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Are EU rules really a barrier to reuniting the railways under public control?

4 March 2013

European Union rules get blamed for everything from the mythical ban on re-using glass jars for homemade jam to preventing the renationalisation of the railways. Labour’s leader in the European Parliament, Glenis Willmott MEP, asks whether EU rules are really a barrier to bringing Britain’s fragmented railway system back under public control.

Glenis Willmott.jpg

‘It's against European Law’ is one of the arguments often raised against reunifying the railways under public control. The others are that the involvement of the private sector brings innovation, greater investment and greater efficiency, and that it would cost too much to buy back the assets.

But as the Rebuilding Rail report by independent think tank Transport for Quality of Life very clearly shows, European rules do not dictate that railways must be fully privatised. Nor is there a requirement for railway infrastructure to be in private ownership or a ban on train services being operated by a government-owned enterprise.

The EU has been involved in railway policy since 1985 and since then several waves of EU law have indeed promoted and extended competition. But when John Major’s Conservative government decided to separate track and trains during privatisation 20 years ago, it went far beyond any EU rules.

As Rebuilding Rail shows, the UK – not the EU – has decided that the railways must be privately owned, that the running of passenger services and railway infrastructure must be completely divorced, and that trains must be leased from private companies.

What EU rules do require is that freight and international passenger services must be open to competition; railways must hold assets, budgets and accounts separate to those of the State; the manager of railway infrastructure must draw up separate accounts to the provider or providers of passenger services; and that certain ‘essential functions’ of infrastructure management must be independent of train operators.

In several other European countries, either all or a large proportion of passenger and freight services are under public ownership:

  • In France, both the train operator SNCF and the infrastructure operator RFF are state-owned.
  • In Germany the state-owned operator Deutsche Bahn runs 90 per cent of passenger services.
  • In Italy, the state-owned railway company FS Holding owns both the national rail infrastructure manager RFI and train-operating company Trenitalia.
  • The Spanish railway is almost entirely in public ownership.
  • Even in Sweden, the first country in Europe to take steps towards privatisation, the state-owned rail operator SJ operates more than 80 per cent of all passenger services.

European law relating to railways continues to develop. In September, one of the chief legal advisors to the European Court of Justice said that the German model, in which the transport operator is integrated with the infrastructure manager, conforms to EU rules.

In October, transport ministers and MEPs agreed a ‘recast’ – or consolidation and amendment – of EU rules, restating that national rail networks must be open to private competition for rail freight and cross-border passenger services.

In January the European Commission published proposals for a Fourth Railway Package that would open up domestic passenger services to competition. These must be approved by the European Parliament and Member States before they become law.

But other European countries have managed to retain the railways under public ownership and there is no reason why the UK could not do the same.

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