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House of Lords Hansard
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Connecting Europe Facility (Revocation) (EU Exit) Regulations 2019
20 May 2019
Volume 797

Motion to Take Note

Moved by

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To move that this House takes note of the Connecting Europe Facility (Revocation) (EU Exit) Regulations 2019 (SI 2019/477).

Relevant document: 21st Report from the Secondary Legislation Scrutiny Committee (Sub-Committee B)

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I will not take long talking about this Motion, but it is important that we understand the potential changes to the railway sector if we leave the European Union without an agreement. I declare an interest, because I am still a board member of the European Rail Freight Association.

I very much welcome the commitment in the draft SI for the Government to continue funding the Connecting Europe Facility, which is given in the first page of the Explanatory Memorandum. I am also grateful to the Minister for the short meeting we had this morning to discuss some of these issues. I would be grateful if she could write to me with a list of the projects that are still receiving or are due to receive funding from the Connecting Europe Facility, so we can see how many there are and how long they will go on for. I do not think they will go on for long, but it would be good if they did.

The whole concept of a trans-Europe network, TEN-T and freight corridors has been debated and developed by the Commission over many years to try to get some continuity of funding or specification for operating procedures on the railways—and roads for TEN-T. Railways in the European Union generally are in complete chaos. They have got better, but are still pretty bad. The concept of continuity across frontiers will help customers have certainty of what they can operate on the trains. There has been little take-up on some routes, including a particular one that comes to the UK, but that is as much a problem of attitudes in France to operating anything in France that has not been developed in France.

We have a problem in this country, because these corridors go back long before Brexit was even thought about. I have always detected a reticence in successive Ministers of the Department for Transport to encourage the principle of through-running trains, because they thought they could do things better here. To me, this latest Explanatory Memorandum tries to confirm that policy, whether we stay in—when it will not apply—or leave.

I have a few questions to ask the Minister, if she does not mind, particularly about the content of the Explanatory Memorandum. I note from paragraph 2.3 that some further separate draft instruments will “deal with deficiencies arising”. When will that occur? On paragraph 2.8, we are members of the North Sea-Mediterranean Corridor, and I have been to many of the meetings of this body. It extends beyond London to Glasgow, Edinburgh, Southampton—and we can probably forget about Felixstowe. There is pressure from the European Union and quite rightly so, and remember we are still a member. Getting through services to Glasgow and Edinburgh in particular is important. I see no reason why this should not continue if we leave the EU. My understanding is that Switzerland, which has at least one and maybe one and a half corridors going through it, fully participates in all the discussions about improvements that are needed. I see absolutely no reason why we cannot have the same status as the Swiss. I would be grateful if the Minister would explain whether the Government intend to seek whatever arrangement is needed with the Swiss to achieve that. It is very important, from the customer’s point of view, to see that the Government are enthusiastic about this, even if it does not involve any money, so I hope that they will look at it again.

Paragraph 2.13 contains a very odd statement:

“The extension of the parts of the North Sea Mediterranean RFC in Great Britain made by the CEF are saved by the instrument”.

I do not know what the word “saved” means in this context. Perhaps the Minister can explain whether it is some old-fashioned meaning of the word or whether it means it will be “retained”. I hope it will be retained because it is very important that the Government give the message that these corridors can continue even if we have left the EU, under any circumstances. It is the same problem as the one we debated a couple of months ago about the European Railway Agency. If we leave, we are trying to stay as close as we can to Europe on the air side; and, as we debated earlier today, on the coach side we seem to be trying quite hard to stay with it; but on the railways, as far as I can see, Ministers want to separate us as much as they can from the rest of Europe, particularly in connection with the European Railway Agency. Is it because the word “Europe” is in the title of the European Railway Agency? I hope it is more sensible than that, but you never can tell.

I hope, first, that we never have to use this SI, but also that the Minister can give me some comfort that the UK Government’s policy on these corridors, for freight and the TEN-T, is better than lukewarm, because it has been lukewarm. It would be very good to encourage customers, Network Rail, the Government and the train operators to act positively and support them. They are very important to enable the best possible, environmentally friendly form of transport to continue—I think it covers something like 40% of our exports now. I beg to move.

