HL Deb 22 November 1983 vol 445 cc181-95

7.28 p.m.

Lord Kings Norton rose to move, That this House takes note of the report of the European Communities Committee on Quotas for the Carriage of Goods by Road (6th Report, 1983–84. H.L. 40).

The noble Lord said: My Lords, I beg to move that this House takes note of the report of the European Communities Committee on Quotas for the Carriage of Goods by Road. The Motion deals with what you may feel is a rather narrow issue, intrinsically of interest to only a section of British industry. But it has what I might call a strong extrinsic interest, because agreement in the Community to a liberalisation of the quota system, which I shall briefly describe, would be a move towards greater freedom of trade and towards a Community transport policy, a policy which the Treaty of Rome imposes on the Community but which, so far, is sadly lacking.

The Select Committee on the European Communities published the report at the end of September. The relevant documents of the Commission are quoted in it, and Sub-Committee F of your Select Committee, which conducted the inquiry resulting in the report, had the advantage of oral evidence from the Director General of the Transport Directorate of the European Commission. We also had oral and written evidence from our own Department of Transport, the Road Haulage Association and the Freight Transport Association, and written evidence from British Rail.

The quota system originated in the restrictions most European states imposed in the 1930s on road competition with railways. The system has developed in such a way that today road haulage traffic is regulated by bilateral agreements between this country and 25 other European countries, including all the EEC member states. In only three cases, however, are the agreements restrictive. These are the agreements with France, Germany and Italy. These countries still appear to believe that they are protecting their railways by restricting road haulage traffic. Typically, in the agreement between the United Kingdom and one of these countries, say, Germany, the Germans issue annually for distribution to British road haulage firms permits for a number of return trips between the United Kingdom and Germany, and we issue the same quota for distribution to German firms. The British road haulage contractors receive their permits by application to the United Kingdom Department of Transport.

In addition, the United Kingdom disposes of a small number of permits granted under the Community quota. These allow the authorized vehicle an unlimited number of journeys during the year. These of course, are especially valuable because they allow the holder to make unrestricted journeys within the European Community.

In practice the system is immensely complicated, as noble Lords who have studied the statistics, the concessions, and the exemptions detailed in the report will have discovered. The only member states who wish to retain it are the ones I have mentioned. The conclusions of the Select Committee are unequivocally stated in paragraph 43 of the report.

First, we state that restrictive quotas for road haulage cannot be reconciled with the free trade principles of the Treaty of Rome. Unfortunately, the legal position is sufficiently ambiguous to deter any challenge to the quota system in the Court of Justice. Secondly, we believe that quotas may frustrate exporters when economic recovery comes: there will not be sufficient permits to go round. Thirdly, the system discriminates against progressive hauliers seeking to enter the international field and protects established operators—the people who are already there.

Fourthly, we conclude that quotas have not been effective in improving railway finances and, fifthly, that they distort competition among road hauliers themselves. They do not necessarily exclude the cut price operators from competition with responsible firms and to do this—and I hope we shall—we should adopt strict methods ensuring that only professionally qualified hauliers operate. Finally, the report concludes that quotas should be abolished as soon as possible.

It is quite clear that in this conclusion we are in line with the Transport Directorate General in the Commission. In one of their documents they described the quota system as "costly, cumbersome and economically inefficient". Furthermore, while the report was being prepared, the Commission published in June a new proposal for liberalising the quota system. This proposal provides for significant increases in the quota of permits issued by the Commission itself—an automatic increase every year for five years derived from the percentage growth of international road haulage traffic in the previous year multiplied by five, and distribution of the increases among member states, taking into account their gross national products and their shares of the market.

The Commission propose from 1989 the abolition of fixed quotas of EC permits and the distribution of unlimited numbers to established hauliers of good repute. Clearly the Commission's ultimate goal is the complete abolition of the quota system, the goal envisaged by your Select Committee.

This proposal has been put by the Commission to the Council of Ministers. That there will be bitter opposition was evident from the proceedings of a meeting which the noble Lord, Lord Underhill, and I attended in Brussels at the end of September—a meeting of the Transport Committee of the European Parliament with representatives of the transport committees of the Parliaments of member states. I recited there the conclusions of the report before you and the noble Lord, Lord Underhill, and I urged that liberalisation of the quota system would be a practical and an inexpensive step towards a common transport policy. The leader of the French delegation found this unacceptable—it would apparently have the gravest effects on industry in some French regions, and would increase unemployment. The Germans appeared to support this and the Italian vice-chairman of the committee was unequivocally opposed to any change. The Dutch however sided with us, and we had valuable support from Mr. Moreland, a prominent United Kingdom member of the European Parliament's Transport Committee. We must now await the views of the Council of Ministers, though the likelihood of their being decisive is small.

