Select Committee on European Union Forty-Ninth Report


RAILWAYS (5744/02; 5723/02; 5724/02; 5726/02; 5727/02)

Letter from David Jamieson MP to the Chairman

  5744/02 COM(2002)21 Final—Proposal for a directive on safety of the Community's railways and amending council directive 95/18/EC on the licensing of railway undertakings and directive 2001/14/EC on the allocation of railway infrastructure capacity and the levying of charges for the use of railway infrastructure and safety certification.

  5723/02 COM(2002)22 Final-Proposal for a directive amending council directive 96/48/EC and directive 2001/16/EC on the interoperability of the trans-european rail system

  5724/02 COM(2002)23 Final-Proposal for a Regulation establishing a European Railway Agency.

  5726/02 COM(2002)24 Final—Recommendation for a decision authorising the commission to negotiate the conditions for community accession to the convention concerning international carriage by rail (COTIF) of 9 May 1980, as amended by the Vilnius protocol of 3 June 1999.

  5727/02 COM(2002)25 Final-Proposal for a directive amending council directive 91/440/EEC on the development of the community's railways.

  Thank you for your letter of 27 March, in which you retained your scrutiny reserve and asked to learn the results of the consultation exercise carried out by my Department over the summer. In your letter of 30 October you also asked for a detailed account of how discussions have progressed, in view of the Presidency's hope for political agreement at the December Transport Council.

  I am pleased to enclose a copy of our report on the consultation exercise, which we will be publishing shortly. The responses we received provide broad support for the key elements of the Government's initial views on the proposals, namely:

    —  support for further liberalisation of the rail freight market; and

    —  concerns about the balance between potential costs and benefits of some of the technical harmonisation proposals.

  Subsequent to the consultation exercise my officials have continued to work closely with the Strategic Rail Authority, The Office of the Rail Regulator, Health and Safety Executive and rail industry parties to see how concerns about the potential costs of some of the measures can be satisfactorily addressed through changes to the texts.

  It might be helpful to the Committee if I were to summarise how the discussions on these proposals have progressed in the Council and European Parliament.

  Work in Council on the package started under the Spanish Presidency. The Danish Presidency has, however, given priority attention to this package, and is aiming to achieve political agreement at the 5-6 December Transport Council. Considerable progress has been made in Working Group discussions over the last few weeks and many detailed improvements have been made to the texts. Turning to the specific issues mentioned in our Explanatory Memoranda:

PROPOSED SAFETY DIRECTIVE

  Text acceptable to all Member States and the Commission addressing the need for bi-national regulation of specialised cross-border infrastructure such as the Channel Tunnel has been agreed.

  There are two main issues outstanding. The first concerns the processes for bringing into effect new national safety rules. There is broad agreement in principle on the need for more flexibility in the text, which should satisfy our concern that the processes should not undermine the principle that responsibility for safe management of the railway rests with the industry not the safety regulator; though a precise text acceptable to all States has yet to be agreed. The second is the proposal for Common Safety Targets. UK concerns about the potential costs or negative impact on existing safety levels are shared by France, Spain, Ireland and Portugal. We are working closely with UK stakeholders and other Member States to achieve an acceptable compromise text that protects against these impacts.

PROPOSED INTEROPERABILITY AMENDMENT DIRECTIVE

  Our concerns about the potential costs of the proposal to extend the scope of the Directives to the whole EU network are shared by France, Germany, Spain and Ireland. Again, we are working closely with others to achieve an acceptable text that protects against any significant adverse cost imposts.

PROPOSAL FOR A EUROPEAN RAIL AGENCY

  Text changes have been agreed which substantially clarify the role of the Agency, and reduce it in respect of the investigation of Notified Bodies appointed to assess interoperability conformity in the Member States. At working level all Member States (but not yet the Commission) are agreed on text changes to align the governance of the Agency with that of other European transport agencies (EMSA and EASA), thereby giving more influence to the Member States as opposed to the Commission.

PROPOSAL FOR THE COMMUNITY TO ACCEDE TO COTIF

  The basis on which the Community can accede to the Convention, and how it expects to exercise its competence, have been clarified to the satisfaction of all Member States.

