Following my oral evidence last week, I promised to give the Committee further information about Eurotunnel. I now enclose a copy of our RFG Response to Eurotunnel's Network Statement dated February 2004 (not printed). Although this was written some time ago, very little has moved on since then and I hope that it will shed some light on this difficult subject.

  In response to the Committee's question about what the UK Government should do, we suggested that it starts near to home, and complies rather more effectively with its statutory duty to promote rail freight through the Channel Tunnel. So far, this has resulted in just one tenth of the potential traffic using the Tunnel.

  The volume of freight through the Channel Tunnel was forecast to be between 6 and 8 million tonnes per annum at opening in 1994, rising to over 10 million tonnes a few years later. In fact, traffic only reached 3 million tonnes per annum, then reduced to below 1 million tonnes at the time of the problem with illegal immigrants, and is now running at about 2 million tonnes per annum. This gives a share of the addressable market of about 2.5 per cent compared with over 11 per cent for domestic UK rail freight. The market share of rail freight in France, in spite of the poor service quality, is nearly 15 per cent.

  However, in the UK, rail freight volumes have risen by 50 per cent since privatisation, with the market share up from around 8 per cent to 11 per cent. In France, volumes of freight carried has declined along with market share, with SNCF expecting to lose further volumes in 2004/05 as a result of implementing the rationalisation plans that have been developed in response to its worsening financial position.

  The above figures demonstrate the poor showing of cross-Channel rail freight. If it were as easy and competitive as domestic rail freight, one would expect the market share of cross-Channel rail freight to be about 15 per cent as achieved in France, ie, 12 to 15 million tonnes per annum. The fact that the market share is only 2.5 per cent indicates some serious problems.

  Put another way, on the basis of current evidence, there is no reason why 15 million tonnes a year of rail freight should not be carried through the Channel Tunnel, ten times the existing volume.

  Finally, I enclose a cutting from the French railway magazine "La Vie du Rail" 13 October 2004 (not printed) which gives some interesting comments about the opposition within Germany and Deusche Bahn to the open access Directives. It is a matter of concern that both Germany and France do not seem to be embracing open access and fair competition above rail in the manner which they signed up to in approving these Directives.

Tony Berkeley

Chairman

October 2004