I am sorry that I cannot look forward to early improvement in the quota arrangements, but we must fight on, because if the Community fails to move forward on this narrow front, the prospects of its advancing on a broader front towards a transport policy are poor indeed. In that somewhat pessimistic mood, I beg to move.

Moved, That this House takes note of the Report of the European Communities Committee on Quotas for the Carriage of Goods by Road (6th Report, 1983–84. H.L. 40).—(Lord Kings Norton.)

7.36 p.m.

Lord Underhill

My Lords, I wish to thank the noble Lord, Lord Kings Norton, for his excellent summary of the report, for the comprehensive nature of the report, and also for enabling me to take part in the work of Sub-Committee F on this transport issue. At present Community permits cover only a very small part of the United Kingdom haulage to the Continent; most is on bilateral agreements. In fact, only some 8 per cent. of the total international haulage throughout the Community is by Community directives.

As the noble Lord has already stated, Community permits allow unrestricted picking up and setting down of loads in any EEC country. This could help in obtaining return loads from a third country. Therefore, an increase in Community permits is obviously an advantage. The impression left—at least with me—by various witnesses is that generally the present quota system presents little problem to our exporters and hauliers. However, there is concern about the extreme bureaucratic nature of the procedure, and the Department of Transport's evidence is that many people have to use ingenuity and flexibility to get by.

The noble Lord referred to the original position of the railways in going for a quota system. The committee comments in paragraph 29 that it is impossible to state precisely how far, if at all, the quota system helps railway finances. As noble Lords heard, the committee concluded that quotas have been ineffective as a means of protecting the railways. But similarly in paragraph 34 it is stated that it is even more difficult to judge how effective the quota system is in protecting the environment.

Although the quota system may present no real problem for Britain—at least in the present economic climate—I considered it right to have regard to whether other member states may consider quotas to be advantageous to their own railways and to their environment. Therefore, it is to be regretted that no witnesses were able to give firm information, and also it was not possible to persuade representatives, particularly from the three states affected, to come before the committee.

I was grateful for the opportunity to attend the Transport Committee of the European Parliament to which the noble Lord, Lord Kings Norton, has referred. In the course of that meeting I said that it would be helpful if the representatives from the countries concerned could give information about the effect of quotas on their railways and the environment, but I regret that this information was not forthcoming.

Our previous Community directive provides for various exceptions from the permit system. These include carriage of goods by own account—that is in vehicles conveying goods of the trader concerned. The Transport Department and Commission witnesses both told the committee that some 40 per cent. of own account lorries run empty on return journeys. That is obviously wasteful. It was suggested that relaxation in the quota system could lead to many of these traders changing to use professional hauliers.

This leads to the important divergence of view given to the committee between the Freight Transport Association, who represent own account operators and the users of road haulage—that is, the exporters—and the professional hauliers, as represented by the Road Haulage Association. Strong criticisms of the present system made by the FTA are set out in paragraph 24 of the report. The association regard any form of permits as a barrier to trade, and support an increase of Community permits only as a step towards the ultimate objective of total abolition of road haulage quotas.

On the other hand, the Road Haulage Association state that there is no evidence of exporters being frustrated by lack of permits. They made it clear that in the past they had favoured a liberal approach to the question of quotas, but now consider, as traffic has shrunk because of the recession, that the quota system should be tightly administered. They argue that the quota system should be used to prevent disastrous cost cutting and lowering of standards, which is happening because of the present availability of permits.

The Road Haulage Association claim that many of those now engaging in international road haulage are not qualified to do so, and even suggest that some are acting illegally. They urge also that it is essential that regulations on international haulage must be completely harmonised and fully enforced in all countries. Sub-Committee F recommend that more direct means other than a quota system should be used to maintain proper professional and social standards in the industry.

That important qualification helped in enabling me to support the general conclusions of the committee's report. No system should debar innovators or newcomers, nor provide a haven for the established road hauliers. But standards of social conditions and safety must be retained and cowboy competition be avoided. For that reason I am pleased that following this report Sub-Committee F is now considering the question of social regulations for road transport, which I believe goes hand in hand with the report now before your Lordships.

7.43 p.m.

