13:31 - The House divided: - Ayes: 217 / Noes: 172 - Question accordingly agreed to.
The Minister of State, Department for Transport (Mr Simon Burns)
I beg to move,
That this House takes note of European Union Documents No. 5855/13, a Commission Communication: The Fourth Railway Package-completing the single European railway area to foster European competitiveness and growth, No. 6012/13 and Addenda 1 and 2, a Draft Regulation on the European Union Agency for Railways and repealing Regulation (EC) No. 881/2004, No. 6013/13 and Addenda 1 and 2, a Draft Directive on the interoperability of the rail system within the European Union (Recast), No. 6014/13 and Addenda 1 and 2, a Draft Directive on railway safety (Recast), No. 6017/13, a Commission Report on the progress made towards achieving interoperability of the rail system, No 6019/13, a Commission Report on the profile and tasks of other train crew members, No. 5960/13 and Addenda 1 to 5, a Draft Regulation amending Regulation (EC) No. 1370/2007 concerning the opening of the market for domestic passenger transport services by rail, No. 5985/13 and Addenda 1 to 7, a Draft Directive amending Directive 2012/34/EU establishing a single European railway area, as regards the opening of the market for domestic passenger transport services by rail and the governance of the railway infrastructure, and No. 6020/13, a Commission report on the implementation of the provisions of Directive 2007/58/EC on the opening of the market of international rail passenger transport accompanying the Communication on the fourth railway package; supports the Government’s aim of ensuring any resulting measures are appropriate, encourage competition and help to deliver a level playing field across the EU; and further supports the Government’s view that any such measures should be evidence-based, proportionate and reduce or at least minimise the regulatory, administrative and cost burden for industry.
I welcome the fact that the European Scrutiny Committee has referred this subject to the House for debate. I also thank and pay tribute to the Transport Committee for its report on the fourth railway package, a number of whose conclusions and recommendations the Government support.
The fourth railway package is a major European Union legislative proposal involving three directives and three regulations. As Members will appreciate, we are still considering the implications of the proposals in consultation with other Departments, so all I can give the House this afternoon is our initial position.
The United Kingdom has one of the most liberalised rail networks in the EU, which is why the Government support further opening of the domestic EU public passenger transport markets. However, we want to ensure that the proposals that are implemented as part of the package are flexible enough to work within the UK’s public passenger transport structure, and are compatible with our plans for rail reform. The Transport Committee made that point in its report.
Evidence garnered by the European Commission indicates that about 40% of passenger routes in the EU are accessible to new operators. That implies that significant market opportunities could arise both for UK rail firms and for those in the rest of the EU if the proposals pass into European law. There would also be potential for expansion of the rolling stock leasing sector. The new infrastructure manager separation provisions could give freight operators benefits as well if they further open up access in practice, reducing the chances of discriminatory behaviour in some member states. In any event, I can assure the House that the proposals will be the subject of consultation with stakeholders and considerable negotiation within the European Union. We will continue to engage with the Commission, the European Parliament and other member states to ensure that any concerns are addressed in the final texts.
Jeremy Corbyn (Islington North) (Lab)
I am listening to the Minister’s comments with interest. Would these proposals force the publicly owned railway systems that exist in some parts of Europe to be handed over to the private sector, or would they allow the public sector to participate on a level playing field?
Mr Burns
I hope I can give the hon. Gentleman reassurance on that, if that is what he is seeking. It is not a question of forcing any railways in any country in the EU to move from one position to another, although the main thrust of the package is to create a greater liberalisation of the market for the benefit of both taxpayers in the EU and passengers.
Ian Murray (Edinburgh South) (Lab)
Does the Minister agree that any operator, whether private or public, that returns £640 million to the taxpayers of any country is a good operation to have?
Mr Burns
I think the hon. Gentleman is trying to take us back to the House’s earlier Transport questions, as he is trying to highlight the east coast main line case. I am more than happy to take as long it takes to explain why it is the right thing to return the east coast main line to a franchise situation, as the last Labour Government wanted to do, but if I were to do so, I think, Mr Deputy Speaker, that you would step in quickly to tell me that that is beyond the scope of this debate.
