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Railway (Licensing of Railway Undertakings) (Amendment) Regulations 2021

Volume 813: debated on Monday 12 July 2021

Considered in Grand Committee

Moved by

That the Grand Committee do consider the Railway (Licensing of Railway Undertakings) (Amendment) Regulations 2021.

Relevant document: 8th Report from the Secondary Legislation Scrutiny Committee

My Lords, these draft regulations will be made under the powers conferred by the Channel Tunnel Act 1987. They will make the necessary amendments to domestic rail operator licensing legislation to enable the implementation of a bilateral agreement between the UK and France on the recognition of rail operator licences for the Channel Tunnel and cross-border area. This will support the continued smooth operation of Channel Tunnel traffic when the temporary arrangements expire on 30 September 2021.

The regulations will also provide long-term certainty, clarity and confidence to cross-border operators, both current and prospective, regarding the future operator licensing framework for the Channel Tunnel. They will apply to England, Scotland and Wales, although the main operative provisions will, in practice, apply only to the Channel Tunnel and cross-border area. The regulations are subject to the affirmative procedure, as set out under the Channel Tunnel Act, and Schedule 8 to the European Union (Withdrawal) Act 2018.

The regulations amend the 2005 railway operator licensing regulations, which updated the rules for the licensing of passenger and freight train operators in Great Britain established under the Railways Act 1993 by introducing a new EU form of licence. This was done to reflect changes to EU operator licensing laws. The 2005 regulations introduced the requirement for operators running services on the basis of the new EU form of licence in Great Britain to hold a statement of national regulatory provisions, or SNRP. SNRPs supplement licensing requirements, covering, for example, the provision of information to passengers, membership of industry bodies and third-party insurance conditions.

The regulations also amend the Railway (Licensing of Railway Undertakings) (Amendment etc.) (EU Exit) Regulations 2019, which were introduced to correct deficiencies in the 2005 regulations arising from the UK’s exit from the EU, to ensure that they continued to operate effectively post exit. As well as converting the EU form of licences issued by the Office of Rail and Road, the ORR, to “railway undertaking licences”, the 2019 regulations provided for the continued recognition in Great Britain of European licences for a period of two years from exit day—in other words, until 31 January 2022.

Following the end of the transition period, there is no longer automatic mutual recognition of licences between the UK and the EU. The recognition of UK licences for the Channel Tunnel is currently provided for by an EU contingency regulation that expires on 30 September 2021. These operator licensing regulations, and the proposed bilateral agreement that they implement, will ensure the continued recognition of operator licences for the Channel Tunnel when the current temporary arrangements expire. This will have a significant positive impact on cross-border operators, by providing long-term certainty on the licensing requirements for the Channel Tunnel. It will also reduce the administrative burdens on them, by enabling them to operate in the Channel Tunnel and cross-border area without the need to hold two separate licences—that is, one issued in Great Britain and one issued in the EEA.

Under the regulations, EU licences will be recognised up to the first border crossing station in the UK only, which is Dollands Moor for freight and Ashford International for passenger services. This mirrors the extent of the recognition of UK licences in French territory under the proposed bilateral agreement, and so ensures equivalence.

The regulations, and by extension the agreement that they will implement, are fully compatible with the Government’s fundamental red lines in the Channel Tunnel negotiations with France, which are to support the continuation of cross-border services while conferring no role for the EU courts or the European rail agency in UK territory and avoiding dynamic alignment with EU law.

Information-sharing provisions are included in the regulations to give effect to requirements of the proposed bilateral agreement. Under these requirements, the ORR will be able to share information with the equivalent French authorities in relation to, for example, any doubts as to the validity of a licence or compliance with licensing requirements on the part of either a European licence holder operating a Channel Tunnel service in Great Britain or an ORR-licensed operator operating a Channel Tunnel service in France.

The regulations will also ensure a level playing field regarding the licensing requirements for operators on the French and UK sides of the Channel Tunnel and cross-border area by disapplying the current UK requirement to hold an SNRP for EU-licensed operators of Channel Tunnel services, up to Dollands Moor or Ashford International only, and ensuring that no equivalent additional licensing requirements will be in place for UK-licensed operators on the French side—it will be the same either side. Again, this will support the recognition of those licences on a fully reciprocal basis under the bilateral agreement.