Lord Mottistone

My Lords, I too should like to congratulate the noble Lord, Lord Kings Norton, on his introduction of this debate, and also on the conduct of their affairs by his committee. I should also like to congratulate my noble friend Lord Brookeborough as the only other person taking part in the debate apart from myself who is not a member of the committee. I always think that it is rather heartening, if I happen to be on a committee, if outsiders join in. I apologise, I forgot the Minister. I must never do that again.

I must also declare an interest in that I look after exports for two food-processing trade associations. In that capacity I welcome the report. Also in that capacity I have had much experience of hidden barriers to trade, of which this is one. One of the most depressing things that I have discovered during the past 2½ years is that not only are there barriers to trade in third countries like Japan, for example, against which we struggle with our best efforts, but also there are a staggering number of barriers to trade within the Community. I do not know whether your Lordships saw a most interesting article in The Times last August or September, during the Recess, by Mr. Moreland, whom the noble Lord, Lord Kings Norton, mentioned. He went across Europe in a lorry and he wrote of all the problems he had. Most of them I have come across in some other way, but he made the position most graphic, and I thought that that was excellent.

Another excellent thing is the organisation called Kangaroo, which was started so far as we are concerned by Basil de Ferranti, a Member of the European Parliament, and some of his European colleagues, with the specific object of cutting down the barriers within what is supposed to be a common market. It is an absolute negation of that. It is particularly disappointing and shaming that three of the major founder members of the Common Market are the three greatest offenders in this particular area that we are discussing tonight. I find that absolutely disgraceful.

Unfortunately, the noble Lord, Lord Greenhill, has just left the Chamber, because I was going to mention that his committee's report on the internal market set our minds in this direction to start with. We shall be seeing other examples of it in the report of the noble Viscount, Lord Rochdale, on competition policy, which we shall be debating on Thursday. At every turn we find these Community obstructions. For those reasons I particularly welcome the conclusion of the report as summarised in paragraph 38, and would give particular support to the disclosure that it adds unnecessary costs to industry, and that it discriminates against new services. Those are two particularly important points.

In this country we depend absolutely on exports to survive. If we cannot export competitively in the world today then we shall go financially bust. No doubt there will be many interim stages, and this is one of the ways in which we are particularly discriminated against. It is also the case that it offers the railways doubtful protection, and has doubtful environmental benefit. I cannot think of any environmental benefit in trying to have quotas. It probably makes it worse because the lorries have to clutter particular places in a way they would not do if they were streaming along the roads. It also distorts competition among hauliers. I thoroughly endorse all those points which the committee unveiled in its inquiries.

For those reasons I agree with the new Commission document, COM(83)340, of 8th June, to which the noble Lord, Lord Kings Norton, referred, and agree therefore with its suggestions to increase or expand the Community quotas with a view to abolition after five years. But it is depressing to hear what the noble Lord, Lord Kings Norton, and the noble Lord, Lord Underhill, had to say of their visit to the Commission to find a firm barrier, as it were, put up to the abolition of this harrier by, in particular I think the noble Lord said, the French delegate.

It really seems strange that these quotas were invented 50 years ago, back in the 1930s. The change in the transport pattern of the world not only in road transport but in air transport has put the railways into a quite different framework within the overall transport position. To be so pigheaded, old-fashioned, stupid really lets down the Frenchmen who are normally so intelligent, bright, and tell us how to behave—vive la France, all that sort of thing. They are doing themselves and their reputation untold harm by being so old-fashioned and slow. It needs to be got through to them in some way or other.

There is one thing that crosses my mind before I sit down. I know I am allowed to speak for only seven minutes. I wonder whether this is not totally contrary to the Treaty of Rome, Article 85, on competition, and whether perhaps a way through this barrier is to challenge the French, the Germans, and the Italians in the European courts under Article 85. Whether that is done by an individual company or on the inspiration of the Government through one of their many own account lorries does not matter, but it would be worth doing. That is one thing that I might like to add to the report.

7.50 p.m.

Lord Kearton

My Lords, it is always a pleasure to sit on any committee under the chairmanship of the noble Lord, Lord Kings Norton. He conducts his committee through very complicated documents with briskness and efficiency and always comes to a firm conclusion. The report on the carriage of goods by road is no exception.

The introduction of quotas in restraint of trade is always defensible at the time. Quotas can be an effective and respectable way of easing the path of change, preventing change from being so abrupt as to impose undue hardship on the interests affected. Quotas can also give time for unforeseen effects of change to be assessed and for judgments on future policy to be made more rationally. But no quota system should go unchallenged for any great length of time. There is always the danger that bureaucratic inertia and sectional interest will keep quota systems alive, even if only just alive, when their useful life span is over. This is the situation which would seem to apply today in the quota arrangements for road transport among the countries of the EEC.

