HL Deb 18 January 1982 vol 426 cc487-513

8.8 p.m.

Lord Kings Norton rose to ask Her Majesty's Government whether they agree with the conclusions of the report of the European Communities Committee on Combined Transport (1st Report, H.L. 19), and whether they expect progress on the Common Transport Policy (43rd Report, 1977–78, H.L. 255).

The noble Lord said: My Lords, the immediate motive for this Unstarred Question is the publication of the report of your Select Committee on the European Communities on Combined Transport, which, in the terminology of the EEC Commission, is the transport of freight partly by road and partly by rail or inland waterway. The impact of the Commission's proposals on the transport arrangements of the Ten, whether or not amended before adoption, as your committee believe they should be, is not likely to be great and, in the case of the United Kingdom, would undoubtedly be small. Nevertheless, there are points of principle and equity involved in their drafting which your committee believe deserve your Lordships' consideration.

Further, the proposals represent a small step in the progress towards the formulation of what is called the EEC Transport Policy, a progress which, unless the noble Earl, Lord Avon, is able to tell us of recent moves, appears to have been singularly lethargic. After all, the transport policy looms nearly as large as the agricultural policy in the text of the Treaty of Rome and, fundamentally, appears to be of comparable importance. But it certainly does not loom nearly as large as the agricultural policy in the Community.

Your Lordships' Select Committee reported on the transport policy as long ago as July 1978, following an inquiry conducted by the noble Viscount, Lord Simon, who unfortunately is unable to be here this evening to take part in the discussion. The Select Committee concluded its report by recommending that it should be: as source material for any general debate on transport policy in Europe ". Well, I would not describe tonight's discussion as a general debate, but the general issues involved in the development of the common transport policy do indeed provide the background to the much more detailed proposals on combined transport, and indeed before putting the detail of the combined transport issue before your Lordships, I should like to say a few words about the transport policy.

I think that it is fair to say that such progress as has been made is of two kinds: proposals, such as those of 1962, of a supremely general kind, under such headings as " Co-ordination of Investment ", " Liberalisation of Transport Services ", " Organisation of the Transport Market ", " Harmonisation of Competitive Conditions "; and proposals of a strictly practical character, such as those related to the quotas for road transport crossing frontiers, the lorry weights to axle loadings, tachographs, and delays to freight at frontier posts—a matter what I heard discussed recently, and with some feeling, in Strasbourg by MEP's of the European Parliament's Transport Committee. If I may at this stage insert a purely personal opinion, it is that we are likelier to achieve positive results by resolving such relatively minor but definable issues than by attempting to codify the pious generalities.

As a result of an exchange between the Council and the Commission, the latter was persuaded in 1977 to issue, in the form of a draft resolution, a list of priority actions to be taken by 1980. Abbreviating the list, which is given on page xvi of the Transport Policy Report of your Lordships' Select Committee, we have:

  1. (a) developing a coherent Community infrastructure by strengthening procedures for national authorities to consult each other about future national investment plans;
  2. (b) agreeing a common tax structure for commercial vehicles;
  3. (c) adopting uniform principles for calculating railways' costs;
  4. (d) promoting competitive marketing arrangements for inland shipping and road transport, in particular by agreeing the Commission's proposals for opening up the international road haulage market by extending the Community quota and establishing maximum permissible weights and dimensions of commercial vehicles; 489 and, finally,
  5. (e) defining appropriate Community measures including rules of competition for ports, maritime shipping and civil aviation.

Can the noble Earl who is to reply tell your Lordships whether anything has happened as a result? So far as I am aware, the Council has done no more than " take note " of the Commission's programme. Certainly a lot of it is still in the area of acceptable, though difficult-to-implement, generality, but the bits about permissible vehicle weights are in the area of practicability, have long been the subjects of discussion, and have been dealt with in the Armitage Report. So the noble Earl may be able to inform us of some progress.

It is in this area of practicability that the modest proposals on combined transport lie. The inquiry into the draft directive and the draft regulation was conducted by Sub-Committee F of the Select Committee concerned with energy, transport, research, and technology, and the sub-committee heard evidence from the Department of Transport, the British Railways Board, the Road Haulage Association, the British Waterways Board, and Mr. Gabert, MEP, a member of the Transport Committee of the European Parliament; and they had written evidence from the Union of Industries of the European Community and from Novatrans (Europe) Limited.

I think that it would be most convenient if I deal first with the straightforward case of the draft regulation. This enables member states to grant financial aid from national exchequers to combined transport facilities without breaching the Community competition rules. Such expenditure would be discretionary. Community expenditure would not be involved. Neither the Department of Transport, nor your Lordships' Committee, saw any objection to this draft measure. However, I have heard from the Secretary of State for Transport that at their meeting on 15th December last, because of the reservations made by one member, the Transport Council was unable to adopt the proposed regulation.

And now for the more complex case of the directive. For the purpose of the draft directive, " combined transport " means the carriage of goods by a unit of equipment which can be transferred between different means of inland transport—rail, road, and waterway. Transport by sea is excluded. The units of equipment contemplated are lorry, trailer, semi-trailer or their swap body (it I may be technical) or container. An impediment to the full use of combined transport as envisaged by the Commission is the fact that the loading gauge of British Rail is different from the loading gauge in use on the Continent.

I have discovered that some of your Lordships are not quite sure what the loading gauge is. The track gauge, 4 ft 8½in, is the same on the Continent as it is here, but whereas we have the tunnels, platforms and space between tracks limiting the trains to those which can pass through a space 13 ft high by 9 ft 3 in wide, the corresponding limit for continental trains is 14 ft ½ in high and 10 ft 4 in wide. So while, given a cross-Channel link, a British train could run on Continental tracks, a Continental train, unless specially constructed for use in the United Kingdom, could not run on British rail. What is more, in the context of combined transport a British lorry, with which I would include trailer, semi-trailer, and swap body, cannot be carried by train in this country, though it can be so carried on the other side of the Channel. That is one of the reasons for the container system which has been so highly developed in the United Kingdom.

The objective of the proposed directive is to reduce the volume of road traffic by making greater use of the carrying capacity of the railways, and it seeks to achieve that aim by tax concessions on road vehicles involved in combined transport. The Commission argues that a substantial portion of present road traffic should, by its proposals, be transferred to combined transport, but the likelihood of this happening is indeed really small. The sub-committee learned that less than 1 per cent. of inland freight transport in the community used combined transport and that even the Commission, optimistic about its incentives, did not foresee a growth beyond 5 per cent. The effect of the directive in this country would be much less. In our report we go into the financial implications in some detail and conclude that by implementing the directive, as at present drafted, the tax relief would be trivial in amount and too small as a proportion of overall freight costs to be a worthwhile incentive.

If the draft directive is taken further, however, and if there is a real chance of some such set of proposals being adopted by the Council of Ministers, then certain amendments are essential. First of all, if we have interpreted the not unambiguous wording correctly, the directive, as at present drafted, encourages the carriage of lorries by train and discriminates against containers. In so far as containers are considered for tax relief, it is for a period of five years only; and ultimately the only advantage to British carriers would accrue if their lorries were carried on trains on the Continent. From the British viewpoint it would be necessary to insist that the final taxation system treated lorries and containers on equal terms. Our container system is highly developed, and could be still further improved. It must not be put at a disadvantage in competing with (to use the current jargon term) the piggy-back lorry, the lorry carried on a train.

Secondly, the proposals give only half-hearted support to inland waterways, which, our British Water-ways Board argued, should be treated comparably with the railways, and your Committee are sympathetic to this view. Quoting our report: the Committee do not expect that this extension of the scope of the proposals—already suggested by the European Parliament—would make any detectable difference to road traffic in the United Kingdom, but it would provide a small boost to the waterways and would be fair ".

