18 OCTOBER 2004

Lord Berkeley OBE

  Q80  Chairman: You touched yourself on the question of effectively implementing the existing single market legislation. You said that that is what the Commission should be concentrating on, and I assume you agree with that?

  Lord Berkeley: Yes.

  Q81  Chairman: Is the Commission actually vigorously implementing and monitoring existing legislation to the degree you would want?

  Lord Berkeley: Of course, the Commission will say that it is down to Member States to implement the legislation which, in the way these things are written, is probably true. I would like to see, first of all, the Commission pressing much harder on all the Member States. I know they have got infringement proceedings against a number of Member States for not implementing these Directives, but to go through the legal system will take years. There is a lot that they could do themselves through the Council of Ministers and through the European Parliament to raise these issues and ask what is happening. If that does not work, then they will have to propose yet more legislation which will go into more detail so that we have a common process and common more detailed legislation for implementing the open access regulations, which is not in the 3rd Railway Package—they have left that to one side and put other things in the package. It needs to move forward. The Commission's latest move has been to seek bids from a consultancy study to see how the implementation has taken place in different Member States. I do not know the details of it, but I heard about it a couple of months ago. It might be worth finding out, and if I hear any more I can certainly write to you. That is a start. Britain has the Presidency, starting next July. On transport, would it not be nice if rather than come up with many, many lovely new ideas, if our contribution was to get these  things up and running consistently and comprehensively across all Member States? I know I am looking up in the sky, but it would be very nice, Lord Chairman.

  Q82  Lord Geddes: Lord Berkeley, you and I go back a long way as far as Sub-Committee B is concerned, and I would like to put on record how grateful I was, and continue to be, for the terrific assistance you gave me during my Chairmanship in 1996-99. I valued it then, and I still value it today. In your reply to Lord Haskel you got quite a long way down what I call the abuse route, but I would like to tease out a bit more. You made an interesting comment subsequently about the ability now to be able to plan a route, or book a route. We have heard in previous evidence that that is great in theory, but dare I say it, certainly in one particular continental European country, they suddenly say, "sorry, but we have a train that is going to take priority over that, so you cannot do it after all". Can you expand on this whole question of the abuses that in your experience exist on the continent, or indeed in this country, if you know of any? I think I know the answer to my second question, but I would still like to hear it from you: you are obviously very keen on competition, but given the circumstances, what merit can you see of the introduction of the compulsory quality provisions into freight railway contracts, as suggested in the 3rd Rail Package?

  Lord Berkeley: Thank you, Lord Geddes, for your kind remarks. I also enjoyed working with you and it is a privilege to be back here, on the other side of the fence, if I can put it that way.

  Q83  Lord Geddes: The same side!

  Lord Berkeley: The same side. Getting a train path across many Member States is of course key to running a decent service. It achieves what the customer wants, for the goods to get there quickly, on time, reliably and safely. To give you a recent example, there is a new service that has just started between Cologne and Istanbul, going through many Member States and other countries in between. In one trial they saved about 30 hours off the service, just by planning it properly and sorting out the frontiers and everything else. It demonstrated what can be done. In the open access environment there is a further step which is that if you are a big customer, in the UK, that customer can reserve a train path London to Glasgow while he puts together a package of bringing the road vehicle in and by whom, how it is going to transfer and when it needs to go, he can book the timetable slot. He cannot get a train operator because he has not got a licence but at least he can go out to one of the operators we have in this country—four, five, six, or seven—and get the best price from them. This is not legal in the Continent because it was rejected from the 2nd Railway Package because of pressure from countries like France, which did not want customers to do it. I would just like to make the point that customers still want that. The big customers of Europe want to be able to plan their logistics and then they will get prices from the train operators for what they want to do. It is terribly important to plan the route. Again, in this 2001/14, there is a clause which states that international rail freight should be given priority. That is probably the very reason you asked the question. One of the Members of the Committee mentioned that in France there are regional railways that are funded by the local authorities, and naturally they will want to run as many trains as they can over the network—and freight does not perhaps bring them any benefit if it goes straight through. That is why this clause is in this Directive to counteract that—you want to go all the way through so you get priority in the timetabling. That, combined with some speedier transfer across the frontier—it does not take long to change an engine—but the real problem is that the people picking the train up should know that it is coming and have got a driver and are ready—that is the way to do it. If this Directive were implemented properly and enforced, freight would be all right, especially on the main routes, which is where it matters.