Quotas in the transport industry have a long history. As paragraph 9 of the committee's report records, licensing systems to limit the growth of road haulage and to temper the competition offered to existing railway networks were introduced in most European states during the 1930s.

Some 35 years later, in 1968, the United Kingdom felt able to abolish all quantitative controls on domestic haulage. But at the sable time as domestic road traffic was freed from the restrictions controls were imposed in reciprocal arrangements on road trade with other countries. This was to take account of the development of ferry roll-on/roll-off facilities which opened up road trade from and to our ports. As the noble Lord, Lord Kings Norton, said, there are currently in existence bilateral arrangements with 25 countries including all EEC members. It is true that by degrees restrictions have been removed and quotas now only apply with three of the EEC members—the Federal Republic of Germany, France and Italy. But these are the large national economies in the Common Market.

The administrative arrangements to deal with the quotas still existing are modest in scope and seem to be efficient in administration. But they represent a cost, albeit small, and entail a lack of flexibility and a quick response to special needs which can be a hindrance to the efficient management of international road transport. Moreover, quotas make it less easy for new entrants to engage in trans-frontier business and can slow down innovation. Over time various exemptions and concessions have been given in respect of the bilateral quotas still remaining. The Community itself disposes of a number of permits which allow an authorised vehicle an unlimited number of journeys. These permits presently cover only a small percentage of inter-Community road traffic—about 5 per cent.—and it is the objective of the Commission's proposals which the committee was considering to increase this. The Commission's aim is that these permits would ultimately replace bilateral arrangements completely. The period envisaged for this change was five to eight years.

At present levels of trade between the United Kingdom and the rest of the Community, the committee found that the existing quota arrangements were not any serious hindrance. Neither, as far as the committee could determine, did they have any residual justification. The existence of the quotas does not have any meaningful effect on the railway systems the quotas were intended to shield. The choice of road or rail for goods transport is determined by relative economies and convenience. The existence of quotas has not distorted this choice.

There was no evidence that abolition of quotas would lead to any further transfer of rail traffic to road. Nor did the volume of trans-frontier traffic put an unacceptable burden on the roads of Common Market countries. There is certainly a case for countries which have an appreciable degree of through traffic to have some compensation for wear and tear on their roads by third parties. Various simple ways could be devised to deal with this and produce suitable compensatory arrangements.

The summary of the conclusions of the committee in paragraph 43 of the report sets out clearly the case for abolition of quotas as soon as possible. This goes further than the Commission's own proposals. This is not surprising. The Commission is cautious on transport matters. It has experience of a record of dilatoriness on the part of the Council of Ministers in accepting proposals on transport coming to them from the European Parliament. The frustration of the European Parliament at this dilatoriness culminated a year ago in Parliament instituting proceedings against the Council in the European Court of Justice, challenging the Council's failure to adopt a Community transport policy.

Bilateral quotas are certainly not in harmony with a Community transport policy. The Commission's proposals are, of course, a step in the right direction. But the committee felt strongly, and I hope your Lordships will feel with good reason, that a bolder step is necessary. Quotas should be abolished much faster than the Commission envisages. We trust that Her Majesty's Government's Ministers will support our views in the Council of European Ministers.

7.56 p.m.

The Duke of Portland

My Lords, we might have expected that this restrictive system of quotas for the international carriage of goods by road would have been swept aside during the 26 years that have elapsed since the Treaty of Rome came into force, as one of the basic principles of this treaty was the freedom to provide services.

The noble Lord, Lord Kings Norton, has clearly explained that, contrary to the Treaty of Rome, this has not happened. In the United Kingdom the direct administrative cost of the present quota system is estimated at £l million a year. That is of course passed on to the consumer. This system increases delay at the frontiers and frustrates the organisation of transport operations. Thus, a company might have a local haulier to do its domestic distribution, but cannot use that haulier for international distribution because he does not have a Community permit. The company will experience difficulty finding a Community permit holder for their number is strictly limited. The United Kingdom has only a mere 436 permits out of the 4,038 issued.

Quotas protect established operators from competition thus enabling them to increase their charges. Under the quota system many vehicles are obliged to complete their return journey empty while, if unrestricted, they would be able to carry return loads which would decrease the number of trucks on the road.