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My Lords, I thank the noble Lord, Lord Berkeley, for bringing this statutory instrument to my attention. It is not just about hard rail infrastructure but concerns telecommunications. The programmes of this facility particularly concern the digital economy and connectivity, and the whole area of energy, which is crucial for our development, given the problems we have with the nuclear programme at the moment.

I do not want to depress the noble Lord, Lord Berkeley, by saying that the one glimmer of hope in this SI is not what it seems, but I want to explore the Government’s funding guarantee. As I read it, this goes up only to 2020: I presume it is the end of 2020. We know that the current multiannual financial framework ends in 2020, but we also know that in the European cohesion funding and all other funding programmes, expenditure does not stop at the end of 2020: it is the bids for programmes that stop at the end of 2020. In fact there are already enough forthcoming calls in 2019 for new projects, and I suspect there will be in 2020; I am sure the Minister has looked at this already. I presume that all those, particularly in hard infrastructure—not just digital, but even in digital development—will go well beyond the 2020 MFF end of programme and the government guarantee.

Has the Minister had any feedback from British organisations that are involved in this programme? Are they concerned that, if they bid for this programme now—and I presume they are stopping doing so now—they have no guarantee that there will be any funding after 2020? The EU would continue to fund these usually for two years after the MFF ends, and these programmes can no longer be bid for. I would be very interested to understand how that will work. Indeed, if it is a 2020 guarantee, we are already handicapping UK industry and UK business in terms of our connectivity under the threat of Brexit.

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My Lords, to take up the point just made by my noble friend, this SI is intended to plug any gaps that would occur if we leave the EU without a deal. In that situation, it is highly likely that the EU might cease to fund projects that it has already committed to. Crucially, this 2020 date is now remarkably soon, although it might have sounded okay when the Government first dreamed it up at some point last year. Can the Government assure us that the 2020 date will be extended, for the reasons that my noble friend has outlined? That lack of certainty is behind the concerns that have been expressed by the devolved Administrations. If you think about the geography, it is the areas on the edge of the UK that are most concerned in many circumstances. In Wales, Scotland, Northern Ireland, Devon, Cornwall and the north of England, there is, not surprisingly, a lack of confidence that the Government have sufficient commitment to the prosperity of those nations and regions. Their prosperity will be undermined if infrastructure projects of this nature are not taken forward and completed. After all, infrastructure is the key to unlocking prosperity.

Once again, the Government recommended that this SI be slipped through under the negative procedure, so I am very grateful to the noble Lord, Lord Berkeley, for bringing it to our attention. Although the SI is unexceptional in itself, it is connected to an issue of serious concern. We are on the brink of Brexit, yet not only do we not know what will happen with the continued payments of what is currently EU funding for infrastructure projects but, crucially, there is absolutely no guarantee for the future. There is no certainty on the Government’s commitment to further infrastructure development. Will the Government replace this EU concept, which has improved connectivity across our nation, or will they let it just wither away and not replace it? It is the areas on the outskirts of our islands which are most at risk of suffering from lack of government commitment. To take up a point made by the noble Lord, Lord Berkeley, can the Minister give us some information on whether the Government are planning in the long term to seek a status similar to that of the Swiss, who benefit from being part of these networks, or are they intending to cut us off from those networks in the future?

The Government do not have a grand record on infrastructure projects of any sort. They certainly suffer from dither and delay, and it is therefore not surprising that the devolved Administrations have raised concerns—they do not believe that these projects will be safe in the Government’s hands.

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The Connecting Europe Facility for transport, or CEF, aims to support investments in building new transport infrastructure projects in Europe or in refurbishing and upgrading existing ones. On departure from the EU, CEF funding which has previously been agreed by or on behalf of the EU Commission for us may not be paid out if a withdrawal agreement is not in place. This statutory instrument gives the Secretary of State the power to make good any shortfall in funding encountered by UK participants.

I too have a few questions. When will we know whether CEF funding previously agreed will or will not be withdrawn, and will we have any influence over that decision or is it one purely for the EU Commission? Will the decision be a blanket one, or on a project-by-project basis? As of today, how many CEF-funded projects, and what are those projects, are potentially at risk of having their previously agreed funding not paid as a result of our withdrawal from the EU? What is the total amount of funding to UK participants that is potentially at risk in this way, and in respect of which the Government would have to make up that shortfall? Will the Government provide sufficient money to complete a CEF-funded project, and from which budget would that government money come? Can the Government give an assurance that it would not come out of the Department for Transport budget?