  Turning to the 3rd Railway Package and your question on quality, it has been debated by the customers and  the train operators. There is a big difference of  opinion between people. The Community of European Railways, which is mainly the old national railways, are dead against it, and some of the independent railways think it is a good idea. The Platform expressed the view that it was a good idea in principle but that the detail was wrong. The principle is as a means to an end of introducing competition; and the end is competition, like it is on the road. It is quite simple. This might be seen as a means to an end in Member States where there is no competition. Therefore, the Platform has said that there must be an opt-out possible if a customer does not want to participate in this requirement. The customer must be able to opt out. Secondly, the Directive is much too detailed. They talk about so many euros for so many hours' delay, but that is not the sort of thing you put in a Directive. Apart from inflation, it is completely wrong. As a means to an end, and politically, if the British Government opposes this thing, they are seen to be working together with the French Government in opposing it—and probably everybody will follow suit. Does that not give some lovely messages to SNCF? They will say, "We need not bother now." The services from SNCF are still appallingly bad in many instances. Politically, my view is that this Directive needs to go forward, but needs to be significantly modified. If the Committee would like to see our response on the 3rd Railway Package, I can send it through.

  Q84  Lord Geddes: You have mentioned the "F" word—France—on a number of occasions. Just how bad is France in this respect? Witnesses we have had before you—and I am sure witnesses who will come after you—all come back to the same theme: France is the bugbear. Do you agree with that?

  Lord Berkeley: Yes, I do, I am afraid. It is a terrible thing to say. Réseau Ferré de France spoke at a conference I organised last month, and I believe they are trying very hard to be different from SNCF and to welcome new operators. The real problem is that SNCF always seem to have a shortage of drivers and/or locomotives. The number of times I have been in France and seen these big locomotives with "SNCF freight" on the side pulling a passenger train. You think, "how many freight trains are in the sidings?" They are quite capable of running trains on time—because I organised a Parliamentary visit down to Perpignan three years ago and we saw the fruit and vegetable train that leaves Perpignan, temperature-controlled, every night for Paris—sometimes four trains every night—and it has never been late, except for one night in ten years when farmers dropped turnips on the line, which is probably acceptable. They can do it, but it is a question of the will. The feeling, I think you will find, if you are able to interview the chairman of SNCF or ministers in France, is that they all want to do it, but they are desperately concerned about the industrial action that might occur if they did do anything. Who is going to be in there first as a train operator? Is it going to be Rail4Chem or Eurotunnel; will it be Transfesa, who you interviewed last week? They are keen, but who is going to take the plunge? How long can France hold out? The situation is very bad, and it is part of the reason why the Channel Tunnel is going so badly, because the customers do not know when the train will arrive half the time. We feel cut off from the rest of Europe by France, the same as the Spanish and Portuguese do.

  Q85  Lord Geddes: Would it be fair to interpret the action required in this context is internal in France, and not from Brussels?

  Lord Berkeley: Yes, it is internal in France, but the Commission could put even more pressure on than they are putting on at the moment. I believe the new Transport Commissioner, who is French as you know, has expressed his concern about the slow progress in open access; but he of course does not have to deal with the general strike that might occur. Somebody is going to have to deal with it. The feeling is that once it has been dealt with once, it might get better; but there is a great frustration, ten years after the Channel Tunnel opened, that we are still in this position, suffering the appalling service that sometimes comes out of there.

  Q86  Lord Swinfen: You said that international rail freight should be given priority. Over whom—just local freight, or passengers as well?

  Lord Berkeley: What I believe I said was that the Directive 2001/14 gives international rail freight priority. I did not say it—I am just repeating what is in this Directive. It is priority over everything else.

  Q87  Lord Swinfen: You are suggesting it does not happen?

  Lord Berkeley: I am, yes, in some countries.

  Q88  Lord Swinfen: Would you like to enumerate the countries?

  Lord Berkeley: France at the moment, Germany; Italy I do not know enough about.

  Q89  Lord Swinfen: Have you any idea why?

  Lord Berkeley: Because passenger trains carry people who have votes—simple as that.

  Q90  Lord Walpole: Lord Berkeley, I will ask you two questions about the Channel Tunnel and a supplementary question, which I would like you to answer at the same time. What is the potential freight through the Channel Tunnel and what does the British Government need to do to secure it? Are the access charges a barrier to freight through the Channel Tunnel, and again, what could the British Government do to overcome this problem? The supplementary question is this. Sitting still on the M11, listening to the radio and wishing I had come by train instead today, I heard a very interesting piece about the price of carrying yourself across the Channel Tunnel where it does not matter if you go by ferry or Eurostar, or any other way, in a car or whatever: it has gone down about 50 per cent in charges. Are you subsidising all that, you freight people? You must be paying as much as you were when the Channel Tunnel opened.

  Lord Berkeley: Yes. I will answer that question. It is highly complex. I will get there, and I will take it in the order that you asked the questions. I am on record as suggesting that if the Channel Tunnel was being operated properly, in a proper competitive environment, without all the hassle that has gone on, it could probably be expecting to take about ten times the volume it is doing at the moment. I can go into the detail of that if you like.

  Q91  Lord Walpole: Do you mean freight?

  Lord Berkeley: I mean rail freight. Forget about the shuttle, the lorry freight; this is rail freight—ten times. I can go into more detail.

  Q92  Chairman: A note would be useful.