To conclude, the regulations will reduce administrative burdens on cross-border operators and enable them to plan their businesses into the future with confidence. Most importantly, they will support the long-term continued smooth operation of cross-border services through the Channel Tunnel. I commend these regulations to the Committee.

My Lords, I find myself in a uniquely privileged position today because, when looking at the Order Paper this morning, I was rather amazed to see that my role here has been defined as “all other speakers” and I have been afforded no less than 10 minutes to make a speech. This is almost unique in the last 15 months, but I want to placate my colleagues, or at least reassure them, by saying that I do not intend to use all of that time. Still, it was a marvellous bit of news this morning, and I hope it will be replicated in future debates.

Since the Channel Tunnel opened in 1994, I, like many millions of other UK and European citizens, have been able to travel on dry land between our states in comfort and at speed. I have occasionally used the shuttle when I have required my own car to be with me on the continent, but I must, and want to, declare an interest: I hold the record of being one of the most-travelled Eurostar train service passengers, thanks to the weekly journeys that I undertook during the 17 years that I served as a Member of the European Parliament, commuting to Brussels and Paris. I commend Eurostar on its trains and service, which got better and better during those years, with the provision of new facilities at the terminals, as well as its rolling stock.

The Covid crisis has of course presented it, and other cross-channel transport operators, with serious financial challenges. Although that situation is not directly addressed in the legislation that we are considering today, I hope my noble friend will understand that merely expressing positive and good wishes may not be sufficient. I hope it will not be long before Eurostar and others can enjoy renewed growth and prosperity, but the company may need more help, as others have received from Governments on both sides of the Channel.

Having said that, I wish to spend a moment on the treaty of Canterbury, signed by the late Baroness Thatcher, as our Prime Minister, and President Mitterrand of France in Canterbury Cathedral in 1986. It is not perhaps the most exciting thing in history to have happened in Canterbury Cathedral but it is probably close to it. As noble Lords will recollect, this was the treaty that allowed the Channel Tunnel to be constructed, in which the legal and territorial structure for its operation was laid down. A new border between France and the UK was created below the seabed, halfway across.

This was followed up by a protocol signed in November 1991, which effectively juxtaposed national control bureaus at Fréthun near Calais and Folkestone in the UK. This was in itself a unique territorial exchange, allowing security and frontier arrangements to be operated in full co-operation and harmony. Over the years, it has worked very well in protecting both France and the UK, as well as preserving respective immigration rules and policies. It will no doubt please some to know that all this was, and is, based largely on bilateral agreements between France and the UK. The international interest in the Canterbury treaty at that time was from the United Nations. Any modification of the protocol should be by exchange of diplomatic notes.

Of course, although the basis of the tunnel relationship is bilateral, as my noble friend the Minister said, there are consequences for rail operators of our leaving the EU, which is why these provisions are now required. The original pre-Brexit regulations were approved in 2005, as she said, and gave cover for EEA-issued operator licences. In the aftermath of our withdrawal, new regulations were put in place in 2019 to cover the two-year period until September this year.

As my noble friend the Minister said, we now need to renew the regulations to protect the rail operators of Eurostar and freight services until a new agreement with France is, hopefully, concluded and ratified. I understand that the shuttle and Eurotunnel are protected under alternative provisions. Perhaps my noble friend can advise on how the ongoing discussions on the bilateral arrangements are proceeding. I understand that the technical details are agreed. I assume that there are no political or other impediments to the satisfactory conclusion of this.