PROPOSAL TO ACCELERATE AND COMPLETE FREIGHT LIBERALISATION

  Eight Member States, including the UK, fully support this proposal, but France, Belgium and Luxembourg oppose it. Of the remaining three (Finland, Greece and Ireland) Ireland has made clear it would not join a blocking minority. It therefore seems unlikely that a blocking minority could be obtained if the matter were pushed to a vote.

  The proposals have yet to have their First Reading in the European Parliament. However, it is expected that some 300 amendments will be considered by the Regional Transport and Tourism (RETT) Committee later this month. The first Plenary Reading is expected in December—too late to allow the Parliament's views to be taken into account in any political agreement at the December Council. It is difficult to predict the outcome of the Parliament's consideration at this stage, however potential areas of significant difference from the Council position are:

    —  greater involvement of the social partners in the technical work of the Agency and in its management (where the Government would want to consider carefully the practicalities and added value);

    —  emphasis on achieving the optimum level of railway safety (where the Government would want to examine carefully the relative costs and benefits; and

    —  action to extend the liberalisation of the passenger rail market as well as the freight market (which the Government could support in principle provided that there were not adverse effects on subsided franchised services).

  I will write again if any further progress is made before the Transport Council in December. In the meantime, I hope the Committee finds this information useful.

21 November 2002

Letter from the Chairman to Mr David Jamieson MP

  Thank you for your letter dated 11 November which Sub-Committee B considered at its meeting on 2 December.

  We are grateful for this account of your consultation exercise, and also for updating us on the progress made in the Working Group discussions since March this year. We note that, while many elements coincide with UK interests,there are still problems in some areas, and that the views of the European Parliament have yet to be made known, particularly on complete freight liberalisation.

  We understand that the Strategic Rail Authority (SRA) has expressed reservations about some of the aspects of this package, for example, it has doubts over the intended timescales and the contribution of the interoperability Directive to achieving the Commission's objectives of reducing costs and facilitating the opening of the market. The SRA suggests that an analysis of costs and benefits should be undertaken before future extensions of the scope are proposed.

  The SRA also supports the creation of the European Rail Agency (ERA) as long as it remains an advisory body and not constitute an additional regulatory organisation. SRA urges that UK staffing of this Agency should come via the Department for Transport or the SRA rather than through the Commission. On safety, the SRA believes it is premature to impose a common safety framework and that the harmonisation of safety regulation should be part of the longer-term process. In short, the SRA fully supports the further opening of the freight market and the extension of liberalisation to the International passenger market provided the required capacity is available and subject to existing regulatory regimes.

  We should be grateful to have the Government's views on the points put forward by the SRA.

  Under the circumstances, we maintain the Scrutiny reserve on these documents, but would be grateful to be given an account of the discussions at the Transport Council on 3-4 December 2002.

4 December 2002

Letter from John Spellar MP, Minister of State to the Chairman

  Thank you for your letter dated 4 December to David Jamieson, in which you asked him to comment on the views of the Strategic Rail Authority (SRA) on the second Railway Package, and to report on the Transport Council discussion on 6 December.

  The Government agrees with the SRA's views on all the issues raised in your letter. We have been working closely with SRA colleagues, alongside other stakeholders, throughout the development of our policy on the Second Rail Package, and we have reflected these concerns in Council meetings and in briefing UK MEPs.

  On the first issue, the proposed extension of the scope of interoperability requirements, the Commission has explained the difficulty in producing an analysis of the costs and benefits, given that these depend on the technical specifications that would be developed for the remainder of the EU network at a future date. We have made clear that we can only support this proposal if our concerns about the potential costs are satisfactorily progressed. We have therefore been working closely with SRA, as mentioned in my last letter, to propose changes to the proposal to provide further safeguards against additional costs being imposed.

  On the European Rail Agency (ERA), the proposal is indeed that the Agency should be an advisory body providing a source of neutral technical expertise at a European level, rather than a regulatory body. Nobody has challenged this during negotiations. On the question of staffing, in the Council working group it has been agreed to amend the draft directive to permit secondees to the ERA to be drawn from Member States, thus allowing a role for the Department of Transport and the SRA. This, together with changes to the composition of the management board on which all Member States are agreed, will go a long way to meeting SRA's concerns that the Agency give proper consideration to the cost and public funding implications of its recommendations.

