85.  The Government of the United Kingdom's first priority must be to implement fully the First Railway Package as soon as possible. It is impossible for the Government to press others to comply with this legislation until they transpose it fully themselves.

86.  We found it difficult to ascertain exactly why the United Kingdom had not yet implemented fully the First Railway package. Mr Hilbrecht from the European Commission told us that, "in the United Kingdom the basic work has been done. There are probably some questions with regard to the infrastructure charging but nothing should be so important as to cause such a delay. Honestly, I do not know why there is a delay in the United Kingdom." (Q 284).

87.  Even when directly questioned, the Minister did not give us a clear picture of the problems which the United Kingdom was having in implementing the First Railway Package. He said that, "part of the delay was the transmogrification from Railtrack to Network Rail and all that that ensued in terms of definitions and everything else." (Q 319). He was unable to give a date or an estimated date for the full transposition. Mr Bolt, in his oral evidence, suggested that - although Britain was ahead of the rest of Europe in implementing many of the measures required by the first railway package - access to terminals, regulation of the Channel Tunnel Rail Link and some safety issues may need further action before the United Kingdom is fully compliant.

88.  We regard it as urgent that the United Kingdom complies fully with the First Railway Package. We were therefore pleased to be reassured subsequently by the Minister that the Government regards compliance as a priority and expects to transpose the package by the end of 2005 (DfT suppl written evidence).

89.  The Channel Tunnel is the United Kingdom's only direct rail link with the European mainland. The Minister told us that the subsidies to   EWS would continue until 30 November 2006. EWS had told us that they would not be able to continue to operate freight services through the Tunnel if the subsidies ended. We recognise that this extension of the subsidies is necessary because it provides a breathing space but, as the Minister acknowledged, the extension simply continues to provide more favourable prices for the incumbent operator rather than opening up the market to fair and open competition.

90.  It is essential that the period between now and 30 November 2006 is used to ensure that when the subsidies end the necessary changes have been effected to allow the market to open up. We understand that open access at competitive prices through the Channel Tunnel can only be achieved by co-operation between the United Kingdom Government and the French government in the Inter-Governmental Commission. We urge the Government to work with the French government to ensure fair and open access through the Channel Tunnel.

91.  Despite the evidence that we have received, the Committee is unclear whether the usage agreements between the railways and Eurotuneel take precedence over or are subsidiary to the European Union Directives. The United Kingdom Government and the European Commission must clarify this.

92.  We have already discussed the problems with the British loading gauge and we agree with the CER that this problem cannot be solved by the railway companies on their own (see para.29). We acknowledge that valuable improvements have been made in recent years but there remains much to do. Movement of goods by rail remains an important element in ensuring that British industry and commerce is internationally competitive. For some business and industries the movement of freight by rail remains extremely important. The Government must continue to work with the rail freight industry to identify those rail routes that still require an upgraded loading gauge.