As a former Leeds MP and Yorkshire MEP, may I press my noble friend a little further? I know it is a long time ago but, in 1987, when the then Channel Tunnel Bill referred to earlier by my noble friend passed through our Houses, a number of MPs from outside the south-east of the UK supported it and allowed the scheme to proceed on the basis of clear promises that there would be direct services from northern cities such as Leeds, Newcastle and York to European cities such as Paris, Brussels and Amsterdam. These have essentially not materialised; no doubt plans remain on the table. Perhaps my noble friend can elaborate on how this might be taken forward and any possible linkage there might be to the HS2 network in due course. It would be very positive if we tried to bring this about because we all know that, with COP 26 being hosted in this country later this year, the environmental benefits of electric trains cannot be underestimated. We have the opportunity to give fresh endorsement to this form of travel. Can my noble friend also confirm that, in view of the separate EU legislation covering Eurotunnel, there are no risks to the continued smooth running of the shuttle?

Obviously, I fully support these protective measures to cover us for the time being. Not only should we welcome them; we must also look for the enhancement of services using this vital piece of infrastructure, ensuring its use to rebuild positive relationships with our European neighbours after an undoubtedly fraught period.

My Lords, like the noble Lord, Lord Kirkhope, I am a firm fan of both Eurostar and the shuttle service through the tunnel. I mainly take the Eurostar to Brussels for family reasons but I have gone on to a number of other locations on that excellent service. One of the things I have really missed in the last 15 months is those regular trips through the Channel Tunnel.

Given the months of political wrangling about whose responsibility it was to prop up Eurostar, it is a relief to see that at least this aspect of Channel Tunnel services seems to be progressing in a straightforward manner. This SI has a limited application but is nevertheless fundamentally important in keeping people and trade flowing between the UK and the EU and mainland Europe.

When there are so many stories of additional post-Brexit hurdles for those wanting to do business with the EU, it is important that this SI is presented in anticipation of the UK and the EU reaching an agreement at the end of September. I join the request to ask the Minister to update us with the latest information on the discussions with the EU. Is this agreement firmly on track? Can we be confident about it? I have a sense of Groundhog Day about these regulations, as I recall a similar measure in preparation for Brexit in 2019.

The SI is to be welcomed, especially because of the increasing awareness of the environmental importance of encouraging international rail transport, both passenger and freight. EU countries have recognised this and there is strong growth in the number of long-distance rail services being launched to replace air travel. I thoroughly recommend the journey using the Channel Tunnel through to Lille then taking the TGV further south. It is a brilliant and luxurious way to travel, even in standard class. The need to replace air travel applies to both passenger and freight travel. France has even legislated to prevent short domestic air journeys. I hope that the UK Government will similarly work to encourage long-distance rail in our country and use HS2 in the way in which it should be used to encourage that.

I want to take this opportunity to ask the Minister about the level of freight services through the tunnel in the last 18 months during the pandemic. I am especially keen to look at the levels of freight using the tunnel pre and post Brexit. We know that passenger travel has been heavily hit but freight should be flourishing, especially because of the shortage of HGV drivers. The two specialist freight operators using the tunnel are sure to be well placed to take some of the heat out of this situation. I look forward to the Minister’s comments in the hope that she can reassure me that freight is flourishing.

I thank the Minister for her explanation of the purpose and content of the regulations. It was very helpful and almost led me to rewrite parts of what I am going to say.

Before I go any further, I congratulate the noble Lord, Lord Kirkhope of Harrogate, on noticing that he had been given 10 minutes to speak, compared with me, who has six minutes, and the noble Baroness, Lady Randerson, who also has six minutes. I hope that the Government Chief Whip will at some stage explain why this state of affairs happened. The noble Lord, Lord Kirkhope, wondered whether it would ever happen again; I assure him that precisely the same thing does happen again in the next SI we have to deal with.

I also noted the noble Lord’s comments about the possibility of through trains between the north and Europe. I suspect that I am in the same boat as him in wondering why it is not possible to link up HS2 and HS1; the situation at the moment appears to be that there will not necessarily be a link.

I come back to the regulations, which, as the Explanatory Memorandum states,

“provide for the continued recognition of EEA issued rail operator licences … for the Channel Tunnel and the cross-border area”


“make the necessary amendments to domestic rail legislation to support the implementation of a UK-France bilateral agreement on the mutual recognition of rail operator licences”,

which, subject to final checks, is to be implemented and ratified. I, too, look forward to the Minister’s response on what progress is being made in those bilateral discussions.