  We share the concerns voiced by the SRA on safety harmonisation—specifically on the potential implications of common safety targets. There have been very positive developments on this issue in recent weeks in the Council discussions, including at the December Council as reported below. We will continue to press for further necessary changes to the texts to ensure that the timescales, and extent of, harmonisation are realistic and do not impose unreasonable costs, or reductions in safety, on individual Member States.

  Finally, on the opening up of the freight market and the extension of liberalisation to the passenger market, the Government fully supports the SRA's position. These proposals to extend the scope of who can apply for rail infrastructure capacity should not cause any additional capacity problems since they do not interfere with the mechanisms already in place in Directive 2001/14/EC which allow regulatory bodies and infrastructure manages to limit access to the network where there is insufficient capacity. We endorse the SRA's view that further liberalisation in passenger services would be welcome only if existing regulatory safeguards to protect the interests of passengers and taxpayers in the operation of subsidised franchised services can be preserved.

  You also asked for an account of the discussions at the Transport Council on 6 December. I represented the UK in a short orientation debate. Ministers welcomed the substantial progress that has been made on the Package, and gave their views on two issues raised by the Presidency. There was a strong consensus that individual Member States if they wished should be able to maintain higher safety levels than those required by the proposed Common Safety Targets. On interoperability, a majority of Member States favoured extending coverage to a well-defined part of the network in the near future, although a few preferred it to cover the whole EU network in the near to medium term, as the Commission has proposed. The Presidency concluded that officials should continue to work on the package, taking into account these positions. Greece made clear that it hoped to reach agreement on the package during its forthcoming Presidency; and further working group discussions have already been scheduled for January.

  Your Committee may also wish to note that the first Reading of the European Parliament is now expected to be in w/c 13 January.

31 December 2002

Letter from the Chairman to Mr John Spellar MP, Minister of State, Department for Transport

  Thank you for your letter dated 31 December 2002 which Sub-Committee B considered at its meeting on 20 January 2003.

  We note that you have been working closely with the Strategic Rail Authority (SRA) on all these issues.

  You suggest that negotiations are moving in a direction that meets UK concerns. We very much hope that this is so. The European Scrutiny Committee of the French Senate has recommended that the French Government resist the further liberalisation of the right of access to the freight network until such time as the access provided for under the first package in Directive 2001/14/EC is completed.

  At the first Reading of the European Parliament on 15 January 2003, Georg Jarzembowski's report on opening the rail market was adopted by an overwhelming majority and that the Committee adopted amendments in favour of opening up the entire network by 1 January 2006. We should like to know how the Government views the European Parliament's initial response to this package.

29 January 2003

Letter from John Spellar MP to the Chairman

  I am writing in reply to your letter of 29 January, and to seek scrutiny clearance on this package, on which the Greek Presidency aims to reach political agreement on a common position at the 27-28 March Transport Council.

  It may help the Committee if I were to summarise recent developments in the European Council and the European Parliament since my letter of 31 December 2002 on this set of proposals, collectively known as the "Second Rail Package".

  You may recall that the Danish Presidency did not, in the end, meet its ambitious target of achieving political agreement in December 2002. The current Greek Presidency has continued to work on the Package, and aims to achieve political agreement at the next Transport Council.

  The benefits to the UK of this package are limited. Completion of freight liberalisation will have no significant impact within Britain, as the market is already liberalised. But it will have some medium and longer term benefits—of uncertain scale—in providing new commercial opportunities for UK firms in other EU markets, and incentivising improved performance and growth in international rail freight traffic to/from the UK. However the more technical parts of this package—on interoperability and safety regulation—probably have, at best, a neutral effect in the UK; albeit that common EU technical specifications should theoretically help to reduce supply costs in the longer term. And the UK has had to press hard during the negotiations to ensure that potential adverse impacts in the shorter term on safety levels and costs are avoided. I am therefore clear that the UK should only agree to a package if it includes a clear timetable for completion of freight liberalisation, and does not concede ground on technical matters that could impose additional costs on the industry and Government.

