European Rail Market: EUC Report

Lord Haskel Excerpts

Thursday 14th June 2012 Lords Chamber

[Lord Haskel]

My Lords, serving on one of your Lordships’ committees is a wonderful way of getting to know your fellow Peers. The depth of knowledge and experience never ceases to amaze me. The noble Baroness, Lady O’Cathain, mentioned the noble Lord, Lord Bradshaw. He really is a walking database on railways. He and my noble friend Lord Berkeley used to be walking encyclopaedias, but of course they do not exist any more. It was a pleasure to serve with my noble friend and everyone else.

Our chair, the noble Baroness, Lady O’Cathain, has a special concern for the consumer, something that no doubt she learnt during her business career. It is that concern about the well-being of the railway traveller moving across European frontiers that is central to this report. An interest that we all share is to promote the environmental friendliness of rail travel. For my part, I find it more convenient and pleasant to travel by rail than by car or aeroplane.

We were very fortunate to have John Turner and Michael Torrance, and then Mark Davies, as our clerks and policy advisers. They were towers of strength and I thank them.

The conclusion of our report has been reflected in what a number of other noble Lords have said. A lot more can be done to make cross-border rail travel in Europe easier, quicker, cheaper and more convenient. What is required is a much greater sense of urgency and priority—in Whitehall as much as in Brussels. The framework is there, the talking goes on, but the action is slow. For instance, the principles are agreed but member states are not implementing the railway packages equally. For this to happen, the European Railway Agency needs to be a lot more effective. All this discriminates against new access to the rail infrastructure by creating technical and administrative barriers, which vary from nation state to nation state. This is what creates the barrier to international operations.

A recast of the first railway package designed to establish a single European railway area is being discussed. The UK National Parliament Office in Brussels reports that a fourth railway package has been drafted to make things even better, but it all depends on the agreement to be reached on the recast of the first railway package. In their response to our report, the Government are obviously as frustrated as we are that the Commission is not using its powers to enforce the first railway package. Have the European Commission and the European Parliament taken any further action to enforce this package? We were told that they were due to debate this.

The Independent Regulators Group seems to be working. In their response, the Government tell us that the group has a full programme of monitoring of work and developments. If I may say so, it at least is travelling in the right direction. The work is due to be completed this year. Can the Minister tell us how it is going?

It is right to ask why this is important. What is there to be gained? The answer lies in figure 3 on page 35 of our report: the core network map for 2030. According to this map, by then we will be connected to an impressive rail network throughout the European Union. If it is efficient, united and convenient, it will provide a service that will attract the consumer, help the single market and help cut fuel emissions.

As my noble friend Lord Faulkner explained, our connection to this network is through the Channel Tunnel, and this connection is crucial. The impression that we got from the witnesses was that the tunnel is not working well. First, our graph in figure 2 on page 28 shows that the number of passengers is levelling off. Incidentally, the volume of freight is decreasing, which is very worrying.

As other noble Lords have said, we were surprised to learn that there is unused capacity through the tunnel. My noble friend Lady O’Cathain gave us the numbers. The noble Lord, Lord Freeman, doubts this but the evidence we had from our witnesses was pretty definite: there could be a lot more passenger trains going direct to other cities in Europe apart from Paris and Brussels. Yes, a service to Germany is planned, but the start seems to be getting later and later. They are now talking about 2015.

Since our report was published, Eurostar announced that it was “eyeing”—whatever that means—adding up to 10 new routes from St Pancras to Holland, Germany, southern France and Switzerland. This is because with HS1 you can actually save time compared with flying when travelling from city centre to city centre. But it is talking about 2016 or even 2017, even though HS1 has now been operational for two years. This has come about through competition. It will only happen because Eurostar is going to lose its monopoly on high-speed services through the Channel Tunnel. Even so, I am sure that noble Lords will agree that this is disappointingly slow.

Are there any other reasons why this extra capacity is not in use already? The noble Baroness, Lady O’Cathain, gave us several answers. I agree with her that the impression that we were given is that access charges are high and unpredictable. My noble friend Lord Faulkner put the figure at £12,000 from some briefing that came from Eurostar, but I share with the noble Baroness, Lady Scott, the impression that they are unpredictable. As we say in our report, new entrants will be deterred if the access charges are not fair, predictable and readily available.

In their wonderfully bureaucratic response to the question of access charges, the Government recommend caution because of the complexity of making pricing judgments. All I can say is that other regulators make pricing judgments every day of the week, in water, electricity, gas and even within UK railway travel, so why not with the Channel Tunnel? This must be a major factor in the underutilisation of the tunnel and the lack of competition.

Other noble Lords have mentioned border controls. It is a question not only of immigration but of terrorism, both of which are important factors. Integral with this is the right to cabotage, which would help generate more demand and make international services profitable. Perhaps the Minister can say whether anything is happening about this.

Witnesses told us that interoperability is a major factor. The European Rail Agency really has to be more proactive in this area. The Government in their response agree, saying that the European Rail Agency’s work on interoperability is planned to conclude in summer 2012. Well, the calendar, if not the weather, tells us that it is now the summer. What is happening?

Ticketing is another barrier. You just cannot buy a through-ticket from one European railway station to another. That is understandable if it is from one minor station to another, but it applies also to tickets from one major terminus to another. You still have to buy different tickets for different parts of the journey and, of course, there is no consistency in price. Booking cross-border tickets on the internet is virtually impossible. We heard some wonderful evidence from the man from the website The Man in Seat Sixty-One, who explained the intricacies—his evidence also impressed the noble Baroness, Lady Scott—and he works full time advising people on how to book tickets across Europe, particularly on the internet. He makes a living out of it.

Passengers’ rights also need to be clarified, even though, as the Government point out in their response, passengers on international rail journeys within the EU are covered by specific conditions. However, it is still unclear what happens if you miss a connection because your train is late and the ticket price is different on the next train.

We have been assured that all these problems—and others which I have not mentioned but other noble Lords have—are being tackled by the intergovernmental committee which operates through the treaty of Canterbury, and that consumers’ concerns are paramount. However, I repeat that my impression, like that of other noble Lords, is that the whole thing must be speeded up. It is slow because there is little competition both through the Channel Tunnel and across international borders; it is slow because officials, by definition, are too distant from the consumer.

If the Government can find more ways of introducing competition, there will be a much greater sense of urgency initiated by the operating companies. Then we will all benefit from a fast and efficient passenger railway system across Europe that is both consumer-friendly and environmentally friendly. The potential is there; the framework is there; it just requires the effort.