Paragraph 2.3 of the Explanatory Memorandum states:

“In response to concerns raised, the Government has removed from the instrument the provisions that would revoke the TEN-T Regulation and the European Rail Network for Competitive Freight Regulation while it responds to the concerns raised”.

What were those concerns raised, and by whom? Paragraph 6.3 of the Explanatory Memorandum states:

“Grants are applied for in semi-annual calls for funding and applications are made direct to the Commission. The UK Government has a limited role in the application process, but no role in the decisions on whether or not to grant funding to specific projects”.

Can the Government confirm that this situation applies to the present circumstances rather than following departure from the EU with or without a deal? If that is correct, why do the UK Government have only a limited role in the application process and no role in the decisions? Finally, paragraph 7.2 of the EM states at the end of the paragraph:

“Correcting these deficiencies would require the UK to set up an enforcement mechanism (including a process for agreeing exemptions) for EU imposed standards over which the UK would have no control”.

Can the Government say how extensive or elaborate this enforcement mechanism would have to be, who would be responsible for it, and how much it would cost per annum?

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I thank all noble Lords who took part in the debate, which has been short but good. I was doing very well, but, unfortunately, I missed that last question, so I will definitely have to write on it, and that will be supplemented by anything else that I am not able to cover this evening.

The SI that we are discussing today, as many noble Lords noted, was prepared to enable the continuation of funding to UK organisations involved in trans-European network projects in the event the UK leaves the EU without a withdrawal agreement in place.

I will give a tiny bit of further background to the statutory instrument. It revokes regulation 1316/2013 on the Connecting Europe Facility—the CEF regulation. The Connecting Europe Facility is an EU funding programme to support the development of trans-European infrastructure networks for transport, energy and telecommunications. The CEF regulation sets out the conditions, methods and procedures for providing for EU funding for projects relating to the three trans-European networks. It also establishes the amounts of funding available for the period of the 2014-2020 multiannual financial framework.

The first question for the Government in considering how to handle this regulation was whether we needed to retain it in UK law. As the CEF regulation deals with internal EU mechanisms, it will be redundant and will serve no purpose as retained EU law under Section 3 of the European Union (Withdrawal) Act 2018. This instrument therefore revokes the CEF regulation, as well as the Commission delegated regulation 2016/1649 which supplements it.

The second question for the Government was how to address the implications for the funding of TENs projects in the UK. It is possible that projects that have been awarded funding from the EU budget will still be due money, which may not be paid, or may not be paid immediately, by the EU in the event of a no-deal exit. In 2016, the Government announced a guarantee that projects in the UK granted EU funding before exit would continue to receive funding from the Exchequer if the EU payments they would have received were not made. This guarantee was extended in July 2018 to cover successful applications for EU funding until the end of 2020. The guarantee ensures that UK organisations such as charities, businesses and universities continue to receive funding over a project’s lifetime if they successfully bid into EU programmes before the end of 2020.

A number of noble Lords asked how much funding we are talking about. The amount for the 2014-20 period is €345 million. I believe that there are 44 live projects—I will happily provide a list of them—23 of which are completed but may not have received their final amounts, 20 of which are in process and one of which will continue after 2020.

That brings me to another important point. As the noble Lord, Lord Teverson, brought up, the guarantee extends to projects that have been successfully bid for before 2020. The funding will then continue; providing that the project has been bid for, it will get the money.

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That is fantastic but not what the Explanatory Memorandum says. It states:

“The powers would also enable the Secretary of State to make similar payments”—

—payments, not successful bids—

“up to 2020”.

I am therefore delighted by the Minister making that statement.

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Let me keep going and see how we do.

The noble Lord, Lord Rosser, raised the issues of whether the projects will receive the funding, depending on whether the EU decides to give it, and the timing. I am afraid that we do not know because it will depend on future negotiations. I assure the noble Lord that the Government stand behind these payments, which will be made in the circumstances that they are not received from the EU.