  Turning now to the detail, our concerns about the adverse impacts of the technical proposals are satisfactorily addressed in the current working texts. My officials have been working in close partnership on these matters with key stakeholders—in particular the Health and Safety Executive (HSE), the Strategic Rail Authority (SRA) and the Office of the Rail Regulator (ORR). We have also taken full account of the views expressed by those who responded to our consultation exercise, including rail industry parties and user groups. Taking each proposal in turn:

PROPOSED DIRECTIVE ON SAFETY ON THE COMMUNITY'S RAILWAYS

  David Jamieson's letter of 11 November outlined the two main outstanding issues where we had concerns.

  Our first concern was about the process for bringing into effect national safety rules. We wanted to ensure that the national safety authority did not have to take responsibility for the content of safety rules. The current draft is more flexible. This means that the Directive can be implemented in a way that respects our key principle of safety management—that responsibility for a safe railway rests with the industry not the safety regulator. The HSE, in particular, is content with this outcome.

  Our second concern was the proposal for Common Safety Targets (CSTs). The text needed to include further safeguards against potentially excessive cost burdens or negative impacts on current safety levels. We have now achieved a satisfactory text, which requires full cost-benefit analysis for all CST proposals, and ensures that they face a test of "reasonable practicability" for each Member State. It also ensures that Member States can continue to require safety levels higher than CSTs, so long as these do not constitute a disguised restraint on trade.

  We are now therefore content with the current text of the Directive. There remain a few items of concern to other Member States—in particular the arrangements for Commission scrutiny of new national safety rules, safety management responsibilities when accidents are caused by third parties, and independence requirements for safety authorities and accident investigation bodies. The Presidency is aiming to reach compromises on these matters. We will want to ensure that these compromises do not prejudice existing UK safety management practices.

PROPOSED INTEROPERABILITY AMENDMENT DIRECTIVE

  Our concerns about the potential costs of the proposal to extend the scope of the Directives to the whole EU network were widely shared. The current text resolves this problem in two ways.

  First, the text now includes two important additional safeguards against additional cost burdens for which the UK has pressed:

    —  The first safeguard is that further disaggregation of the sub-categories of rolling stock and infrastructure for which technical specifications for interoperability (TSIs) are to be developed is now required. This should help to ensure that TSIs properly reflect the different performance characteristics appropriate for different parts of the network. This should make for more cost-effective TSIs.

    —  The second safeguard is that Member States can now make their own decisions on the extent to which TSIs are to be applied in projects for renewal and upgrading on the conventional TEN network. Under the original proposal and the existing Directive Member States would have had to seek derogations from the Commission in a far greater range of circumstances. This is an important additional protection, should TSIs still turn out to be insufficiently cost-effective. There is no evidence that the Commission could cope effectively and quickly with a large volume of derogation requests.

  Second, the text no longer includes a "blanket" extension of the scope of interoperability requirements to the whole conventional rail system from 2008, as originally proposed. The scope will be extended progressively, as and when the relevant Technical Specifications for Interoperability (TSIs) are agreed. The first batch are to be agreed by 2009.

  These changes allow Member States to prevent the imposition of excessive cost burdens on vulnerable parts of the rail infrastructure. We, and the SRA, are therefore content with the current text.

PROPOSAL FOR A EUROPEAN RAIL AGENCY REGULATION

  The Commission remains (alone) opposed to text changes which align the governance of this Agency with that of other transport agencies—EMSA and EASA—giving more influence to the Member States relative to the Commission. In addition the involvement of other organisations, as voting or not-voting members of the Agency Board, remains under discussion in the light of European Parliament amendments on this issue and precedents in the EASA text. We can be flexible on these points, though in the absence to clear justification we would be reluctant to agree arrangements that diverge substantially from those agreed for EASA and EMSA.

  The other main outstanding issue is the working languages of the Agency, where Member States are unable to agree between three proposed options. English would, under any of these options, become one of the working languages of the Agency. We have therefore remained neutral.

PROPOSAL FOR THE COMMUNITY TO ACCEDE TO COTIF

  The Commission has recently dropped its objections to aspects of the proposed arrangements for consulting Member States during negotiations for Community accession to COTIF. All delegations are now content with the current text.


