines.

Finally, I want to say something about another barrier to long-distance international rail travel that we have erected for ourselves in Britain. One weekend last month, I travelled by train from Budapest to Berlin and then back to Brussels, passing through five different countries. I was not subjected to a single passport or security check throughout the journey. When I got to Brussels and took the Eurostar to St Pancras, there were three passport examinations and my luggage was searched before I got on board. With great respect to the Government, it is not good enough for them to assert that these checks are necessary because Britain is not part of Schengen, and the sub-committee is right to draw attention to that. We are not searched when we board long-distance trains in Britain and I see no reason why the railway should be dragged down to the level of the airlines in this respect. I am disappointed that the Government’s response to the Select Committee report seems to be so inflexible on this issue.

I conclude as I began, by expressing my admiration to the sub-committee for producing a good report, which if implemented would be of real value to the railways, rail passengers and the country as a whole.