Select Committee on European Communities Seventeenth Report


4.  PROPOSED COUNCIL DIRECTIVES ON THE DEVELOPMENT OF THE COMMUNITY'S RAILWAYS (11375/98)

Letter from Lord Tordoff, Chairman of the Committee, to the Rt Hon Dr John Reid MP, Minister of Transport, Department of the Environment, Transport and the Regions

  The above proposals were considered by Sub-Committee B at its meeting this morning.

  We understand that progress on the two proposed Directives, amending Directives 91/440 and 95/18, may be made at the forthcoming Transport Council on 30 November and we wish to state our support for the Government's position. Progress on the third proposal, which we understand will replace Directive 95/19, may take longer.

  We note that the second proposal, amending Directive 95/18, does not go as far as current United Kingdom legislation in allowing authorised applicants to apply for train paths. The United Kingdom system of path allocation is designed to encourage maximum competition and is generally welcomed. We would therefore like to know whether the Government is urging the Commission to take the opportunity, whilst revising Directives 91/440 and 95/18, to open up path allocation across the Community.

   The Committee intends to consider these proposals further. In the meantime the scrutiny reserve is maintained.

19 November 1998

Letter from the Rt Hon Dr John Reid MP, Minister of Transport, Department of the Environment, Transport and the Regions, to Lord Tordoff, Chairman of the Committee

  Thank you for your letter of 19 November.

  At 30 November Transport Council, the Presidency tabled questions addressing some of the principles underlying the package. In discussion, several Member States voiced their support for these principles, the UK drawing attention to the Treaty requirement for progressive abolition of barriers to freedom to provide services. France and others doubted the need for tasks to be allocated to independent bodies as proposed, and referred to recent pan-European rail strikes as highlighting the dangers of liberalisation. The Presidency concluded that COREPER should continue its examination of the three proposals.

  I can assure you that we shall continue to press the case for those other than train operators to be able to enter into access agreements with the infrastructure manager. The Commission is sympathetic to our aims. Whether there will be sufficient support for this relaxation among other Member States remains to be seen.

  I am grateful for your Committee's support of our position on the two smaller measures—the proposed amendments to Directives 95/18 and 91/440. We have reason to think that political agreement on those may prove possible early on during the forthcoming German Presidency. The debate on the proposed Directive replacing 95/19 seems likely to extend beyond the German Presidency because of the complexity of the issues it raises.

16 December 1998

Letter from Lord Tordoff, Chairman of the Committee, to the Rt Hon Dr John Reid MP, Minister of Transport, Department of the Environment, Transport and the Regions

  Thank you for your letter, dated 16 December 1998, in response to my letter dated 19 November 1998, on the above proposals which was considered by Sub-Committee B at its meeting on Thursday 4 February. You state in your letter that political agreement may be reached on the first two proposals early during the German Presidency and the Committee has agreed to lift the scrutiny reserve on them.

  On the third proposal, I asked in my previous letter whether the Government was urging the Commission to open up path allocation across the Community. Your reply of 16 December does not elaborate on this issue. We would, therefore, appreciate a further statement of the Government's position. Furthermore, your Explanatory Memorandum on these proposals, dated 27 October 1998, states that the Department was consulting more widely on the legislative package. We would also appreciate clarification on who is being consulted, on what particular issues and when you expect this further consultation to be completed.

  In the meantime, the third part of this proposal remains under scrutiny.

8 February 1999

Letter from the Rt Hon Dr John Reid MP, Minister for Transport, Department of the Environment, Transport and the Regions, to Lord Tordoff, Chairman of the Committee

  Thank you for your further letter of 8 February. I note that your Committee has lifted its scrutiny reserve on the first two proposals and I am grateful for that.

  As for the third proposal, I said in my letter of 16 December that we would continue to press the case for those other than train operators to be able to enter into contract with an infrastructure manager for access to his network. However, I have to say that, while the Commission and one or two other Member States are favourable to the idea of allowing eg freight consignors to do this (as is already the case in Britain, as you note), other countries remain opposed.

  There is also the more general question of access in terms of broadening the rights in Article 10 of Directive 91/440. We and a number of other Member States continue to press for further opening up of the market, particularly for freight but, as yet, there are not enough votes to secure a qualified majority. In any case, we need to secure agreement to sensible rules on access charging and train path allocation since, without them, rights of access can be readily frustrated. The respective timings of decisions on improved rights are largely matters of concerting tactics with like-minded Member States, which we are doing.

  You also asked about consultation. We completed our consultation on the three proposals with the railway industry and users last month, though we continue to keep them informed of development either through their representative groups (eg the Railway Forum, ATOC) or individually, as appropriate. Responses to the consultation broadly welcomed the Commission's initiative. A number of respondents drew attention to the potentially disincentivising effect upon infrastructure managers of marginal cost pricing for freight.

  As you are probably aware, the third proposal in the package has been tagged with the Commission's White Paper on infrastructure charging (EM 10778/98) for debate in Standing Committee A in the Commons on 10 March.

24 February 1999

Letter from the Rt Hon Dr John Reid MP, Minister for Transport, Department of the Environment, Transport and the Regions, to Lord Tordoff Chairman of the Committee

  Further to my letter of 24 February and following 29 March Transport Council, I thought it would be opportune to provide your committee with a progress report on the proposed council Directives on the development of the Community's railways.