The Explanatory Memorandum refers to

“cross-border operators, both current and prospective”

for whom these regulations are intended

“to provide long-term certainty … regarding the future operator licensing framework for the Channel Tunnel”.

Can the Minister say who the current operators referred to are and whether there are currently any further credible prospective operators on the horizon?

In paragraph 3.3 of the Explanatory Memorandum, there is a reference to

“information sharing by the Office of Rail and Road … in respect of holders of railway undertaking licences issued by the ORR”.

The Minister made reference to this matter in her opening comments. Is this sharing of information a regular occurrence? Did she cover all the issues involved in information sharing in her helpful comments, or are there other issues involving information sharing in addition to the ones she mentioned?

As the Minister said, and as the EM explains, the 2005 regulations, which are amended by these regulations,

“introduced the requirement for operators … to hold a Statement of National Regulatory Provisions … SNRPs supplement licensing requirements, for example setting out specific third-party insurance requirements over and above the general licensing requirement for adequate insurance to be maintained.”

The EM states:

“The requirement introduced by the 2005 Regulations … to hold a SNRP will be disapplied by the Regulations for operators relying on such licences to operate services through the Channel Tunnel and up to … Dollands Moor or Ashford International station.”

It says that this change

“is deemed necessary to support the mutual recognition of licences on a fully reciprocal basis.”

Yet it also says this:

“The impact of disapplying this requirement, if any, is expected to be very limited in practice given the very limited geographical scope of the exemption and given that all cross-border operators currently running services through the Channel Tunnel do so on the basis of a UK licence.”

Can the Minister confirm that this change in respect of an SNRP has no impact on the situation as it is at present or on any current operators of services through the tunnel? If I am wrong in thinking that, can she say what current arrangements and current operators are affected and in what way? Can she also say what the change in respect of disapplying the requirement to hold an SNRP will represent from the current position for any future EEA operator of rail services operating services

“through the Channel Tunnel and up to (but not beyond) Dollands Moor or Ashford International station”?

Finally, the Explanatory Memorandum states that

“the transitory provisions … which provide for the continued recognition of European licences in Great Britain”

will continue in force

“until they expire at 11pm on 31 January 2022.”

It also says that the “current EU contingency legislation”, which provides for the continued recognition of GB operator licences in the French half of the tunnel and immediately beyond,

“expires on 30 September 2021”.

Paragraph 7.8 of the draft Explanatory Memorandum states:

“If … the bilateral agreement is only ratified by both sides after the expiry period of the transitory provisions, the Regulations provide for the amendments to the transitory provisions not to take effect, as the transitory provisions will themselves be spent by that point.”

What happens at midnight on 30 September 2021, when the EU contingency legislation expires, if the bilateral agreement has not been ratified by then by both sides, and what happens at 11 pm on 31 January 2022, when the transitory provisions on the continued recognition in Great Britain of European licences cease to have effect, if the bilateral agreement has not been ratified by then by both sides?

Like the noble Lord, Lord Kirkhope of Harrogate, and the noble Baroness, Lady Randerson, I await the Government’s response to the points that have been made in this debate with interest.

My Lords, I thank all noble Lords for their contributions to this short debate. There were lots of warm wishes for continental train travel; I add mine to them. We all enjoy going on the train, whether it be in a vehicle or on Eurostar. We obviously closely monitor the impact of Covid on Eurostar—I know that my noble friend Lord Kirkhope was interested in this—and all transport services. All being well, I hope to see their passengers and other customers return soon.

Turning to the regulations under consideration today, I start by providing a bit more colour about the status of the discussions with France; I think all noble Lords were interested to hear how we were getting on. My officials have been in active and regular discussion with their French counterparts since the beginning of the year to secure this bilateral agreement on the recognition of the rail operator licences for the Channel Tunnel and the tiny cross-border area either side of it. I assure the Committee that the talks have been highly constructive. Agreement has been reached in principle at the technical level and it is now subject to final legal checks. It is expected that the agreement will be signed before the end of September, then provisionally applied by both sides for a limited period to support the continuation of services in the immediate term once the current EU contingency measure expires.