Mr Tobias Ellwood (Bournemouth East) (Con)
The important issue of whether ownership should be private or public has been raised, and I hope my right hon. Friend will assure me that he agrees that railways in private ownership are better run than those in public ownership. Certain countries in Europe, however, still have a tight grasp of public ownership of their railways, and I therefore hope he will encourage liberalisation of the market so that private companies can invest into markets throughout Europe.
Mr Burns
I am trying to answer my hon. Friend’s question. His second point is also absolutely right. As he knows—and as Labour desperately tries to forget—since privatisation the number of passengers using our rail network has doubled, the number of journeys on our rail network has doubled, the standards have improved noticeably—but there is still some way to go to get even better quality and standards for passengers—and the investment in the infrastructure to improve the quality of the journeys has increased. It is incredible that, although the Labour party pays lip service to a good, efficient rail system, in 13 years of the last Labour Government there were just 10 extra miles of electrification on the network, yet in the first three years of this coalition Government there have been 850 extra miles of electrification.
Sheila Gilmore
If our system is so much better than the European systems that have more state control, why is it that Members, including on the Government Benches, have been saying that the costs here are too great? Is there, perhaps, some relationship between the costs under a privatised system as opposed to the costs under a state-run system?
Mr Burns
I think I am in a better position than the hon. Lady to know what my hon. Friends say, as I probably mix with them more frequently than she does. They are impressed that since privatisation the number of passengers using the rail network has doubled, the number of rail journeys has doubled and the amount of freight on rail, and off our congested roads, has increased by 60%. They want continued investment in infrastructure to improve the quality of journeys and to improve rolling stock and track electrification so that people can travel around this country by rail far better than under British Rail. As someone who, sadly, is old enough to remember British Rail, I find it incredible that so many—almost dinosaurs—on the Opposition Benches seem to have a rose-tinted view of how fabulous it was. It was not.
I turn to the safety aspects of the package, which are important and are of major interest to the various sectors in the UK rail transport chain. In consultation with stakeholders, we are giving full consideration to their implications. The proposal to move from a two-part safety certificate to a single-part certificate is welcome as a simplification of the existing process. We expect it to lead to a significant reduction in the costs and regulatory burdens for railway undertakings. It will especially benefit those who operate cross-border services.
However, we need to look carefully at the justification for the extension of powers for the European rail agency to issue the single safety certificate, and we need to understand how it supports market opening objectives. Enhancement of the agency’s powers for audit and inspection of national safety authorities will change its current role. It is a fundamental shift away from a partnership role to a policing function. We are not convinced that those powers are necessary given the high level of co-operation already achieved between the majority of national safety authorities. We will ask the European Commission for further clarity about how any issues exposed will be resolved.
The communication includes proposals for a recast of the interoperability directive for railways. The Commission believes that there are problems with the authorisation process for rail vehicles, especially when the vehicle is intended for use in more than one member state. It refers to delays and costs reported by operators to the Commission owing to vehicles sitting idle in sidings awaiting authorisation from national safety authorities. To solve the problem, the Commission proposes a recast of the directive and changes to the authorisation process. A key change would be that the applicant applied to the European rail agency instead of the national safety authorities for authorisation of their vehicle.
Removal of powers from national safety authorities to the agency will change their role. The three safety authorities in the UK—the Office of Rail Regulation, the Channel Tunnel Intergovernmental Commission and the Department for Regional Development in Northern Ireland—will no longer be able to issue those authorisations.
Jacob Rees-Mogg (North East Somerset) (Con)
Does that not indicate the heart of the problem? The European Union is once again seeking to extend its powers in an area where it already has competence. In the review of competences, will my right hon. Friend consider returning the whole area to the authority of the United Kingdom and our democratic control, as we are an island and our connection with the continent by rail is limited to the channel tunnel?
