At the time when UK Prime Minister David Cameron sets out his negotiating position with the rest of the EU to ‘protect the single market’ and ‘boost competitiveness’, his Government is doing precisely the opposite by participating with what looks like a grubby deal to align with France and Germany at the expense of any fair competition or transparency (the basis for an effective single market) in the rail sector.
The UK now agrees with Germany and France that transparency of financial flows does not need independent monitoring and enforcement by a regulator body (RB), allowing ongoing hidden subsidies not only to incumbent train operators such as SNCF or DB, but also to enable them to buy up other train operators across Europe with money paid by train operators for access to the network in Germany or France.
The UK not only supports France and Germany in opposing the integration of senior staff between Infrastructure manager and railway undertaking, but has already put this into practice by allowed the appointment of one person in Scotland to run both the main passenger ‘alliance’ of RU and the IM (Network Rail) operation there. So information obtained by the RU from this dual responsibility in Scotland might be useful when it bids for franchises in England. Such information would not of course be available to other competing RUs. So much for the UK’s commitment to the Single Market!
Commissioner Bulc spoke at the 4th Railway Package Conference in Luxembourg today (23 Nov 2015) urged the industry to get cost under control. ‘Generate conditions across Europe to meet the needs for the railway to encourage private investors. How to open up railway system to private investors? Need good regulatory framework for PPP and other industry’.
The Transport Council clearly disagrees. It has proposed a lack of transparency and regulation which will allow private operators running on the French and German networks and no doubt other vertically integrated networks may end up funding incumbents’ acquisitions via the track access charges they are paying to the integrated infrastructure manager.
So where is the strong support from the UK government for independent regulation as an essential ingredient of ensuring a fair competitive single market? Dumped to placate Germany and France! The UK RB (ORR) has rightly been criticised, along with Network Rail and the Department for Transport, for the cost overruns on network enhancements, but the role of the regulatory body in dealing with competition issues, secret transfers of funds from IM to RUs or elsewhere, ensuring fair access to the infrastructure for all RUs and being able to take enforcement action is fundamental to the creation of a single market in rail. Germany and France have long opposed this; now the UK does as well, contradicting Cameron’s professed support for an effective single market, of which an independent regulator is an essential element.
As IRG Rail says in its recent submission to the Trilogue negotiations between the Commission, Council and Parliament:
IRG-Rail considers that appropriate regulatory instruments are key to preventing anti-competitive and discriminatory behaviour in the rail sector. Proper supervision and enforcement are only possible if regulatory bodies can rely on:
- Sufficient, clearly-defined competences and responsibilities to supervise and control the independence requirements and fair and non-discriminatory access to the market;
- A legal basis for gathering the relevant information and data in order to be able to ensure the necessary regulatory supervision;
- Enforcement powers and a legal basis for the application of remedies.
IRG-Rail anticipates major problems due to the absence of such provisions and rules in the current proposals.
So the Big Three in Europe have clubbed together to turn the 4th Railway Package governance section into an empty shell. Other member states would do well to ignore the UK position, which no doubt has more to do with the politics of BREXIT than any real interest in an effective single market.
Tony Berkeley is a member of the UK House of Lords, Chairman of the Rail Freight Group and a Board Member of the European Rail Freight association. The opinions expressed here are his own.