The noble Lord, Lord Kings Norton, referred to the policy paper published by the Commission in February this year which included specific proposals for improving the quota system, followed by a proposal in June this year to abolish all quotas, which would be achieved by a transitional period of five years during which the Commission quota would increase each year at five times the annual rate of traffic increase, plus a further optional three years during which the quota would increase at 10 times the annual rate. However, Lord Kings Norton expressed the opinion that an early improvement in the quota arrangements is unlikely. I submit to your Lordships that that will largely depend on the degree of pressure exercised by Her Majesty's Government.

I also suggest that fair competition between road and rail transport could best be obtained by payment of transit dues on international road transport. Thus, road and rail transport would both pay for their infrastructure but road traffic would be freed from quotas and other administrative obstacles.

7.59 p.m.

Viscount Brookeborough

My Lords, I, like other noble Lords, would like to congratulate the noble Lord, Lord Kings Norton, on his presentation of the report. I should also like to thank my noble friend Lord Mottistone for his reference to me. Instead of giving way as rapidly as they did on the importation of UHT milk from other parts of the world, I should like to encourage the Government to follow the example of other countries to challenge under Article 85 restrictive practices on transport.

I am a member of the European Communities Committee and I approved the production of this report. Therefore, I have to accept some of the responsibility, although not quite Cabinet responsibility, for everything that is in it. I must therefore accept some responsibility for what I shall now describe as the inadequacies, as I discovered afterwards, of the evidence which was presented to the committee. The noble Lord, Lord Kings Norton, has implied that the discussion on this subject was rather a narrow issue. I am afraid that I agree with other noble Lords that this is not a narrow issue at all. It is a most important issue. If the EEC means anything at all, it means free flow of trade without any inhibitions or restrictions.

Up to now, general principles have been discussed; but I want to raise a particular issue where I feel that the evidence that was presented to the committee was lamentably deficient. The particular issue that I want to raise is this. Northern Ireland is the only part of the United Kingdom which has a land frontier. Therefore, it has freight traffic rolling over it and it has to cope with the bureaucracy and restriction which exists. However, there is no mention of Northern Ireland in the evidence by the Minister and his department. Yet the frontier at Newry-Dundalk, which is our main frontier in Northern Ireland and our main road frontier in the United Kingdom is—and let us make no mistake about it—a scandal and a disgrace to the United Kingdom and the United Kingdom Government. And that is understating the situation which exists there.

Paragraph 9 of our report says that United Kingdom quotas are too small; and the implication is that it is because we have a sea journey. What about Northern Ireland? It has two sea journeys. There is not a mention of that at all. There are 436 United Kingdom quotas. There are 10 for Northern Ireland. Yet the evidence presented by the Minister's department makes no mention of that. Even the Road Haulage Association, which is a national road haulage body representing all parts of the United Kingdom, has made no representations on the problem of the haulage industry of Northern Ireland. It is equally deficient.

The Ministry of Transport deals with the transport of the United Kingdom, the transport of Great Britain and Northern Ireland; and the Road Haulage Association is a private body which still represents the whole of the United Kingdom. The Road Haulage Association say that delays on the Continent are nowhere near—and I am cutting out a whole lot of their comments—the delays on the return from the Continent. Not a word about the Northern Ireland industry and the delays that they have to suffer on their border!

What is the position on the Newry-Dundalk border? First of all, do not imagine that this post is an isolated case miles from anywhere. Not at all. It is right in the suburbs of Newry. There are no facilities whatsoever for the lorry drivers, and precious few for Customs officers. There is no parking. The morning I went there at 8 o'clock—and they open at 8 o'clock—there were 70 lorries waiting there with a howling south-westerly wind and the rain driving horizontally down the road. There was no canteen for the drivers. They had been waiting for hours. They had got up at unsocial hours. There were no lavatories. And this in a suburb of Newry. What do you think happens? The gardens of those houses were used as lavatories. Surely something should be done about that. Up to 80 lorries are always waiting at the border. They have a two-hour or two-and-a-half-hour delay at Newry followed by a one-hour delay at Dundalk. Part of the delay at Dundalk is due to the fact that our Customs officers, the British Customs officers, release a batch of up to 20 lorries at a time. They arrive at Dundalk in a batch and have to be dealt with. The result, quite honestly, is a war between the lorry drivers and the Customs officers. There is great bad feeling. I want to make it quite clear that I do not blame either the Customs officers or the drivers. If you produce bad facilities, you will get bad tempers. You cannot expect somebody to produce clean milk out of a dirty dairy; and that is what is happening at Newry-Dundalk. The post is open from 8 a.m. until 5 p.m.; and, because of the "war", the time is absolutely rigid, there is no give and take at all. The post should be open from 6 a.m. to 10 p.m.