Mr Burns
I am very grateful to my hon. Friend for that intervention, to which I will respond in two parts. His second point is, I am afraid, above my pay grade. I hear what he says, and I understand what he is getting at, but I cannot give him an assurance. The transport field is a bit more complicated because so much is done on a Europe-wide basis, but I can give him the somewhat glib assurance that no doubt his concerns and his point will be heard and considered in other places. On the narrower issue, I beg his patience because he may be more reassured when I reach our proposals.
Mr William Cash (Stone) (Con)
I endorse the views expressed by my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg). When my right hon. Friend reaches that narrower issue, will he make clear whether High Speed 2 is directly connected? It is being put around by the UK Independence party, and others in the county council elections, that HS2 is directly related to the issue.
Mr Burns
I will deal with it now. HS2 is not directly related. It is a project drawn up by the coalition Government—to be fair, building on the work of Lord Adonis when Labour was in power. We support the project because we believe it is in the national interest, which is why it is going ahead. UKIP has sought to muddy the water on a number of issues with regard to HS2 and the European Union. As I was saying at Transport questions, before I was politely interrupted, that is fascinating, because if one were to travel around Buckinghamshire, and possibly Warwickshire, Staffordshire and a few other points north, one would see opposition to that magnificent project from the party my hon. Friend mentioned. He might then be confused if he read UKIP’s 2010 general election manifesto, which calls for three—not one, but three—high-speed railway systems in this country. But I now return—
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. May I help the Minister a little more? He is right to suggest to the Chair that he does not want a rerun of Transport questions. I totally agree and we are not going to do that, are we?
Mr Burns
If my hon. Friend will forgive me, I want to make some progress.
The Commission’s explanation is that removing authorisation powers to the agency will help to address the delays that some operators have reported when seeking authorisations from national safety authorities. That is especially the case for cross-border operations where a train may run through more than one member state. We are not currently aware of significant costs or delays for railway undertakings in obtaining those authorisations in the UK, so we are not convinced that there is a problem in the UK. That is why we need to safeguard practices that already work here.
Overall, the Commission needs to be clearer about how the changes to the directive will contribute to market opening. Another Commission proposal is to change the authorisation process for trackside signalling, which would have a significant impact in the UK. There is not yet much experience in the UK of the authorisation of trackside signalling by the national safety authorities. However, UK projects are more likely to prefer to seek authorisation from the national safety authority rather than the agency, because they have not encountered difficulties so far.
The Commission has explained that to deal effectively with authorisation delays and cross-border problems it requires action at the EU level. It argues that individual member states acting independently cannot address such problems. However, at the Transport Council on 11 March, my right hon. Friend the Secretary of State proposed that there might be an alternative to moving powers away from national safety authorities to the agency. We have suggested giving the market a choice about where the authorisation is obtained from, so we propose exploring with member states and the Commission an approach that would enable rail undertakings to choose whether to obtain an authorisation from the relevant national safety authority or the agency. The same principle could be extended to give the industry a choice about where it needs to apply for trackside signalling authorisations. The UK is continuing to push for our choice of approach so that the national safety authorities and the agency could have the power to authorise vehicles.
The details of the recast of the interoperability directive are being negotiated in Council working groups. However, there are indications that our views about choice are being listened to and that other member states support our idea, which gives us grounds for encouragement. We will keep a close eye on how the proposals develop to try to ensure that we get the best outcome for Britain and the rail system in Europe. We will try to preserve as much flexibility as possible for member states to determine what work needs to be authorised and the applicable standards.
Let me turn to the impact of the proposals to require a railway infrastructure manager to be separate from a railway undertaking. The Government will need to understand the possible effects on several areas, including alliances between Network Rail and railway undertakings, and joint working arrangements. Within the package are requirements to ensure the effective independence of the infrastructure manager within a vertically integrated undertaking. The Government are looking further at how they will influence the holding company model, as used by Eurotunnel in respect of the channel tunnel and the cross-border rail services that run through it. There will also be points to consider for the railway structure in Northern Ireland, which remains vertically integrated.