  Lord Berkeley: You would like a note! I thought you probably would. It is quite complicated. Are Eurotunnel access charges a barrier to rail freight through the Channel Tunnel? It is very difficult, because of the structure that was set up when the tunnel was being developed—and as some of you may know, I used to work for Eurotunnel at that time—to tell the source of the charges, in other words what Eurotunnel charges and what the other charges are. All I can say is that five years ago we commissioned some research which did indicate that if you wanted to send a container from Birmingham to Paris by rail or road, probably the rail element through the tunnel was two to three times what it was if you sent it by lorry on the shuttle or ferry. You would have to do the deductions, because there are no prices quoted yet by Eurotunnel of their own rates because of the usage agreement with EWS and SNCF. That is what the customers believed was roughly the difference. What can the British Government do? I ought to explain the problem about the current charging regime. I am sure that Mr Smith, in his evidence, will be able to tell you a bit more about this. Next May the current arrangement where the British Government funds what is called a minimum usage charge for the British half of the tunnel for freight, in place of EWS, stops. Unless something is done to take this forward, EWS will be faced with paying £20-25 million a year even if they run one train. That period goes on for about 18 months, until the end of 2006. I hope that the Government is going to sort it out. I cannot see any company wanting to spend £25 million just like that. More importantly, at the end of 2006, the minimum usage charge stops for passengers and freight; so Eurotunnel will lose £60-70 million worth of revenue a year, and heaven knows what will be the consequence of that. You are right in saying that the cost of going across the Channel as a passenger has gone down. That is probably because of competition, although P&O have announced they are cutting some of their ferries, and so that might change things. The real problem with the competition between road freight and rail freight is that the road rates are set in a free market, whereas the rail freight rates are fixed by the usage agreement that was signed in the mid-eighties between British Rail, SNCF and Eurotunnel as a back-door financial guarantee for the company Eurotunnel, as we all know. What the future holds is quite difficult to know. The uncertainty is nearly killing the business at the moment. It is very serious. Some people say that Eurotunnel might go into liquidation and then it will pop up with rather less debts than it has at the moment. The operation of the system is perfectly rational and reasonable, and it should be profitable, in competition with the ferries. It is this enormous debt they owe at the moment which is the problem. I am not suggesting that the British Government should bale them out. I have a few small shares in Eurotunnel, but, frankly, if you are a shareholder and it is going bust, then that is your problem. I hope that they will at least facilitate the continuity of the operation and then introduce the open access Directive in a way that will encourage competition, which will enable the operators and Eurotunnel, in whatever form it is, to get a reasonable return on what they are doing. At that stage, then the traffic should grow significantly. The next two years could be a bumpy ride for everybody, which is worrying.

  Q93  Lord Shutt of Greetland: You, like me, will have had the experience of sitting in a motor car and somebody saying that the wagon in front should be on the rail; and then you look carefully at the wagon and see that it is taking furniture to somebody's house or something. I have some problem about this definition of what is freight and what is possible. It is not that long ago that I read that there is a moratorium in this country on private sidings at the moment. People are not able to get access to the system and so on. Are there any problems like that in other countries?

  Lord Berkeley: Yes. I am not quite sure if it was a moratorium on private sidings. There is a shortage of them in some places in this country, mostly in the South East, where one will want to deliver things. Clearly, if you take more freight by rail, you have to have terminals to lift them on or off, or unload them. Goods like furniture are more difficult to take by rail, unless you put them in a container. More and more things are put in containers—and swap bodies are technically very similar—which is probably the easiest way to do it, except for the bulk flows, or if you have pallets, in which case you use wagons. The real answer to your question is that anything that can go into a container or swap body in enough volume to run a decent train length, is fit to go by rail. A wagon load is the concept of single wagons and marshalling yards that you come across. Sometimes they work. In some continental countries they are, frankly, disastrous. If you can get a train load right across Europe or within this country or through the Channel Tunnel, be it containers or wagons or whatever, it can go by rail freight, and it should be economic. One of the projects that some of our members are going to look at this autumn is to try and capture for rail the fruit and vegetables that come from southern Spain. About 60 trucks a day come into this country in the season: why not take them by rail? We have to make sure that it works through France, and they do not sit in a siding for three weeks; but that is all part of tracking and tracing, which the road freight industry is very good at, so it is not very difficult. That would save 60 lorries a day, and it might take two trains but it might take one.

  Q94  Lord Shutt of Greetland: Are you saying that the infrastructure is there for any freight that is likely to be offered?

  Lord Berkeley: Within the gauge limits and the height and weight limits, but virtually anything, if it is going far enough and in big enough volumes, which is basically a train in general terms.

Chairman: Thank you very much indeed, Lord Berkeley. As we expected, you have been very good value, as it were! We are very grateful for your evidence and for coming to represent the ERFCP this afternoon.

  SUPPLEMENTARY WRITTEN EVIDENCE BY EUROPEAN RAIL FREIGHT CUSTOMERS PLATFORM—PLEASE SEE PAGE 154.