My Lords, you may be told that security is the excuse; but with a border post in the centre of one of the main towns of Northern Ireland, some three or four miles back from the border totally surrounded by friendly houses, that is no excuse at all. You might wonder whether this is an isolated post with not much trade from the United Kingdom going in. The facts are that there are some 150,000 movements a year through that border post. All are delayed for three hours. I will not complicate the issue with statistics but the unnecessary cost to Northern Ireland and to jobs is somewhere around £400,000—which dwarfs the other figures in relation to the size of Northern Ireland. It is a colossal cost.

I find that there is a reluctance on the part of the Government even to call the frontier between Northern Ireland the Irish Republic a frontier. I think that the Northern Ireland Office itself is ambivalent in its position on that. We have discussed France and Italy. Let us clean up our own back yard before worrying about Italy or anywhere else! Nothing would be cheaper to create jobs in Northern Ireland than to clean up this particular matter. Something must be done now. I look forward with great confidence that the Minister will tell me that it will be done and will be done at once.

8.7 p.m.

Lord Lucas of Chilworth

My Lords, may I, too, congratulate the noble Lord, Lord Kings Norton, and his colleagues on their succinct presentation and the quite clear conclusions of their inquiry on the international road haulage quotas in the Community which we are discussing this evening. May I also be so bold as to congratulate him on the succinct and very short manner in which he was able to present to your Lordships the real findings of that committee. I think that this report is a most useful and very independent contribution to transport policy. I should say here and now that I and my colleagues think that their conclusions are right.

Having said that, your Lordships will appreciate that my intervention tonight will be brief, because the Government accept so much of what is said in the Select Committee report. The Government believe in the free operation of the freight transport market within a framework of fair competition. We do not think that any of the interventionist practices now occurring in certain countries in Europe are either desirable or effective in their objectives. In road haulage, we abandoned any attempt to restrict capacity internally in 1968 by which time (noble Lords will probably recall) the whole system was in almost total disarray. We certainly cannot go along with recent suggestions that bilateral quotas protect the United Kingdom transport industry. They do not.

The way to protect the United Kingdom transport industry is to enforce the quality-control legislation that we already have and to ensure as far as possible that permits are in the hands of hauliers who will use them. We have taken steps to do just that.

Unhappily, certain European countries continue to maintain their internal restrictions on road haulage capacity, and the reasons are given quite clearly in paragraphs 28–37 of the report. We, like the Select Committee, do not believe that quotas are an effective means even of achieving these objectives, but others are not convinced. Naturally, states which apply internal restrictions on road haulage capacity have to apply them externally as well. It is thus that, ever since international road haulage from the United Kingdom became technically possible in the late 1960s, we have been arguing for a more liberal approach. The United Kingdom international road haulage industry has now become very significant, not only as a service to trade but in its own right. It earns around £80 million in foreign exchange every year. A number of noble Lords. including the noble Lords, Lord Kearton and Lord Kings Norton, together with my noble friend Lord Mottistone, have said that it is important that this trade is not obstructed by non-tariff barriers like quotas.

The Government's scope for action is twofold. We meet regularly with states with whom we have restrictive bilateral agreements, and we try to get them to increase the quotas. Since the Select Committee inquiry we have had some success The French agreed to a 12 per cent. increase in September for this year and. provisionally, for 1984. The Italians agreed to an 18 per cent. increase. We meet the Germans in February next year and we would expect there to get some agreement because we have already indicated to them that an increase in the quota is essential. So forceful was that indication that they have permitted us to over-use the quota this year to avoid our running out of permits altogether. Demand for ail these permits continues to outstrip supply.

My noble friend the Duke of Portland made a very good point this evening when he outlined the difficulties faced by the hire and reward operators, which rather forced the own-account operators into a field into which they are not particularly anxious to go because, with no backloading, it was a particularly expensive business.