Sir Roy McNulty concluded in his report—we accept this—that the key to delivering long-term efficiencies in the rail industry is the alignment of incentives between track and train. Alliances or partnerships between Network Rail and the passenger train operators are central to our approach. Alliances are expected to maximise efficiencies and to ensure that minority freight and open-access operators are protected, not discriminated against. They do so by ensuring that capacity allocation and charging decisions are undertaken outside the alliance to avoid discrimination against smaller train operators, including freight operators. Safety is protected by ensuring that ultimate accountability rests with the statutory duty holder. We believe that that is compatible with the open competition in rail markets that the Commission wants, but we are worried that the way in which the Commission’s proposals are formulated might prohibit certain types of alliances, such as between Network Rail and rail undertakings, and joint working arrangements, such as integrated control centres and performance improvement projects. The proposals therefore might prevent us from achieving the benefits that we anticipate. I know that the Transport Committee’s report stated that joint working between Network Rail and train operators should not be prohibited or unduly restricted. We will continue to engage closely with the European Commission and Parliament, and other member states, to ensure that our concerns are addressed in the final proposals.
On the impact of the proposals on franchising, we welcome the commitment to market opening.
Gavin Shuker (Luton South) (Lab/Co-op)
Will the Minister give way on that point?
Mr Burns
I actually have not said anything yet, so I am not quite sure what the hon. Gentleman is going to ask. Perhaps he will allow me to say a little more.
We believe that the liberalised domestic market has delivered significant benefits for passengers. We have shown our commitment to franchising through the recent announcement to restart the franchising programme and return the east coast main line to the private sector.
Gavin Shuker
I am extremely grateful to the Minister for giving way on that point. Will he confirm that it would not be possible for him to continue to operate the east coast line through Directly Operated Railways if this package of measures goes through? I understand his commitment to returning the line to the private sector, but given that it is thriving in the public sector, why does he want to go along with these proposals?
Mr Burns
I am not sure what it is about the hon. Gentleman that he cannot comprehend the position, but I suspect that he just has not read the facts. Lord Adonis and the right hon. Member for Tooting (Sadiq Khan), when he was in my post, also believed that it was best to operate trains through franchises in the private sector. Even when Lord Adonis had to introduce the emergency measure of taking the east coast main line into public ownership, as a result of the problems that blew up at that time, he was clear that that would be a short-term measure and that the service would be returned to a franchise when it was possible to do so.
Mr Burns
The hon. Gentleman is displaying a degree of incredulity and suggesting that that was not the case. I know that he was not a Member at that time, but if goes to the Library to find the relevant copies of Hansard, he will read that Lord Adonis and the right hon. Member for Tooting were emphatic in their announcements to Parliament that the decision on the east coast main line was a short-term measure. I am rather grateful that Lord Adonis went a step further by saying that it was better for the railways to be run by franchises in the private sector.
Mr Burns
It is fascinating to hear that from one of Lord Adonis’s colleagues. I suspect that the hon. Gentleman—there seems to be a problem with Luton today—meant that in a derogatory way, but I thought that Lord Adonis was not a Tory, but the last Labour Secretary of State for Transport. I also thought that he was working with the present leader of the Labour party on formulating Labour’s policies.
Mr Burns
No, I am going to make progress—[Interruption.] I do not want to be disrespectful to the hon. Gentleman, but I have listened to many of his interventions and it is not often that they can be put in the category of making progress—they usually hark back to an era that most of us do not remember.
Mr Burns
I will make progress in my way, not the hon. Gentleman’s.
The subject of franchising has aroused considerable interest among Labour Members, so let me briefly set out something that I have said before. Since privatisation, rail numbers have doubled and passenger satisfaction is at an all-time high. Recent European research has shown that the countries with the greatest growth in rail travel are those with the most liberalised markets.
As with the proposals I have already discussed, we will need to ensure that we continue to engage on the detail, including by ensuring that any changes to public passenger transport services regulation are compatible with the specific needs of our network and give us the flexibility to deliver a sustainable franchise programme. I know that the Transport Committee’s report is concerned that our arrangements for letting train franchises should not be challenged, and I assure hon. Members that the Government share that view and are looking closely at the issue.