  It has been agreed that all the three proposals should go forward as a package. Good progress has been made in the official level working group on the first two proposals and only France, Belgium and Luxembourg remain opposed to the principles involved. The third proposal—on track charging, train path allocation and safety certification—needs more work. In particular, France, Belgium and Luxembourg believe the proposal is too prescriptive; charging principles have yet to be agreed; there is a measure of scepticism about the role of the regulatory body; and there remains a substantial body of opposition to "authorised applicants". However, I would not rule out the possibility of an initial agreement in principle at the June Transport Council. The proposals would still then be some way from final agreement and will become subject to co-decision with the entry into force of the Amsterdam Treaty.

  As you may be aware, the European Parliament considered the package in plenary on 12 March and put forward a number of amendments. The Commission are considering these and have indicated informally that they expect to publish a revised proposal in mid May.

  At 29 March Transport Council, there was an orientation debate on the package. The Commission indicated a willingness to countenance higher charges than those based on a strict interpretation of short run marginal cost and provided that freight was not priced off the network. The Commission's clarification of the position on freight charges opens the way to resolving the main difficulty for the UK on the package.

  Assuming a satisfactory outcome on this point, the regulatory impact of the package would be broadly neutral. The proposed amendment to Directive 91/440 would have no effect on the British domestic network, as the relevant constituent parts of the industry are in separate companies already. (Northern Ireland Railways remains in the public sector). Eurotunnel would be required to provide separate accounts for its Shuttle operation. The practical effect of the amendment to Directive 95/18 would be to replace the two existing licensing regimes—one for domestic operators, the other for providers of services under Directive 91/440—with one system. There would be some transitional costs for ORR and some costs for the industry. The track charging etc proposals reflect many of the features of the British system but there may be some changes to arrangements, including the way in which capacity allocation is scrutinised by the regulatory body.

  I will issue a further EM when the Commission's revised proposals have been published.

15 April 1999

Letter from Lord Tordoff, Chairman of the Committee, to the Rt Hon Dr John Reid MP, Minister for Transport, Department of the Environment, Transport and the Regions

  Thank you for your letter of 24 February, in response to my letter of 8 February, which was considered by Sub-Committee B at its meeting this morning.

  The Committee notes the position on path allocation and encourages the Government in continuing to press the case for the further opening up of the market.

  The Committee would, though, appreciate fuller information about the Government's consultations. Your letter says that there was a broad welcome for the Commission's initiative, but mentions some reservations. We should be grateful if you would say with whom you consulted, and over what period; for a fuller summary of the outcome of the consultation; and for an indication of the ways in which the outcomes have influenced the Government's approach.

  In the meantime, the scrutiny reserve on this last limb of 11375/98 is retained.

  Thank you also for your letter of 15 April giving a general update on the position. We look forward to early sight of both the Commission's revised proposal and your subsequent further Explanatory Memorandum.

29 April 1999

Letter from the Rt Hon Helen Liddell MP, Minister for Transport, Department of the Environment, Transport and the Regions, to Lord Tordoff, Chairman of the Committee

  Thank you for your letter of 29 April to my predecessor John Reid.

  We wrote last October consulting the Scottish, Welsh and Northern Ireland Offices, HSE, ORR, OPRAF, the Central Rail Users Consultative Committee, the passenger and freight train operating companies, LUL, Railtrack, Eurotunnel, the PTEs, the Railway Forum, the Rail Freight Group, the Freight Transport Association, combined transport operators and the Railway Industry Association. We asked for preliminary comments by the end of October, because we could not be certain at the time how quickly the debate would proceed in Council.

  Helpfully, a number of respondents drew attention to drafting points in some of the more technical aspects of the proposal. Railtrack, in particular, provided extremely useful advice, and continues to do so. On points of principle, there were inevitably differences of view. Freight users welcomed the proposal to use short-run marginal cost as a basis for freight access charges, while the infrastructure managers and passenger train operators were concerned lest that might lead to cross-subsidy and/or loss of revenue without additional public support. Indeed, one of the freight train operating companies acknowledged that artificially capping freight charges in this way could actually disincentivise the infrastructure manager to encourage freight on rail. A PTE respondent drew attention to the need to ensure that socially necessary passenger services were not disadvantaged in the allocation process.

  We found these comments helpful in confirming our own appreciation of the proposal's implications for domestic policy and consultation is ongoing. The Railway Forum hosted two seminars, at which the Department spoke, in November and December and officials continue to keep the industry informed of developments and to hear their views.

  We now await the Commission's revised proposal. We have reason to believe that this will provide the additional flexibility on freight charges that we seek and, assuming that is acceptable to others, the practical effect of the package on us, in terms of both regulatory burden and financial impact, would be broadly neutral.

  The current expectation in Council is that the Presidency will aim for political agreement on the package in June. In that event, I should like to be in a position to be able to lift our Parliamentary scrutiny reserve and, on that basis, I hope your committee can agree to clear the proposal.

24 May 1999

Letter from Lord Tordoff, Chairman of the Committee, to the Rt Hon Helen Liddell MP, Minister for Transport, Department of the Environment, Transport and the Regions

  Thank you for your letter of 24 May in reply to mine of 29 April. This was considered by Sub-Committee B at its meeting this morning.

  In the light of the further information you provide, the Committee lifts its scrutiny reserve on this last limb of the package—though we are interested to know how "political agreement" can be satisfactorily reached before the Commission issues its revised proposal.

  We should be grateful if you would send us a copy of the revised proposal as soon as it is issued, and generally keep us in touch with developments.

10 June 1999


 
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