PROPOSAL TO ACCELERATE AND COMPLETE FREIGHT LIBERALISATION

  There has been little movement since David Jamieson's 11 November letter. France, Belgium and Luxembourg continue to oppose early agreement on the proposal for full liberalisation of international and domestic rail freight services from around mid 2005, until the Commission has reported on the effect of the liberalisation measures in the previous rail package (Directives 2001/12, 2001/13 and 2001/14/EC, due to be implemented by 15 March 2003). Finland, Greece and Ireland retain reservations for various reasons, but we think they are unlikely to join a blocking minority. Other Member States favour the proposal, and seven (DK, ES, NL, P, S, D and ourselves) would resist any attempt to progress the other technical elements of the Package without progress on liberalisation.

  The Presidency is therefore likely to seek a compromise at Council. I am clear that an acceptable package for the UK must include a clear timetable for completion of freight liberalisation.

  The four proposals subject to the co-decision procedure had their First Reading in the European Parliament on 14 January. All were passed with large majorities, with some 150 amendments proposed. You asked for the Government's views. Some of these amendments are very helpful to the UK. Many others duplicate changes agreed—or at least debated—in Council. There are, though, two main areas where we have concerns:

    —  The European Parliament's proposed amendments would require full passenger market liberalisation from 2008 (international market from 2006). We would welcome progress on passenger market liberalisation. But these specific amendments could prejudice our ability to restrict competition against subsidised competitively tendered services in the interests of passengers and taxpayers, as in currently practicised in Great Britain through the Rail Regulator's moderation of competition policy. Both the Commission and the Parliament's rapporteur—Mr Jarzembowski—are receptive to these arguments. Mr Jarzembowski has explained to my officials that this amendment is a negotiating tactic to force the Council to make some progress on passenger liberalisation.

    —  The Parliament has also proposed a small number of detailed changes to the safety Directive which are either incompatible with rail safety management practice in the UK or risk imposing unjustified costs.

  As neither the Commission, nor any of the Member States, has sought to incorporate these amendments in the Council text, we will not need to argue these points at the March Council. We will however continue to lobby UK MEPs and the rapporteurs on these matters, with the aim of achieving a satisfactory result when the Package returns to the European Parliament for its Second Reading.

  I would be pleased to provide any additional information that would assist the Committee in its considerations.

11 March 2003

Letter from the Chairman to the Rt Hon John Spellar MP

  Thank you for your letter of 11 March 2003 which Sub-Committee B considered at its meeting on 17 March.

  We note your comments on each of the different proposals, and your conviction that UK interests are adequately protected to enable you to agree a sensible compromise at the 27-28 March Transport Council. In particular, we note your requirement that an acceptable package for the UK must include a clear timetable for completion of freight liberalisation. Under these circumstances, we lift the Scrutiny Reserve on these proposals.

  However, we are still nervous about the intervention of the European Parliament. We note Mr Jarzembowski's assurances that your concern about the amendment that the European Parliament would require full passenger and market liberalisation from 2008 (international market from 2006) was misplaced because the amendment was designed as a negotiating tactic to force the Council to make some progress on passenger liberalisation.

  But, we remain uneasy about the proposed small number of detailed changes to the safety Directive which are either incompatible with rail safety management practice in the UK, or risk imposing unjustified costs. We recognise that because these do not form part of the amended Council text, you feel no need to argue the points at the March Council, and that you will continue to lobby in the European Parliament with the aim of achieving a satisfactory result when the package returns for its second reading.

  We should, therefore, be grateful to receive an account of your efforts in persuading the European Parliament to meet your concerns on these important points when the European Parliament holds its second reading on this package of proposals.

21 March 2003

Letter from John Spellar MP, Minister of State to the Chairman

  Thank you for your letter of 21 March by which you lifted the Select Committee's Scrutiny reserve on the proposals contained in the European Commission's second Railways package. As you will know, political agreement was reached on this package, by Qualified Majority Vote, at the meeting of the Transport Council on 28 March 2003 in Brussels. The objectives I set out in my letter of 11 March were achieved.

  I have noted the Committee's continuing concern about the intervention of the European Parliament, and the proposed small number of detailed changes to the safety Directive that are either incompatible with rail safety management practice in the UK, or risk imposing unjustified costs. I shall keep the Committee informed of progress in the European Parliament on these points, in particular its second reading on this package of proposals.

9 April 2003


 
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