From the United Kingdom point of view a far more important omission from the proposals is maritime transport. The Commission did not forget it, but proposed to delay consideration of measures to incorporate it. This is perhaps of no great consequence to mainland Europe, but in the context of combined transport it is of great importance to the United Kingdom; and the Commission proposals bringing in sea transport, when they come, may affect profoundly the choice between containers and lorries. The committee firmly believe that in its final form the directive should cover sea transport. Roll on/roll off transport of road vehicles on ferries should not, however, be regarded as combined transport. If it were, the tax incentives would have the effect of encouraging road traffic, not discouraging it.

Combined transport considerations would, however, be very relevant to the design of a cross-Channel link involving in whole or in part a tunnel. The choice of loading gauge would decide whether or not lorries would be carried across the Channel by rail.

Your Lordships' committee concluded that if the proposals were enacted without amendment they would be moderately harmful to British Rail and to the development of the container system in the United Kingdom. In the long run they might encourage rather than discourage road traffic in the United Kingdom, especially for the first and final sections of long-distance trans-Europe lorry journeys. The committee suggest that the proposals should be amended to give equal treatment to piggy-back lorries, containers and water transport. With such amendments there would be some modest advantage, though not enough to reduce substantially the proportion of freight traffic on the road network.

The committee retain doubts whether the whole exercise would be worth the trouble and cost of administration, especially of the proposed tax concessions or rebates, and suggest that the practical problems arising should be more thoroughly examined before any such proposals are approved.

8.24 p.m.

Lord Underhill

My Lords, I am certain your Lordships will be grateful to the noble Lord, Lord Kings Norton, for asking this Question; for explaining the work of your Lordships' committee and the conclusions arrived at; and for putting them forward (if I may say so with humility) in such a clear way that even a person such as myself can understand fully what is involved in the proposals. It would seem to me that the objectives of the Commission are admirable, but, as the noble Lord has pointed out, at the moment, even in the Community as a whole, only 1 per cent. of all inland freight transport uses combined transport, and even the Commission's own aim is only that it might achieve 5 per cent.

I find that I am in agreement with the committee's view that the overall effect of the proposals as they stand could be to encourage the use of piggy-back lorries and discourage the use of containers. Therefore, the proposed tax reductions, which are the incentives for the development of combined transport, would mean that a British lorry could travel piggy-back on continental rail but not in Britain. I noticed the statement of British Rail—and I quote: this island would just become a road delivery and collection area for the piggy-back system in Europe ". The noble Lord, Lord Kings Norton, has detailed the conclusions of the committee, and without going over them again I would say that, on the report and the evidence presented, in general I not only agree with the conclusions of the committee but I also find myself in general agreement with the proposed amendments that the committee feel should be made to the draft directive. I must say that the committee's view that (and I quote again) The actual proposals pale beside those grandiose claims which were made in the directive seems to be borne out by the report; and it would appear that so far as the United Kingdom is concerned, it could be much ado about nothing.

I am very grateful to the committee for subjecting the proposals to such detailed consideration and for the way in which they have exposed the weaknesses in the draft directive and have indicated the amendments that should be made if the directive is to be proceeded with. I am particularly pleased that the committee paid such attention to the wording of the draft directive with regard to reduction or exemption of taxation, as this is the incentive for the development of combined transport. The Commission has declared that no member state must give any relief from fuel duty, and as far as the United Kingdom is concerned it can apply only to relief on vehicle excise duty. Therefore, it is important, I believe, as the committee have stressed, that the actual wording of the taxation proposals should be precise.

Another reason is that the European Assembly have proposed that taxation relief should be made compulsory and not discretionary, as is proposed in the draft directive; and also that the directive should include provision for taxation relief for vehicles used only occasionally for road haulage, as defined in the draft directive.

The noble Lord, Lord Kings Norton, referred to the evidence of Mr. Gabert. I noticed that he also supported the proposal that there should be equal treatment for combined transport, whether used for road and rail or for road and inland transport. That was the view of your Lordships' committee, and it is the view which I also support. I must say that in view of the length of the inland waterways that there are in some EEC countries, I have found it rather difficult to understand why help for waterways should be confined to transport of containers. It seems so logical to me that there should have been the extension as proposed by your Lordships' committee.

It seems that the objective of the draft directive appears to have been looked at through continental eyes. There we have long distances and we have the frequent crossing of frontiers, all of which would seem to make combined transport beneficial in those countries. I note that Mr. Gabert claimed that combined transport decongests roads and contributes to the reduction of expenditure on road building and to the protection of the environment, and assists road safety. But when Mr. Gabert was asked whether he thought that combined transport would have a very small effect in reducing road congestion in the United Kingdom, I find that he replied that he could not say what would be the effect in Britain but it would have a strong effect in continental Europe. That seems to bear out what I have said, that it was being seen through continental eyes.

Mr. Gabert also expressed the view that the proposals would be important for Britain with regard to containers. But I note that your Lordships' committee accepts the British Rail criticism that the investment required to secure limited increase in container traffic would not be justified, particularly as tax relief would end after five years. I support the view of your Lordships' committee that the transport of containers must be given comparable advantages to those proposed for piggy-back lorries. From the evidence, I note that the evidence presented by the Road Haulage Association and that by the Union of Industries of the European Community are somewhat similar. They take the view that the use of combined transport should be encouraged on its merits alone and not be specifically used to achieve transfer of freight from road to rail. Nevertheless, they would approve minimal assistance on specific projects to assist the development of combined transport, but would not approve grants or subsidies on actual operations.

I note that the Road Haulage Association pointed out in their evidence that operations in Germany are limited by regulation rather than by market forces, that the number of road permits is severely limited, has not been increased for some years and that this is intentional to protect the German rail system. Then I note Article 4 of the draft directive which states that member states have to ensure that carriage by road as part of combined transport operations shall not be subject to any quota system or other quantitive restriction affecting access to the market. At present the Germans would appear to contravene that particular article.

I thought that the memorandum of the Department of Transport was particularly helpful in explaining the whole of this issue. I thought it an excellent memorandum. Paragraph 8 of that memorandum states that the draft regulation would amend Regulation 1107 of 1970 which provides that member states may give aid during research and development stages of any new transport systems and techniques and that such aid is not in breach of Article 92 of the Rome Treaty. The memorandum also states that adjustment to the 1970 regulations would be absolutely essential if member states are legitimately to continue their support for combined transport.

Then we find British Rail evidence, which I am certain we have heard in other debates, but which I will quote. It says: We are the only European rail whose freight business has to be commercial and cover its total costs; every other European rail system is supported by some form of governmental aid, and road haulage is restricted. Neither of these things is present in this country ". In view of that statement and the known level of governmental aid to rail in most European countries and the similar help given to public transport in most of their capitals, far in excess of that which applies in the United Kingdom, I wondered how all this fits in with the Treaty of Rome. Therefore, in this connection, the second part of the Unstarred Question put down by the noble Lord, Lord Kings Norton, which raises the whole question of the European common transport policy, is important.

So I re-read the 43rd Report which, as the noble Lord has said, was issued in 1978. I find that page 10 sets out a number of EEC articles which deal with the common transport policy and the circumstances in which there might be state intervention in transport and also the provision of state subsidies. I am certain that your Lordships will agree that at this stage it would be wrong to reopen the debate on the 43rd Report which has been debated previously by your Lordships. However, I am sure that it will be interest- ing to learn of the Government's view on the common transport policy. I note that the Committee under the chairmanship of the noble Viscount, Lord Simon, explained that they recognised that what seemed sound in theory often proved in practice difficult to implement.