If I may, I should like now to turn for a moment to a point which was brought out during the course of the Committee's inquiry but which in fact has not been specifically mentioned this evening by noble Lords. There has been criticism of us—the Government and, more particularly, my department—for not enforcing permit restrictions and other regulations against foreign hauliers. It is said that they are getting away with more journeys than our own people as a result. I cannot agree with the assertion that we do not enforce permit restrictions. Customs officers are under standing instructions to stamp permits as appropriate when vehicles arrive. Of course one has to admit that the odd one will get through, but my, information is that the job is done well and systematically. It is true that Customs officers do not have the power to prohibit entry or levy on-the-spot fines. They do, however, report incidents to the department, and 233 such offences were notified through the department to foreign Governments in the past six months as a result. Currently we are discussing with Customs and Excise how we can make this operation more effective. Our own efforts on weight checks and drivers' hours continue to be increased. Our authorised traffic examiner strength has gone up to 235; and of course we have the co-operation of the police and trading standards departments. For what it may be worth, I can tell your Lordships that in October I observed such a check being carried out, and I was very impressed by the technical standard of the officers doing the check.

Returning to the particular matter in front of us, we are especially concerned about the proposals of the Commission, which came out perhaps a little too late for the Select Committee but which were in substance foreseen by the Commission last February. Those proposals were outlined in their evidence to the inquiry. As the noble Lord, Lord Kings-Norton said, the proposals envisaged a transitional period of five or eight years. during which quotas and permits would be gradually increased according to known criteria. Then quotas would be abolished altogether and replaced by permits issued to firms with three years' domestic experience.

Perhaps I may break away from my notes at this point and say that the noble Lord, Lord Underhill, referred particularly to the "cowboy element", or the less legitimate operators, in the haulage field getting the business. The noble Lord I am sure will recall the increased powers which the licensing authorities have in this country to determine fit and proper persons to undertake haulage business when they apply for their licence: and added to the three-year domestic experience qualification, I personally can see no difficulty in the legitimate trade taking that business which will be available to it when quotas are removed, thus eliminating any "cowboy element" that they might fear at this time.

We firmly support the principles of these proposals, although of course we have made some detailed comments about them in the Commission. That the proposals are being resisted by some member states particularly in so far as they deal with the full liberalisation in the longer term is understood; but we shall continue to press our support for them. The proposal is to be discussed again on 1st December at a meeting of the Council of Transport Ministers.

My noble friend Lord Mottistone, in his very supportive speech this evening, suggested that perhaps this was not a good enough course to take. He suggested that perhaps we should challenge this matter in the courts. Indeed, he even suggested that perhaps some operator might wish to do that. I say to him that if we can achieve that which we all wish to achieve by discussion and negotiation with our partners in the Community, even though it may take a long time, that may be a rather more satisfactory way of achieving the same objective. Nevertheless, I can understand his interest, particularly when he declared his own interest in exporting, in perhaps achieving results that much faster. That, as I say, we can understand.

So there is a meeting on the 1st December and there is a further meeting on 20th December at which the Council of Transport Ministers meet. We shall make our position quite clear then and also of course at any other ministerial meetings; and we shall take any other opportunities which may occur. I do assure the noble Lord, Lord Kearton, who raised this point, together with my noble friend the Duke of Portland that certainly we will pursue this most strongly.

The noble Lord, Lord Underhill, suggested—and if I misunderstood him I hope that he will correct me—that the permit system did not cause concern to the haulage industry. It is my understanding that the lack of permits within the system is causing a good deal of concern to the industry. Certainly inquiries at our offices in Newcastle suggest that there are a lot of good and able people who want to get into the business and cannot get permits. The noble Lord mentioned, as did my noble friend the Duke of Portland and, I think, the noble Lord, Lord Kearton, the question of the own-account vehicles returning empty. This is a wicked waste of money, effort, total resource, environmental and any other—

Lord Underhill

My Lords, will the noble Lord allow me to intervene? The reference which I made was to paragraph 7 of the memorandum of the Road Haulage Association and the noble Lord the Minister may refer to that after the debate.

Lord Lucas of Chilworth

My Lords, I am obliged to the noble Lord for reminding me of that. If the RHA felt that, certainly evidence in the department does not suggest that they are entirely correct. If I may make one mention of the speech of my noble friend Lord Mottistone, when he referred to invisible barriers to trade he was, of course, quite right. That is contrary to the spirit and the intent of the treaty. This is one of the points which my right honourable friend will have very much in his mind when he goes into these discussions.

I have to answer at some length my noble friend Lord Brookeborough. I was rather sad that he should start his speech by saying that the situation on the Newry-Dundalk border is scandalous and disgraceful. He asked later: Are the Government too reluctant to recognise the border? We accept that the facilities at Newry are not all that they might be. The post was built in 1960 when conditions were very different. But I am informed by the Property Services Agency that they are at present engaged in seeking a new site and there are a number of alternatives. We attach high priority to this project.