The agreement will still need to be ratified through the UK Parliament; this will of course be done as soon as possible thereafter. It will be done via the Constitutional Reform and Governance Act 2010 process, rightly giving Parliament the opportunity to scrutinise the text in full before it is ratified. I am not sure whether this will reassure the noble Lord, Lord Rosser, but it will certainly inform him: we have been clear with our French counterparts that the regulations will not receive ministerial signature and become law unless and until the related bilateral agreement is signed by France or, failing that, a EU contingency measure is extended pending the final conclusion of the agreement. Something will thus have happened by 30 September to maintain the smooth running of services. It does not strike me that it would be in anyone’s interest for that not to occur.

In the extraordinarily unlikely event that France does not ratify the signed agreement, for whatever reason, we could also revoke these regulations in future. There is no risk that the UK will continue to recognise EU licences indefinitely without that being fully reciprocated by France. We do not think that we will end up in that situation. We absolutely believe that the agreement will be signed and that we will be able to put in place in the immediate term while it is being ratified by the UK Parliament.

On the disapplication of SNRPs, the disapplication of the requirement to hold a SNRP in the UK half of the channel and the immediate cross-border area will ensure equivalence with the licensing requirements applicable to UK operators on the French side, so it will be the same. Given the extremely limited scope of the regulations, disapplication of the SNRP requirement is expected to have almost no impact in practice. It is therefore considered acceptable in the interests of reciprocity. In practice, there are no current operators to which this disapplication will apply; I know this was of interest to the noble Lord, Lord Rosser. All the cross-border operators—the two freight operators, GB Railfreight and DB Cargo UK, and the passenger operator, Eurostar—do so on the basis of a GB licence. They are scooped up in the SNRP requirement anyway by having a GB licence.

The noble Lord, Lord Rosser, also asked whether there are any credible prospective operators. I am not aware that there are any at this moment in time but, should one wish to come forward, we would obviously welcome its involvement in the market. Any future operator of rail services, if it was an EEA operator that went beyond either Dollands Moor or Ashford International, would in any event have to have an ORR-issued railway undertaking licence, so they too would then be subject to the SNRP requirement. We believe that the situation we have works very well. It is time to be pragmatic and, in practice, it makes no difference.

On stakeholder views and the impact on operators, the amendments in these regulations will in reality have a very limited impact on cross-border operators. Indeed, the measures being introduced will have a significant positive impact in that they will be able to continue the smooth running of cross-border operations. We did a survey on the draft regulations and sent it to Channel Tunnel stakeholders. DB Cargo, Eurostar International Ltd, Eurotunnel, the Rail Delivery Group, the Rail Freight Group and High Speed 1 Ltd responded; all were highly supportive of the regulations and recognised the importance of securing this continued smooth running. A couple of concerns were raised but they were outside the scope of the regulations or related to the geographic scope of recognition in the UK. Obviously, we have chosen to mirror that closely to what they do on the French side, where you go up to the first station for either passengers or freight; that is the cross-border area, so to speak. We continue our discussions with these stakeholders and keep them informed as to how the bilateral negotiations with France are going.

To give noble Lords a quick heads-up, it is also worth mentioning that this is just one element of what we are discussing with the French at the moment. We are also discussing train driver licences, safety certificates and the overarching safety rules applicable to the Channel Tunnel. Again, these discussions are going well. We will bring more regulations to your Lordships’ House in the autumn and we will have the opportunity to scrutinise them in full. In any event, there are robust and effective contingency agreements and arrangements in place for those matters at the moment.

My noble friend Lord Kirkhope asked a question about services from Europe to the north. I will write a letter to him, if I may, because then I can explain more generally our plans for rail in the north and how they might link into European services.

The noble Baroness, Lady Randerson, asked about pre-Brexit and post-Brexit freight volumes. I do not have that information to hand, unfortunately; again, I will happily write to her.

If I have missed anything else, I will ask officials to look through Hansard very carefully and make sure that they pick up everything I have forgotten.

Motion agreed.

The Grand Committee stands adjourned until 5.10 pm, which is really quite soon. I remind Members to sanitise their desks and chairs before leaving the Room.

Sitting suspended.