I noted in paragrah 46 of the report, that that committee while supporting the principle of a non-discriminatory and competitive market, also call for the exercise of common sense and realism in the measures taken to promote it. They believe that at present too much attention is being paid to " fair competition " at the expense of reaching agreements on specific matters such as construction and use regulations. I wonder whether the Government agree with the statement of your Lordships' previous report and whether that is the Government view at present. It is interesting to note that Article 9 of the draft directive proposes that every two years the Commission shall draw up a report on the development of combined transport as far as the application of Community laws is concerned. That will obviously bring up the whole question of the common transport policy, the whole question of the subsidies and the policy which is carried out at the moment by most of the European Community countries in contravention of the articles of the treaty.

Mr. Gabert was asked if he could elaborate on what the United Kingdom Transport Minister had told the European Committee on Transport when it was discussing combined transport. He replied that the British Minister and other Transport Ministers were very much in favour of the directive and the regulation to provide for combined transport. Then, in reply to another question, he said that the British Minister made no reservations. It may be that Mr. Gabert's statement was not in full accord with the facts. But, if it was, then I am surprised, in view of the reservations and the criticism made by witnesses on behalf of the Department of Transport, that our Minister did not make reservations and criticisms when this matter was being discussed in the Transport Committee of the Community.

My last point is on the question of the Channel tunnel raised by the noble Lord, Lord Kings Norton. This matter was drawn attention to by the committee. In their evidence, British Rail point out that their agreement with their French Rail counterparts is for a six-metre tunnel and they suggested that their French partners are luke warm to piggy-back transport generally whereas Germany is extremely enthusiastic. I readily understand the view of both British Rail and French Rail that so long as there is only a single tunnel, even if it is a larger one of seven metres, it would have to be confined to conventional rail traffic. It has been stated elsewhere (not in this report) that a larger tunnel of seven metres, instead of six metres would involve only an additional £75 million in costs.

I have no brief as to whether it should be a 6-metre or a 7-metre tunnel. But I would ask the Government to accept that in view of the possible development of combined transport and the fact that provided there are suitable amendments made to the directive there are possibilities of development, then urgent consideration must be given to the size of the tunnel. This should be considered by the Government, who, I understand, are going to make an early decision on the tunnel. This question should be considered as a matter of urgency alongside the principle of combined transport.

8.40 p.m.

Lord Sherfield

My Lords, I should like to add my thanks to the noble Lord, Lord Kings Norton, for putting down this unstarred Question. He is my successor as chairman of the relevant sub-committee of the Select Committee. I started off this report on combined transport. I handed over to him what I hope was not too poisoned a chalice, and he has brought the report before your Lordships' House.

It is a long time since there was a debate on European transport policy in your Lordships' House. A cynic might say: " This is because there ain't no such animal to discuss ". There is more than a grain of truth in that. In the Treaty of Rome, transport policy covers transport by rail and road and on inland waterways. Sea and air were to be included at the option of the Council. This was a limited start and the preoccupation of most member Governments with the financial subventions needed for their railways was the dominant factor in the formulation—or perhaps one should say the non-formulation—of a common transport policy.

Viewing the situation from a United Kingdom standpoint, the existence of the Channel ensures that, so far as rail and road transport are concerned, the United Kingdom's interest is a special and in some degree a peripheral issue. In the event, the history of the attempt to develop a common transport policy is that of a series of surges instigated by an active commissioner or member of Council followed by a period of reflux in which the problem has merely been tinkered with.

The first surge occurred before United Kingdom membership, when in 1961 the then Commissioner Schaus made a very creditable effort to get a common transport policy going. It led to the adoption of an action programme in 1962. But this petered out and only a few modest directives were agreed. The next surge was a British initiative in 1977, when Mr. William Rodgers, during a United Kingdom presidency, put forward, as chairman of the Transport Committee, a paper, Common Transport Policy Objectives and Priorities. This initiative was translated by the Commission into a communication outlining the priorities for action with an appropriate resolution attached.

However, in the event, the resolution was never adopted and the Council merely took note of the proposal. It was about this time that the Transport Committee of the European Paliament began to put pressure for progress on the Commission and the Council, and it was also at about this time that your Select Committee came on the scene and, in August 1978, produced a report on transport policy. I remember it well, as I joined the sub-committee halfway through the work and was impressed by the very considerable difficulty experienced by the chairman, the noble Viscount, Lord Simon, and the committee in hammering out a report from some pretty unpromising material. This report has been left on the shelf until tonight, when it is on your Lordships' agenda. Eventually the Council approved an improved consultation procedure, exchange of information and the like, relating to transport infrastructure projects. But by and large in the transport field the EEC went back to tinkering with the problem, and their main concern, as the noble Lord, Lord Kings Norton, has pointed out, was in relation to commercial vehicles, road transport, and transport bottlenecks.

A third surge occurred in 1978 when the Irish Commissioner Burke produced a Green Paper on community transport infrastructure. This was followed by discussions in the Commission and the Council. It was the intention of your Select Committee to scrutinise the relevant documents at this time, but, fortunately or unfortunately, the newly-formed transport committee in another place shot your Lordships' fox.

In its report on the Green Paper and on the action in it recommended to the Council, the enthusiasm of the committee in another place was noticeably restrained. On the Green Paper itself, the verdict was, " Though short, it was vague and depressingly difficult to read, and its arguments were tentative and uncertain ". On the basis of it, the Commission proposed yet another action programme and put forward a specific proposal for a financial regulation under which finance could be made available for infrastructure projects which had a " community interest ", though this phrase, " a community interest ", was not very clearly defined. The other place did not think much of this regulation, which as usual applied only to rail, road and inland waterways, and concluded that without its extension to airports, and ferries, it was of little interest or advantage to the United Kingdom.

The committee in another place was principally concerned—perhaps unduly concerned—with calculations as to the immediate financial advantages or disadvantages of various proposals to the United Kingdom—" the nicely calculated less or more "rather than with the importance of a long-range improvement of the European transport infrastructure to the Community as a whole and particularly to the enlarged Community. But in its initial form the regulation was no doubt too restricted and it contained some questionable proposals for assistance to non-Community members in order to assist Greece, which the committee in the other place—quite rightly in my view—advised the Government to resist.

The Ministry of Transport, and some other organisations which gave evidence on that occasion, while agreeing that the regulation needed amendment and that wider coverage was required, were favourably disposed towards the Commission's initiative. However that may be, the outcome of all this palaver was, first, that Her Majesty's Government replied in a White Paper to the report in another place in a positive way and the Commission produced a further report on transport bottlenecks. But today, as I understand it, that financial regulation, after three years, still lies on the table. No proposals for the extension of the resolution to ferries, docks, sea and air transport infrastructure have yet been produced, and the whole initiative on transport infrastructure appears to be stalled. Perhaps the Minister can throw some further light on this matter.

Against this background, last year's directive and regulation on combined transport, the subject of the second report before your Lordships' House this evening, appears to reflect a return to tinkering with the problem. I shall not say much about it. It has been well covered by the noble Lords, Lord Kings Norton and Lord Underhill. So suffice it to say that it has all the hallmarks of earlier initiatives—a preoccupation with rail and road as opposed to sea and, in this case, even inland waterways. Since piggy-back " is widely used on the Continent, it is heavily weighted in favour of " piggy-back " and against container traffic. These difficulties could, as the report points out, be easily overcome by amendment and would make the proposals quite useful, though the scheme would be costly to administer. The whole proposal seems to me to lie at the margin. In any case, as the noble Lord, Lord Kings Norton, has stated, the regulation has apparently been thrown out by the Council, though presumably discussions on the phrasing of the draft directive will continue.

However, it is easy enough to make critical and " knocking " speeches about the EEC's achievements in the formulation of a common transport policy, but the criticism, at least of the Commission, is not perhaps fully deserved. Comparisons are often drawn—the noble Lord, Lord Kings Norton, referred to them—between progress on the common agricultural policy and progress on transport policy, to the detriment of the latter. But, apart from the fact that both cover large areas of national and international policy and share certain exemptions in the Treaty of Rome from the strict doctrine of liberalisation and the free movement of goods, they are not in my view really comparable. We have already seen that the transport provisions in the Treaty of Rome, however extensive, were in effect, weak and restricted; and the Council of Ministers has certainly not felt the incentive to reinforce and liberalise them. Nor has it accepted the Commission's proposals for some Community financial support.