On transport plans, we are concerned that the requirements are over-prescriptive and will therefore impose a significant regulatory burden.
In relation to the channel tunnel, the focus of the Commission’s proposal is on achieving effective competition and further market opening for domestic passenger services, thereby increasing the quantity and improving the quality of passenger services. It is still too early to assess whether this will lead to more cross-border rail services through the channel tunnel.
I will summarise our initial findings on the impacts of the package on the UK. The package may present significant market opportunities for UK firms wishing to expand their operations into the EU. However, the benefits for domestic rail transport are less obvious. We cannot see how a substantial proportion of the additional demand and cost savings identified by the European Commission in its impact assessment will translate to the domestic rail sector in the UK. This is because significant parts of the Commission proposal, including the competitive tendering aspects of the package, are already in place, and because in the UK we already have the benefits of vertical separation which avoids discrimination.
I remain concerned about the Commission moving powers from national safety authorities to the European Railway Agency. The Government will need to be convinced that these powers are necessary, given the high level of co-operation already achieved between national safety authorities. We also do not want anything that interferes with the current UK rail structure or adds bureaucracy and costs, or any proposals that are not compatible with our plans for rail reform.
Andrew Percy
I am pleased the Minister is talking about UK passengers. My constituents would be happy just to be able to get on the train to Doncaster. They are not necessarily bothered about being able to get a train to Berlin, so I am reassured by what he is saying. However, having listened to the debate, my knee has started to jerk a little. We seem to be hearing the usual European argument about how all this will be in the interests of the passenger, but is not the risk that this is just another area that we will cede to the European Union? We will be told that it is all about improvements for domestic passengers, and down the line we will find out in short time that we have given away yet another power over another area of domestic policy, which will not be in the interests of passengers.
Mr Burns
I think I can give some reassurance to my hon. Friend. As he will know, because he has been listening avidly to my remarks, I have identified a number of areas where we are concerned or where we are seeking to forge a partnership with other members of the European Union to make changes for the better. But the assurance is that we are so far ahead of most of the European Union with our liberalised market that we are seeking to bring others up to our standards and offer the same opportunities as we have of a more liberalised rail service in other EU countries. I do not think it is a case of our being dragged to do something that we do not want to do, because in many areas we are already doing it. We want other people to follow our good example and get the benefit that we have had from a liberalised market with a good franchising process, where more people are using our railways, standards are improving and we are investing in enhancing it.
On that happy note, I conclude by saying that I warmly welcome the opportunity that we have today to debate the document. I will listen with great care to the comments from the Opposition Front-Bench spokesman, and I will be fascinated to see whether she and her hon. Friends will join me in the Lobby to take note of this important document.
Lilian Greenwood
My hon. Friend makes a telling point. The Government’s claims—
Lilian Greenwood
I will respond to the previous intervention first.
The Government’s claims about the east coast main line’s performance have been blown out of the water by the Office of Rail Regulation’s recent financial report. East Coast has seen rising passenger satisfaction and been given a national award. It receives virtually no subsidy and makes the second highest contribution to the Treasury. The Government’s case for re-privatisation just does not stack up.
Mr Burns
The hon. Lady might want to reassure her hon. Friend the Member for Edinburgh South (Ian Murray) that the west coast main line has paid back even more money to the Treasury. In the light of what she has just said, perhaps she would like to explain her view of the comments of her right hon. and noble Friend Lord Adonis and her right hon. Friend the Member for Tooting (Sadiq Khan) on the east coast main line going back to franchising and out of public ownership.
Lilian Greenwood
The west coast main line, of course, enjoys the advantage of having had a major infrastructure and rolling stock upgrade, all funded by the taxpayer, and the east coast main line is due to have a large investment in infrastructure and rolling stock, also paid for by the taxpayer. Perhaps the Minister would like to reflect on the comments Lord Adonis made in last year’s “Rebuilding Rail” report. Some years after taking the east coast main line back into a not-for-dividend operator, he acknowledged that the current arrangements hold back our state operator.