The noble Lord, Lord Rosser, also mentioned the present circumstances and the Government’s limited role. The Government have a limited role because it is often private companies making the bid. The Government are not part of the decision process because, as I hope I have already explained clearly, it is clearly set out in the regulations such that the regulations govern the decision process.

The funds that will be paid out, or are guaranteed to stand behind these payments from the EU, are “new money”, to use the terminology. They are not from existing DfT budgets.

The instrument provides the necessary powers for DfT, the Department for Business, Energy and Industrial Strategy and the Department for Culture, Media and Sport to “operationalise” the Government guarantee and make payments in respect of CEF grants if these are not met by the EU in the event of the UK leaving the EU without a withdrawal agreement in place.

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Following on from the Minister’s commitment to the noble Lord, Lord Teverson, that bids will still be accepted a few years later, will the criteria for awarding funding be retained? I understand that one of the reasons why the Government and other member states do not have much involvement in the decision-making is due entirely to the Commission’s view that investment in infrastructure near frontiers tended to be much less than in the middle of a member state. I hope that those criteria will be continued.

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I believe that that is the case. I was just going to come on to bidding, where I believe I will reiterate what I have already confirmed to the noble Lord.

As the noble Lord pointed out, all bids for CEF funding are reviewed against set criteria. If UK organisations submit applications that meet those criteria, the application could be successful. The EU has maintained that, until such time as the UK leaves the EU, it continues to be a member state and therefore enjoys all the rights of a member state, so the EU could very well award funds to UK firms between now and 31 October. One UK organisation was part of a multi-member state project application which was successful in the October 2018 call. The Government have advised UK organisations to continue to bid for EU funding and have committed to providing funding through the government guarantee over the lifetime of the project to those organisations which successfully bid into EU-funded programmes before the end of 2020. I have said that twice and if I am not right, I shall make a correction.

I turn to the broader issues, including the TEN-T regulations which are obviously at a slight tangent to the issue before us, but they are important because an SI will be coming down the track, it is hoped later this year, that will revoke the TEN-T regulation and the regulation on a competitive rail freight network. As we explained in the Explanatory Memorandum, it was decided to address only the CEF regulations at this stage given the concerns raised in the consultation. Those concerns were raised specifically by Wales. Obviously, we are working closely with the Welsh Government to allay their concerns. When those discussions have been completed, we will bring forward that SI.

The noble Lord, Lord Berkeley, asked about paragraph 2.13 of the memorandum which talks about “saved”. This is a technical point, but I shall address it anyway. The use of the word “saved” in this paragraph is legal shorthand for a savings provision, a type of clause used to preserve an existing legal rule that would otherwise be repealed or cease to have effect because of the repeal of an existing piece of legislation. The 2013 CEF regulation was used to make amendments to the rail freight corridor regulation. It is these amending provisions that are being saved for the time being, until we come back to the issue in due course when the other SI comes before your Lordships’ House.

I turn now to the comments made by the noble Lord, Lord Berkeley, about rail freight. It is an important issue and I feel that we do not talk about it enough, and indeed I do not think that we talk about aviation freight enough either. In September 2016, the Government published a rail freight strategy which was developed in collaboration with key industry stakeholders. It sets out a shared vision for the rail freight sector, but looking to the future we are open to any practical action that helps more freight move on to rail. For example, it may be possible to reach an agreement with Switzerland, but that would be delivered in the context of our future relationship with the EU.

The noble Baroness, Lady Randerson, also talked about future co-operation and the TEN-T regulation. She asked whether we would hang on to it. There is no barrier to the UK participating in any TEN-T projects of common interest following exit, but of course that will be subject to negotiation. We are also reviewing the benefits of continued participation in the North Sea-Mediterranean Corridor. We recognise that rail freight corridors have facilitated a degree of co-operation and co-ordination between member states, particularly on the continent. However, use of the corridor has been negligible, with only a handful of paths requested to date. Freight operating companies prefer to use access rights granted under national laws which offer greater certainty.

I have appreciated the opportunity to listen to the views of noble Lords in this debate as well as on the broader issues which I am sure we will return to. I look forward to discussing them in the context of the SI that will come before the House later in the year.

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I am grateful to the Minister for her response and to all noble Lords who have participated in the debate. We have learned quite a lot and we look forward to discussing these issues again in the future.

Motion agreed.