However, some progress at least has been made in certain areas, and if not much advantage has accrued to the United Kingdom this is partly the result of geography. It may be our misfortune that our railway gauge is different from the gauge on the Continent, but that is hardly the rest of Europe's fault. We have, I suggest, to try to take a broader view, as indeed it seems the Ministry of Transport does endeavour to do, and to judge the effect of particular measures on the welfare of the Community as a whole without expecting too much short-term advantage for the United Kingdom. But, as in the case of the present limited proposal under discussion, these measures, to be acceptable, should be non-discriminatory, and applicable to all forms of transport and to all devices for the transport of goods. Your Lordships will be looking forward to the Minister's views on all this.

8.53 p.m.

The Earl of Bessborough

My Lords, I, too, should like to thank the noble Lord, Lord Kings Norton, for asking his Question and for the manner in which he has presented the opinion and conclusion of the committee. I agree with the opinion of the committee and its conclusion. My remarks will be very brief because most of the arguments which I would have propounded have already been very ably propounded by the noble Lords, Lord Kings Norton, Lord Underhill and Lord Sherfield.

None of your Lordships could complain, I think, that I am not a good European and a supporter of a number of Commission proposals, but in this case I cannot urge the Government to support the directive which we are at present discussing. I am certainly generally and in principle in favour of a common transport policy in the EEC. Indeed, as the noble Lords, Lord Underhill and Lord Sherfield, have said, it is written with limitations into the treaties and therefore there should be a common transport policy just as there is a common agricultural policy, although I see very clearly that they are different. Nonetheless, it was written into the treaties. But, having said that, I cannot support this directive.

In regard to the directive proposal for a system of tax reductions for road vehicles proportionate to the distance for which they are carried by rail and tax exemptions for road vehicles which are solely for road haulage, as defined in the directive, in these cases the difficulties of administering such a system, which may appear to be obvious, seem to me to have been inadequately considered.

Then in so far as combined transport in the United Kingdom is concerned, I should emphasise that this consists mainly in transport by containers, and it would be certainly advantageous to this country if the system could be improved and developed. Greater use of containers would be encouraged if systems of locating them in transit and for reducing delays could be improved. Quality of service is, by common consent, a very important factor in the choice of methods of goods transport.

Finally, I should like to stress the special situation of the United Kingdom in the way in which other noble Lords have already done. This country is in an altogether different position from other EEC countries with the possible exception of Greece, which is not contiguous with any of the other member states. As the noble Lord, Lord Kings Norton, implied, maritime transport in particular should be given full consideration when transport policy is discussed. The fact that British Rail cannot carry lorries by the piggy-back system must also not be forgotten—a point which is especially important in any proposals for encouraging combined transport.

Therefore, while I am in favour overall of an EEC transport policy, I hope that in the Council of Ministers Her Majesty's Government will not support the directive even if perhaps they might, in my view, accept the regulation—a regulation which unfortunately has not been accepted by one particular member state. I hope in consequence that the Commission will be asked by the Council to look at the directive again, taking into consideration the special situation of the United Kingdom. I fully support the opinion and conclusion of the Committee and I congratulate the noble Lord on his presentation of them.

8.58 p.m.

Viscount Sidmouth

My Lords, as has been pointed out this evening, Article 3 of the Treaty of Rome called for a common policy, first in agriculture, admittedly, but secondly in transport. It made clear that progress towards these objectives was of the essence in building up the Community. So far there has been progress in agriculture but very little in transport, and many feel that the future prospects of the Community are threatened both by the over-emphasis on agriculture—for example, its over-importance in the Community budget—and the failure to evolve any sort of policy on transport.

A study of the Select Committee report on EEC transport policy shows that there have never been any doubts about the economic importance of a transport policy. Indeed, though classed as a service industry, transport is demonstrably a critical element in the whole process of production and distribution which constitute modern economic activity. It is on the political side that failure to agree arises, probably because of the heavy commitments of the Governments themselves in the transport field, where they have vast investments in both roads and railways. I am inclined to think, too, as the noble Lord, Lord Underhill, said, that the commitment of governments in the way of national aids in the transport field is also a stumbling block to progress which will have to be removed. It is doubtful whether any real progress will be made within a reasonable time limit until the principle of unanimity is set aside, presumably in favour of a voting system such as that set out in Article 148 of the Treaty. This procedure is, in fact, already provided for in Article 75(1) of that section of the treaty which deals with transport.

In his evidence to the Select Committee in May 1977, the then Minister of Transport said: All discussions on transport policy tend to start, and end, with the railways ". Historically he may well have been correct, but in this 20th century it cannot be right. Just as the 19th century saw the rise of the railways on cheap coal, so the 20th century saw that of the internal combustion engine on cheap oil. At present within the EEC, road transport dominates the movement of freight, as indeed it does that of passengers. This is particularly so in the United Kingdom, as has been pointed out by other speakers, where out of the 1979 total of ton-miles worked, including coastal shipping, road was responsible for 65 per cent. as against 12.5 per cent. for rail. Road transport is not necessarily cheaper than rail in real terms—indeed, the Armitage Committee found that the average costs per ton-mile by road are five times higher than on railways—but it is far more convenient and thus is seen to be more cost-effective.

But as the 21st century approaches, is this pattern going to continue? The era of cheap and abundant oil is probably nearing its end, and the next century may well be that of electricity which can be generated from various sources, including alternative ones which are now being developed. This process might well change once again the basic economics of transport. Then, again, there are environmental problems arising from congestion and pollution, as a recent report about what is happening to Germany's forests helps to remind us.

This report of the Select Committee on the European Communities makes it abundantly clear that the need for a common transport policy is widely accepted, both in the Commission and in the European Parliament. It refers to the many attempts that have been made to define the objectives, all of which have failed to find acceptance by the Council. Quite rightly, it points out that, because of the political situation, there has been a lack of the instruments through which a policy could be implemented. Instead, there has been a trickle of minor regulations which are generally referred to as " small steps ".

Turning now to the Select Committee's report on combined transport, this arises, as has been said, from proposals put forward by the Commission in the form of a draft directive and a draft regulation, which aim at giving certain economic advantages to various forms of combined transport, of which that known as " piggy-hack "—that is, the trunk haulage of a lorry by rail or inland waterway—is apparently the one most favoured by the Commission. The report points out that the proposed tax rebates would be difficult to administer and probably not very significant in effect.

More importantly for this country, the railway loading gauge—that is, tunnels, bridges, gantries and, to some extent, platforms—precludes piggy-back " for lorries on ordinary flat wagons. Thus, even with a direct rail link to the Continent, increased " piggyback " as far as the Channel might well mean more lorries making their way through Kent by road. To adapt even one rail route to London—and British Rail have three rail routes from the Channel to London—to the continental gauge would cost perhaps £50 million and pro rata beyond London. In general, " piggyback " seems better suited to the very long hauls available in the USA and Canada, where it has become quite significant.

But, in saying that, I am sure that the noble Lord, Lord Underhill, is right in drawing attention to the importance of the loading gauge in the direct rail link Channel Tunnel, in that it would be inexcusably short-sighted to build it to the British Rail loading gauge—the restricted gauge. Seeing that this is a long-term project, we should undoubtedly be condemned as being short-sighted if we did not build it to the full continental gauge. That might raise some problems about funding—I believe that it would add about £100 million to the cost of the single-bore—bu, that would have to be faced as an essential part of the scheme.

