asked Her Majesty’s Government:

What progress they are making in increasing the flow of rail freight traffic through the Channel Tunnel.

My Lords, on 29 June 2007, the British Railways Board, English Welsh & Scottish Railway, the French rail operator and Eurotunnel signed a memorandum of understanding concerning the development of open access for cross-channel rail freight traffic and freight pricing. The Government welcome continuing progress towards a more commercial and liberalised regime but, ultimately, rates and services through the tunnel are a commercial matter for the parties concerned.

My Lords, I thank the noble Lord for that reply. However, when we debated this issue in the House after my noble friend Lord Dykes raised it, four freight trains a day were going through the Channel Tunnel, whereas there is now one train a day. There is space for 40 trains a day, while 200 trainloads of traffic go up the motorway, some of which should go by train. Can the Minister explain what is obstructing this? I am sure that it is not simply price. Some institutional obstacle must be causing prices to be artificially high.

My Lords, I share the noble Lord’s concern. It is for that reason that the Government have been working with their partners, in particular through the intergovernmental commission, to try to secure, encourage and facilitate more freight going through the Channel Tunnel. In general, the record of increased use of our railway network for freight over the past decade has been phenomenal, with a 5 to 6 per cent per year growth in that method of moving goods and services.

My Lords, does my noble friend agree that the Channel Tunnel will play an important part in meeting the welcome commitment in the high-level output statement to double the volume of rail freight over the next 30 years? Will the Government use their best endeavours to achieve a more satisfactory commercial agreement of the sort that the noble Lord, Lord Bradshaw, described to ensure that volumes going through the Channel Tunnel are increased? Will they talk to the owners of the Channel Tunnel rail link to ensure that freight trains can use the new line as well?

My Lords, we will of course continue the dialogue to try to ensure that the new track can be used. The noble Lord is right that we must do more here, but in the end the growth in freight can only be based on market pressures and there has to be robust commercial underpinning to the system. However, the Government are keen to secure more use of the railway network for freight.

My Lords, last December, the Government announced a £6.5 million environmental grant because of the reduced carbon emissions on rail freight; we would all agree with that. However, the figure had been £26 million, so one wonders how the Government reduced it to £6 million. Was it because of some European regulation that we could not give as much as we might have liked to encourage rail freight transport?

My Lords, we have given considerable rail freight subsidy, as the noble Lord is well aware. Over the past 12 years, the rate has been fixed at £26 million per annum, as he said, and we have contingency to extend that. We have already extended the support once. The time-limited state-aid extension expired in November 2006, but of course we continue to support the rail freight industry through subsidy.

My Lords, further to the Minister’s correct assertion that it is mainly the companies and the markets that determine these matters, Eurotunnel mark 2 plainly needs the additional revenue that will come from extra freight trains. Will the Government undertake to discuss this further with the French Government, because it needs a bilateral agreement and a new text?

There are many indications that there is a certain amount of resistance in the French department for transport, whereas some members of the National Assembly and the Senate are very keen on Eurotunnel having far more freight trains, as my noble friend Lord Bradshaw indicated.

My Lords, I can assure the House that we have been discussing these very issues with SNCF and the French Government directly. We recognise the potential for rail freight growth through the tunnel. As has been said this afternoon, this is clearly an area of potential growth, which is in the commercial interest of the operators. So of course we will continue to do that.

My Lords, does the Minister acknowledge that we have not spent billions of pounds building the Channel Tunnel in order to run one freight train a day between the respective countries? Although the noble Lord, Lord Dykes, as ever, was too polite to say so, there has been a great deal of obstruction from SNCF, the French railways, against anybody else running trains in its area. Why do we in the United Kingdom always gold-plate EEC regulations while the rest of the EEC appears to ignore them?

My Lords, I always expect my noble friend to be absolutely on the point. I cannot accept the charge that we gold-plate. We try to deal fairly and I think that that is right. It is plainly daft that only one freight train goes through the Channel Tunnel each day. We know that. That is why we are working hard with SNCF, the operators, Eurotunnel and so on to ensure that much better use is made of the tunnel for rail freight.

My Lords, does the Minister not agree that some of this friction, which undoubtedly exists across the system, is due to the fact that this country’s network is virtually the only one that is not state owned? Does he not accept that there is at least a case for saying that we should look again at privatisation?

My Lords, that is not a question that I particularly want to open up. We have had a decade of continued growth on our rail network with the current system. I recognise that any system will develop some problems, but we have had a very good record—I was about to say “track record”—in railway growth over the past decade. I think that many of our European partners would like to equal that growth.