However, I am afraid that some of the figures given by my noble friend this evening were not entirely correct. I am told by the customs authorities today that the Newry post is open from 8 a.m. to 9 p.m. I do not mean that the post is open today from that time: I was told today that those are the hours when the post is open. It is indeed very rare that 70 or so lorries are waiting. It is usually not more than 30—

Viscount Brookeborough

My Lords, may I interrupt my noble friend? He is correct in saying that very often the post is open from 5 p.m. to 9 p.m., but it is as a result of requests put in 48 hours ahead, and any trader who does not put in a request 48 hours ahead finds a closed post. There is that rigidity. A trader cannot arrive on the chance of finding the post open, because somebody else has made a request, and get through. The fact is that rigidity is there. The post is closed at 5 o'clock—not one minute after—and any trader who arrives after that, irrespective of whether the post is manned, does not get through if he has not made a request 48 hours before. This does not apply at any Continental post.

Lord Lucas of Chilworth

My Lords, I am obliged to my noble friend for the information that he has given me. It is somewhat contrary to my understanding of the matter and I can promise him that tomorrow morning I will certainly look further into it. If I am wrong I will of course apologise to him, but I do not believe that I am wrong. Going back to the days when I was in the haulage business, I recall that if a despatcher does not know what time his lorry will get to a certain place he is a had despatcher.

Finally, perhaps I may say that the Government do not share the pessimism with which the noble Lord, Lord Kings Norton, closed his remarks. We are determined to see greater freedom of movement of goods and services in the Community. We agree with the Select Committee that the present arrangements are incompatible with the Treaty of Rome. They distort competition, providing an unnecessary barrier to trade. While, of course, we have to take note of what other member states say in attempting to reach a satisfactory solution, we are determined not to lose sight of our ultimate purpose, which is the abolition of restrictions such as those that we have been discussing this evening.

8.25 p.m.

Lord Kings Norton

My Lords, may I say in conclusion with what satisfaction the Select Committee, particularly Sub-Committee F, will learn of the Government's reaction to our report. I, too, was very pleased to hear what the noble Lord, Lord Lucas, said about the way in which we conducted our enforcement of the regulations. I am glad that he commented on the remarks of the noble Lord, Lord Mottistone, about challenging the quota system in the courts of justice. We, of course, considered this in detail on several occasions in our inquiry and, while one can get comfort from Article 85, one gets discomfort from Article 61. As Mr. Albu of the Department of Transport said in answer to a question which the noble Lord, Lord Gregson, put to him: It is a very debatable question. You can read different bits of the Treaty and get different answers.". That is the unfortunate part of it and I think, with the noble Lord, Lord Lucas, that probably the most satisfactory course would be persuasion rather than challenge.

Again with regard to what the noble Lord, Lord Mottistone, said, the visit which the noble Lord, Lord Underhill, and I made to Brussels was not to the Commission. It was to a meeting of the Transport Committee of the Parliament of Europe, together with transport representatives from other member states, Parliaments. In justice to the chairman, Mr. Seefeld, it should be said that he is a great enthusiast for progress, and for progress towards a transport policy, but he is a little handicapped by the divergences of opinion in the orchestra which he is seeking to conduct. We heard opinions expressed when we were there which were discouraging and which explain my pessimism which I hope will nevertheless be liquidated by the obvious optimism of the noble Lord on the Front Bench.

I was quite horrified by what the noble Viscount, Lord Brookeborough, said, but I must say that that is really not the problem to which we were addressing ourselves. It is a cognate problem, and it happens to be the other problem on which we might get a little progress in the Parliament of Europe's transport committee—certainly, there will be progress initiated by the Commission.

In conclusion, may I thank all noble Lords who have taken part in this discussion—rather than debate—this evening. It is rather pleasant to find that, although it sounded so dull, it is not quite so dull as it sounds. If I may come back just for a moment as a last thought to the noble Viscount, Lord Brookeborough, I said that noble Lords might feel that this was a rather narrow issue, but proceeded to explain that it was not.

On Question, Motion agreed to.

Lord Lyell

My Lords, I beg to move that the House do now adjourn during pleasure until 8.30 p.m., as I understand that the participants in the next Business of the House are not yet in their places.

Moved accordingly, and, on Question, Motion agreed to.

[The Sitting was suspended from 8.29 p.m. until 8.30 p.m.]