However, before leaving combined transport, there are other forms of combined transport that are mentioned in the report which could be very important for this country. British Rail have made considerable progress with containers, and their Freightliner trains and depots now handle some of the less-than-wagon load traffic which has otherwise been lost to road. It is worth pointing out that private road transport has access to Freightliner depots, and indeed 40 per cent. of the traffic carried in that way comes in by private transport. This mode should certainly be encouraged for international traffic, as should the caisse mobile or swap-body, also mentioned in the report, which notes that it is making headway on the Continent.

With respect, I would disagree with what the noble Lord, Lord Kings Norton, said. This is not a trailer. It is a demountable body and, in fact, the last page of the report shows a diagram of a caisse mobile which is capable of being transported over the present British loading gauge. I am sure that it is has great advan- tages because, like most modern lorries, it is capable of being side-loaded with pallets, which of course you cannot do with a container, which is like a box-body. I think that this mode is something which should also be encouraged.

Reference is made in the report to inland waterways, which are very significant in Europe. The phenomenal rise of Rotterdam as a port has been one of the main features of European transport since the war, and the Rhine has played a great part in this. Quite recently I had the opportunity of observing the traffic on the Rhine and the Danube, and also to travel over portions of the great canal which the West Germans are building to connect the two. So far as this country is concerned, the only form of combined transport which would be significant to the waterways would involve a maritime clement, in the form of barge-carrying vessels. These could, for example, connect cities served by the new works on the Trent, which are in progress, with the North Sea and so with Europe.

Probably the most valuable part of these reports is that they draw attention to two important policy matters: the need to facilitate traffic between members of the Community and the suitability of rail transport for this purpose. On the first point, our Minister of Transport is quoted in the 1978 report as saying: As regards road freight transport, at present some 94 per cent. of intra-community movements are carried out under bilateral arrangements between the Member States, and only very limited categories are entirely free from quota and authorisation arrangements ". This is far removed from the more liberal régimes envisaged in the Treaty of Rome and, indeed, already prevailing to a degree on the Rhine and Danube where I have seen for myself the varied national flags being flown by the barge trains.

At page 42 of the report reference is made to what, from experience, I believe to be a major source of restriction and delay in intra-Community transport; namely, customs. Obviously, it is up to the sender to do his homework and ensure that his documentation is correct, but there is still a degree of inflexibility and inertia built into the system which acts as a most unwelcome brake on such traffic. One might perhaps illustrate this by saying that senders often prefer to consign by road simply because a driver travels with the lorry, and it is well-known that they have strong views on delays far from home and forceful ways of expressing them. By contrast, a rail container stuck at a port or frontier point on some technicality can be delayed for a week or very much more. I believe that combined transport by rail could help substantially in easing this situation by making possible through transport to inland depots away from the concentration of traffic so many ports provide.

Finally, reference has been made to the Channel Tunnel. I believe that a study of these reports brings out the relevance and the urgent need for a direct rail link between this country and the Continent. This project has been identified by the Commission as being one of those capable of removing a bottleneck and so of being of great benefit to intra-Community transport. In consultation with the French, the Minister is currently considering several schemes and it is greatly to be hoped that he will come to a decision at an early date. In doing so, he will no doubt take into account that on the evidence of these reports the rail link is the priority element, and on grounds of cost the scheme put forward by British Rail and their associates is by far the cheapest. It also involves no unfamiliar technology and so could be put in hand and completed in the shortest time. International traffic, because it is on average long-haul, is inherently suitable for rail and yet at present, for the lack of a link, only 2 per cent. of all British Rail traffic is in this category as compared with 62.8 per cent. for Italian railways, 38.8 per cent. for French and 22.3 per cent. for German. A cross-Channel rail link would thus enable British Rail to compete for traffic which they can win on cost while at the same time, by the appropriate use of combined transport, retaining the convenience of road transport for collection and delivery. This I believe to be the most important point for this country arising from the debate on these reports.

9.12 p.m.

Lord Lucas of Chilworth

My Lords, I take part in this debate in the certain knowledge that I cannot be very far from other people's views. Certainly I endorse nearly all that the noble Lord, Lord Underhill, had to say. I, too, agree with the conclusion contained in the report of the Select Committee regarding combined transport. I might go a little further. In paragraph 41 they say that if the proposals were enacted they would be moderately harmful to British Rail. I believe that they would be more than moderately harmful. I believe that they would prove to be totally disadvantageous to British Rail.

The proposals are, of course, laudable in that they seek to reduce the volume of road traffic, to improve safety, to give rise to energy savings and so on. Those are all aspirations which anybody in the transport field wishes to meet. But the reality of the matter seems to me to force a subscription from Community Members to European railway systems, with little or no advantage to the United Kingdom. As has been pointed out, the European countries have less flexibility regarding transport modes and considerably more control as to direction on to State-run railways. We take the opposite view. We take the view that railways should be operationally self-supporting. That they are not so is sad. Nevertheless, we take this view. Our European colleagues take the alternative view, and I can see no justification whatsoever why, by a somewhat indeterminate (at this stage) tax reversion scheme which lasts for only five years, we should support that kind of view.

It seems to me that the general argument laid down in the proposals is very similar to that which has obtained in this country since the end of the First World War—the fact that more traffic must be moved from road to rail. We do not take the view that it must be forced that way. We take the view that there should be equal opportunity for the consumer to choose, and I think that is right. In fact, the evidence in paragraph 75 on page 21 and indeed our own independent report contained in the Armitage Committee Report, suggests that, even were rail able and willing, in this country or in Europe, to accept all the traffic that was available that they would wish to compete for on equal terms and would wish to carry, the net result would be insignificant in terms of meeting the laudable objectives of reducing road transport, improving safety and so on. If we are to get a combined transport system as the Select Committee so describe it, I believe that, first of all, we have to ensure a relaxation in the present permit situation.

It is really ludicrous that, for example, the French and the Germans will for each " piggy-back " transaction undertaking give another free permit. In unparliamentary terms, that is just straight blackmail. That is all that is. That is a situation which looks after one's own. That we do it is because we play cricket by the rules. That is the blunt fact of the matter. We should not subscribe to a system that prevents a free transport system. Some hauliers do indeed subscribe to this " piggy-back equals one extra permit " system, but the delays in delivery—the transhipment delays—are quite appalling. Until the termini, whether they have to be in the United Kingdom or in Europe, are sufficiently equipped with the machinery and the manpower, and have the modern expertise, there is just no point in transhipping. The few occasions when it is worth while are where the service element of delivery falls to a low level. Indeed, it was the noble Viscount, Lord Sidmouth, who made this point about the cost element. The cost element is one part only; it is the service which comes into this all-embracing phrase, " cost effectiveness ". From our point of view, as soon as we accept that the delivery, whether it is by road or rail, is merely an extension of the production line and that we have to get the goods to the market in the fastest time (and not always at the cheapest cost) I believe we shall be able to accept the value of a combined situation.

The haulage industry subscribed to this view, and their evidence is in paragraphs 88 and 89. What we have to do is to remove the current restrictions on permits and, again as the noble Viscount pointed out, the inextricable maze of difficulty, which results in delay, over customs. This really is appalling, and I do recall having the privilege of serving on one of your Lordships' scrutiny committees on trade and treaties some four or five years ago, when we examined the arrangements for customs clearance. We do not seem to have got any further forward on that. In fact, not to put too fine a point on it, the French—and to an extent, the Italians—are past masters at holding up pieces of paper. Normally in your Lordships' House one does not phrase one's expressions quite so bluntly. But one might just as well when looking at draft regulations and a draft directive which would be of a good deal of concern to us. What I am really trying to say is that I believe that the proposals put the cart well before the horse. Herr Gabert's evidence and discussions with the Committee suggest that there is an esoteric hope in the proposals but very little realisation of the effectiveness of them.

I believe that we should move to a more flexible system of moving goods and people, through the relaxation of permits, customs, and so on and so forth. That will then provide the market demand for additional services. Whether it is " piggy-back ", whether it is " swap-bodies ", whether it is different types of containers is at this time totally immaterial, because the marketplace itself will demand that which shall be supplied. That demand will then put upon the Community the responsibility of finding ways and means of producing the answers to the need. That is what I believe we need to do.

So far as the tax suggestion is concerned—and the Select Committee point this out quite clearly—it is so infinitesimal as to be almost unworthy of further consideration. I believe that the Union of Industries of the European Community in their paper to the committee say it all; I think they sum it up. In their paragraph 2 on page 57 they say: However desirable the development of combined transport should be, it should not be regarded as a substitute for conventional road transport, but as the introduction of a set of quite different techniques ". That I believe to be true. That I believe is what the market will in fact demand, should the market go that way. They say in their paragraph 5: The quality of the service provided by the new techniques should at least be equal to that of road haulage (speed, dependability) and so on ". They say in their final sentence set out on page 58: So long as the control of combined rail and road traffic remains a matter of conflict, the whole future of these facilities will be uncertain ". While it is uncertain commercial enterprises are not going to put their money into it: neither are they going to subscribe to any system of taxation involving the removal of money which they themselves put into their own transport system by way of taxation being syphoned off into systems such as those described in the proposals.

I would finally say something about the EEC transport policy document which comes before us again tonight. In 1961 Ambassador Charles' Memorandum set out what he was really looking for. He said: A transport policy applying to the transport of the Community as a whole must, therefore, gradually replace national transport policies ". I take that certainly out of context. That remains so today. And despite that initiative, despite the 1977 William Rodgers initiative, and despite the 1978 initiative, what has been done? Apart from niggling little harmonisation and regulatory rules, two things only have emerged in all that time: one tachographs—and we had problems there and we do not want to discuss those again tonight; we finally agreed. The other thing is the 40-tonne gross lorry. By far the biggest measure of concord, of agreement in the Community, is the 40-tonnes. Whether in fact the United Kingdom Parliament is going to accept that when we come to it we shall have to wait and see. But at least on that issue the Community has reached agreement. All the rest pales into total insignificance because it is only here, I believe, that we can do anything particularly useful. The noble Lord, Lord Underhill, underlined this point.

One may ask: What should Her Majesty's Government do to pursue a European transport policy? I believe that there are, in fact, only three areas where anything totally useful or totally practicable can be done and that is to get flexibility into the quota system; to get a customs simplification, which means free movement of both goods and people; and I have noted " the universality of the vehicle ". The noble Lord, Lord Underhill, referred to agreement under the construction and use regulations. That falls into two areas; harmonisation on the safety factors—brakes and steering—under the construction and use regula- tions; and the environmental features of noise, smell and so on.

Neither of those two objectives is outside our grasp because they are purely technical. They require only agreement as to the mean and the mean has been found in total weight of 40 tonnes. The mean can quite easily be found in all the other areas because the amount of money involved by virtue of the manufacturers and the retailers is insignificant compared to the whole. A trans-continental rig of 30 or 32 tonnes now costs something around £40,000 to £50,000. A fully equipped continental-going passenger coach is around £70,000. If one added £2,000 for a non-skid braking system it pales into insignificance. These are the areas in which I believe Her Majesty's Government should spend their energies. I think that we should abandon totally all hopes of total uniformity for uniformity's sake. I believe that transport is one of those businesses which excite the interests of the entrepreneur. The entrepreneur is prepared to take the risk. All that is required is a fair chance with all modes and utilising all modes wherever he operates.

9.28 p.m.

Viscount St. Davids

My Lords, first I should like to thank the noble Lord, Lord Kings Norton, for giving me the chance to make a speech that I have wanted to make for a long time. We are an island—we are surrounded by the sea, by water. That water is either a barrier which confines us or else it is a high road which takes us to Europe and the world. To neglect or to keep out of consideration the sea is a disadvantage to this country which never ought to be allowed. We have the facility to go anywhere with our ships, at least as far as seaports. One might think that the great continental countries would pay much more attention to land transport, and that, of course, is true in many ways. But it is noticeable that they also understand that you can carry cargoes in great bulk much more cheaply and easily and with much greater fuel economy—I should like to mention the words of the noble Viscount, Lord Sidmouth—on water. Therefore, they have been enlarging their waterways so that they can take a standard vessel which will carry 1,350 tonnes. That is a very big inland waterways vessel indeed. By the time the European system is complete, which will be some years hence but it will come, those vessels will be able to get not only through all Western Europe, but through all Eastern Europe as well, not only down the Danube but down into the Aegean through to Greece and Turkey and even as far as Asiatic Russia. That would be an enormous advantage.

What is more, although those vessels are called inland waterways vessels, they are quite capable of crossing the North Sea which, in their terms, can be regarded as an inland waterway. We should most strongly urge and so arrange matters that the provision by us of such vessels links us across the North Sea to the inland waterways of Europe. That at least would be a good start.

But there is something further that we can do better to link our transport with the rest of the world. I am thinking of the container, but I am thinking of the container possibly in rather different terms from most of your Lordships, because from my knowledge of the inland waterways of our country I remember how our little narrow boats became too narrow usefully to carry cargoes. Their gauge became too small. It will happen to the container. We cannot make containers bigger than a certain size because we cannot get them along the roads, and certainly we cannot load them onto road vehicles and " piggyback " them. But there is a way to make much bigger containers. You make them watertight and put them in the water. What is a good large barge but a floating container?—and it can be much bigger than anything we can put on the roads. What is more, it can be got across to Europe, and in Europe you do not even need to put it on a lorry or anything else; you make it into a raft, you put a tug behind it and push it or them in hundreds. Already in parts of Europe it is possible to push floating container cargoes of 7,000 tonnes. That is a big cargo on anybody's measurement.

What about containers coming to us? You cannot push them across the North Sea; they would not last very long in our normal weather. But you can load them into a barge-carrying ship and, loaded onto a barge-carrying ship, they can then be brought across, unloaded in our major river estuaries and be pushed happily up our canals. I am not talking about the little narrow canals of the Midlands; I am talking about the big cargo canals of which British Waterways has a pretty fair supply and is improving them, and could improve them still further with advantage. That can be done with no great trouble.

There was a very fine scheme called Bacat—Barge Aboard Catamaran—a doubled-hulled vessel with a space up the middle which drew barges up in between it which were then lifted onto its decks and carried across the sea. Those could go up our waterways, be dropped into the Continental great waterways and be made up into rafts of whatever sizes the locks would take—and, as I say, in some cases there could be 7,000 tonne rafts—and be pushed wherever they were required. I regret to say that that scheme was murdered. It was a scheme for one of the finest technological advances that have been seen in transport. It was murdered by a trade union, with the consent of a Government. Everybody on that matter should blush, and blush very hard, because that was a real way of advancing into the future; carrying bigger containers which you will not be able to get on to the roads, but which, with the modern European waterways system and with not much development of our own waterways system would work perfectly happily.

You may call this " piggy-backing " of an aquatic form; you may call it mixed transport. I do not know what you would call it, but it seems to me that with this directive and with all the actions taken so far this whole business has been neglected. I do not know whether it should be a good Tory motto, " Bring back Bacat ". Certainly it would be a fine one. If we could have something like Bacat back again, that would be the finest and cheapest way of providing future style transport for us; not merely today's transport, but tomorrow's transport. That at the moment seems to me to be being almost wholly neglected.

We have ships carrying barges coming across from the States and dropping their barges into the Medway and some of our other big rivers, but it is not the big ship carried barges that we should really be thinking of now, but the slightly smaller Bacat type barge which can be taken to the inland waterways of Europe, dropped there, rafted there, and really take goods from them to us back and forth in quantity and cheaply. Cheaply, not only as a method of transport but cheaply—and here I very much agree—in the matter of fuel; fuel conservation. One pusher-tug pushing a great raft of these things. It is in this direction that I should like to ask the Government whether they could direct their attention more; they should consider that the sea has always been our great advantage; that the North Sea is not that wide, and that this is the direction in which we should really he holding out our hand to Europe.

9.38 p.m.

The Earl of Avon

My Lords, I have listened to the speeches this evening with great interest. It has been a valuable opportunity to discuss not only the rather intricate proposals the Commission has made on combined transport, but also the wider aspects of Community transport policy as a whole. I am grateful to the noble Lord, Lord Kings Norton, for coupling these two subjects in his Question and thus providing an opportunity for a useful debate. I should also like to join with the noble Lord, Lord Underhill, in thanking the noble Lord, Lord Kings Norton, for his comprehensive introduction today, because it has set the problem in a realistic perspective.

The noble Lord asked first whether Her Majesty's Government agree with this report which the Select Committee has prepared on Combined Transport. The Government very much welcome this report. Thorough consideration has obviously been given to this complex topic, and evidence taken from an impressive number of interested parties, including the British Railways Board and representatives of road haulage and inland waterways transport industries. The Government are looking with great care at the conclusions of so thorough a study. I can say at this stage that we agree with many of them.

The Government certainly share the Committee's doubts about the significant impact which the Commission claims its proposals will have. As we have heard, combined transport plays only a comparatively small role in European transport, and even with the benefit of these proposals its contribution could not be great. Despite their general optimism about developing combined transport, the Commission recognise—and we have heard this again this evening—that it is unlikely ever to account for more than about 5 per cent. of freight movement. The Government broadly agree with this assessment and do not expect the proposals under discussion to do more than marginally affect the wider balance of choice available to freight consignors. I shall return in a moment to the specific question of choice between different forms of combined transport.

Because the proposals are so modest, the Government do not consider that they would interfere unacceptably with free competition between the main transport modes. Free competition is a fundamental principle of the Treaty of Rome and one which this Government would certainly not wish to see eroded in the transport sector. This debate has reinforced the committee's view that in encouraging combined transport, the principles of freedom of choice and even-handed treat- ment of different types of transport must still be maintained. The Government share this view and I should now like to develop this point further.

The committee noted that there remained some doubt about whether inland waterways were covered by the scope of these proposals. The Government fully share the committee's view that inland waterways should receive the same treatment in respect of combined transport as other modes. Of course, this is less significant for the United Kingdom than for some other member states, but we will continue to press in our negotiations in Brussels for fair treatment of inland waterways. I hope this House will accept, however, that on a matter such as this, where direct United Kingdom interests are substantially smaller than those of several other countries, there is a limit to the extent to which we can press the point. On the subject of inland waterways, I knew we should get an interesting speech from the noble Viscount, Lord St. Davids, which we did, blessed with his great experience and stimulating ideas, which I assure him we shall look at carefully.

A similar problem of even-handedness arises over maritime transport, which the committee recommends should be brought within the scope of these proposals. The Commission has said it is looking separately at the possibility of encouraging maritime and air combined transport. The question is whether these should be brought within the scope of the present draft directive. The Government agree with the committee's view that the conditions applying to sea crossings may influence the ease with which containers, or indeed lorries, can move easily between member states using combined transport systems. But aviation and maritime matters have traditionally been treated separately in Community legislation. The Community has not so far adopted many shipping measures and its major achievement has been agreement on a common approach to the United Nations work on liner conferences. The Government consider that the Community can play a useful role by acting in concert to support non-protectionist shipping policies.

On civil aviation, there has been less progress than the Government would have liked. Work is in hand in Brussels on inter-regional air services, air fares and a number of other measures. The United Kingdom favours a gradual, controlled liberalisation of civil aviation in Europe and the application to air transport of the competition articles of the Rome Treaty. It is, in any case, hard to see how the specific proposals in the present draft directive could apply to maritime or air transport; they are essentially concerned with aspects of road and rail freight movement and it would be necessary to introduce wholly new provisions into the draft directive, thus greatly increasing both its scope and complexity.

This House has from time to time commented unfavourably on Commission proposals which attempt too much either in scope or in detail. The Government, of course, do not disagree with the committee's view of the importance of maritime frieight links with Europe. We will ask the Commission to clarify their intentions for comparable measures to cover maritime combined transport, but the Government think it would he sensible to continue to limit the present directive to inland transport modes.

The most important aspect of these proposals from a United Kingdom viewpoint is undoubtedly the treatment of containers. This was touched on by most speakers and particularly by the noble Lord, Lord Underhill, and the noble Viscount, Lord Sidmouth. As the committee point out in their report, containers are for us by far the most significant form of combined transport. As the evidence given by the Department of Transport and by British Rail shows, containers account for roughly 12.5 per cent. of rail freight moved in the United Kingdom. About a third of the containers moved by Freightliner are for foreign shipment. The United Kingdom is at the forefront of technical development of containers, and the Freightliner business is important to British Rail.

By contrast, on the Continent there is extensive use of " piggy-back " combined transport, and, as we have heard, the United Kingdom rail loading gauge precludes this. Some British hauliers find it useful to take goods by road and roll on/roll off ferry to the Continent, and then to use the " piggy-back " services. This is particularly useful if road haulage permits are in short supply; and on the very longest hauls, where a substantial rail leg can on balance save time. But because of our far greater interest in container transport, the Government will wish to be sure that the measures that we are now considering do not give undue encouragement to " piggy-back " transport at the possible expense of containers. We must work for a broadly even-handed approach.

On this point there is no need for concern about the draft regulation. Its scope is now such that the discretionary aids which it allows are not limited to " piggy-back " transport, but apply in a fully equal way to containers, where these are moved by more than one mode.

The problem of even-handedness applies essentially to Article 3 of the directive, which concerns relief from taxation for road vehicles engaged in combined transport. There is now a new version of this article which, if it were to be agreed, would in effect make tax concessions by the United Kingdom Government optional, and confine mandatory tax relief for lorries engaged in " piggy-back " to vehicles used wholly on the Continent. I hope that that will in some way satisfy my noble friend Lord Bessborough. Negotiations currently continue, and we cannot yet say whether this version will command general support. Should it do so, the Government would need to consider their attitude carefully, and would of course consult the Scrutiny Committees of both Houses, on the basis of a further explanatory memorandum.

I am, however, able to tell the House that the Commission has accepted the need to specify precisely in Article 3 the taxes that it has in mind. As the noble Lord, Lord Underhill, said, for the United Kingdom the only tax involved is the vehicle excise duty.

My right honourable friend the Secretary of State for Transport will meanwhile keep very closely in mind the committee's strong reservations, which he shares, about the administrative cost-effectiveness of any tax concessions to United Kingdom vehicles engaged in " piggy-back ", and also the committee's still more important point about the need for even-handedness of treatment for United Kingdom interests in different combined transport systems. We cannot, of course, rule out that the text could be still further modified, and this, too, would be reported to both Houses if need arose. But in appraising the need for evenhandedness, we must keep steadily in view the point that the balance between rail container and " piggy-back " traffic is at present decidely in favour of the former. Container traffic also has a healthy recent growth record.

We must look wider than the draft directive, and I should like, for instance, to draw your Lordships' attention to another measure, which the Council, under the United Kingdom presidency, adopted at the end of last year. This was a directive making permanent what had formerly been the only very temporary liberalisation of international rail container traffic from all quota restrictions. This measure, which would otherwise have expired at the end of 1981, constitutes a valuable incentive for the use of containers within the Community. In judging the even-handedness of the Community's attempts to develop combined transport, I hope that this House will agree with the Government's view that we must look at the whole range of relevant measures, and not concentrate simply on one draft measure.

I should now like to move on to the second strand of the Question, the European Community's common transport policy; and here I am sure that the whole House will join with me in saying how much we appreciated the exposé by the noble Lord, Lord Sherfield, of the European Community and his bringing us up-to-date historically since 1961. I have also taken careful note of what the noble Viscount, Lord Sidmouth, said, though much of it, I feel, referred to Brussels rather than to any governmental policy. I also noted what the noble Viscount and the noble Lord, Lord Lucas of Chilworth, said about the customs.

It is now nearly four years since the Select Committee reported on the common transport policy. At the end of that report, the committee said that it hoped that the report would serve as source material for any general debate on the subject. Let me say at once how useful the Department of Transport has found the report. It has been particularly helpful in providing an overall picture of what can appear to be a hopelessly disparate range of issues.

The noble Lord, Lord Kings Norton, asked whether the Government expect progress on the common transport policy. The brief answer is, Yes. It is perhaps more difficult to assess the future speed, or significance, of developments. It is understandable for people to be as disappointed now at the pace of progress as they were four years ago. There is still a large number of proposals unresolved, essentially lying dormant on the table. Some of these are significant measures in which the United Kingdom has taken a major interest, such as the draft directive on the adjustment of national taxation systems, which would give a common basis for taxation of heavy lorries, or such as the draft regulation on aid for transport infrastructure. The former, I am told, has been on the table for 13 years, the latter for seven years.

Having said this, we should not be too ready to belittle what has been achieved. Agreement on major issues such as those I have mentioned is inevitably difficult because of the importance of what is involved. But (using the expression that other noble Lords have used) step by step the Community has made progress with its transport policy, and that progress covers all the main modes of inland transport. In the same way as even-handedness is so clearly important in the case of combined transport, so, too, we have to make steady progress on all modes when it comes to the far wider issues of a common transport policy.

To answer, perhaps, some of the more specific questions of the noble Lord, Lord Kings Norton, to illustrate the progress that is being made and at the same time to answer questions from other noble Lords, it may be helpful if I outline the main points from the most recent meeting of transport Ministers in Brussels. The council was, of course, chaired by my right honourable friend the Secretary of State for Transport. At the December Council, Ministers discussed and agreed a resolution on railways policy, broadly setting out guidelines for the work needed on this topic. It stresses the need to concentrate on improving co-operation between the railways, to improve the economic position of the railways and to examine how best to make use of available railway capacity.

On road haulage, the Council reached agreement in principle on a modest increase in the Community road haulage quota. Although differences of view meant that only a 5 per cent. increase could be agreed for most member states, this represents a small step forward which is particularly welcome to the United Kingdom and to those member states who believe in liberalisation of road transport. The Council also made some useful progress on the draft regulation on aid for transport infrastructure. Ministers discussed what the next steps on this issue should be in the light of the very useful Commission report on the evaluation of Community interest. The discussion resulted in a resolution again charting the way forward, and thus bringing the possibility of agreement a little nearer. But I am afraid I must agree with the noble Lord, Lord Sherfield, when he says that progress on this is depressingly slow. The Government hope that the latest Council resolution will help, but at the end of the day it may be that real progress will not be made until it appears likely that funds can be made available in the Community budget.

The subject of lorry weights was touched on; and, as the House is aware, the Government have published a White Paper giving their response to the Armitage Inquiry and have invited views on their proposals. The next step must be to agree on a policy most suited to the United Kingdom domestic conditions. United Kingdom policy towards European harmonisation will have to be formulated in light of the domestic decisions. I should perhaps like to say something to my noble friend Lord Lucas of Chilworth. I think I should dispel the impression given by the noble Lord that the rest of the Community has reached agreement on the 40-tonne maximum gross weight for lorries. The European Parliament and Commission agreed on this point, but the other member states are widely divided on this issue. This is reflected by the very different legislation on lorry weights in every country.

On balance the meeting of the Council achieved slightly more than other recent Transport Councils, but was perhaps fairly typical of progress in the longer term. Certainly discussions and progress were fairly evenly spread over all main aspects of transport in the Community—a point to which most member states attach importance. I think it can be said that progress has been made fairly evenly over the main areas identified by the Select Committee's report.

On liberalisation of transport services, for instance, the size of the Community quota has increased from 2,835 permits in 1978 to just over 4,000 permits under the latest increase agreed in principle. A series of minor amendments to the first Council Directive of 23rd July 1962 has gradually extended the categories of goods which can move freely. As I said earlier, the road legs of international rail container journeys are now liberalised. These are just some of the measures that take us forward on this point. From a United Kingdom viewpoint, it is not fast enough progress, but we must always recognise the different, but equally strong, priorities of our Community partners.

The second main area identified by the Committee's report was co-operation of infrastructure investment. At the time of the report, Ministers had just adopted a decision setting up a consultation procedure on proposed investment in major transport infrastructure projects. Although this has not been extensively used by member states, the related Transport Infrastructure Committee, established at the same time, has done valuable work on aspects of the draft aid regulation, including the Community interest report I mentioned earlier.

Finally, there is the difficult problem of harmonisation of competitive conditions in transport. The committee points out the dangers inherent in harmonisation for its own sake. There may be valid reasons for some existing disparities. But the Council has agreed a number of sensible harmonising measures, including the introduction of a common format and mutual recognition for Community driving licences. Work is also in hand on the major question of public subsidies to the railways; and the " transparency " of railways' accounts. The Commission put forward in 1981 a new priority programme superseding that of 1977. Whereas in the past the Council had simply taken note of Commission programmes, in March 1981 the Council, after considering the new Commission's proposals, adopted a resolution setting out its own priorities. These cover the same ground as the Commission's. However, they reflect the political judgment of the Ministers of the member states as to what is most important and most practical.

Turning to one direct question asked about the Channel tunnel, the remarks of the noble Lord, Lord Underhill, and the noble Viscount, Lord Sidmouth, will be taken into account. The discussions with the French over possible schemes are still in progress; and not all tunnel schemes would be suitable for " piggy-back ", as British Rail pointed out. But we would expect all tunnel schemes to be suitable for container traffic. The Government will consider all these points at the appropriate time.

The noble Lord, Lord Underhill, mentioned the speech of my right honourable friend the Secretary of State for Transport at the European Parliament. I am not sure which one he had in mind. He may have been quoting from one he made in his capacity as President of the Council of Transport Ministers. He did not, therefore, seek to put forward a purely United Kingdom policy at that time. I assure the House that the Government recognise the importance of container transport to other member states. During the United Kingdom presidency, we did our best to take the Commission's proposals forward while at the same time taking care to protect British interests.

The Government fully recognise the importance of the common transport policy. The need for such a policy is clearly stated in the Treaty of Rome. As I have already said, the United Kingdom would like the policy to be developed more quickly and more effectively. We must also recognise, however, that the size and economic significance of transport in the Community means that progress cannot be easy. Transport accounts for about 6 per cent. of the GDP of all member states. Roughly 6 million people are employed in the transport sector. With so much at stake, we must not be surprised that the Community has tackled the problems cautiously, step by step. Indeed, the many difficulties underlined by many speakers tonight, and particularly by my noble friend Lord Lucas, bear out this approach.

I am sure that this House will have found today's debate useful and informative. It seems to me that the complexities and difficulties raised by the proposals on combined transport in many ways provide a perfect illustration of the problems confronting the common transport policy as a whole. In both cases we are seeking integrated, efficient transport services, which preserve genuine freedom of choice for the user, and free competition between modes. For good commercial and historical reasons, national interests differ, and so progress can only be made by careful and painstaking negotiation and close attention to detail. The House is, as I know the Government are, grateful to the noble Lord, Lord Kings Norton, and to his sub-committee, for the way in which they have brought these items to our attention.