Kinnock moves to boost rail sector

Date: 19/11/1998

By Renée Cordes

THE European Commission is drawing up plans to ensure governments pay railways real market prices for their services, in a move designed to help the sector regain freight traffic from roads.

While most member states are expected to support this approach, Belgium and France are likely to oppose them amid concern that moves to force state railway companies to operate in the same way as private firms could lead to massive job cuts.

The railway sector is one of the largest employers in both Belgium and France.

Transport Commissioner Neil Kinnock hopes to unveil the new package of rail proposals late next month or in early January.

"Currently governments are free to force railroads to run services but they are not required to compensate them," said a Commission official.

Under the current system, railways can be required to run public services which are not necessarily economically feasible, such as short-distance trains at late hours which attract few passengers.

If Kinnock's proposals are approved, governments and railways would be required to agree on prices for such services.

The package would also lay down new guidelines on when state aid can be given to railways to replace the current lump-sum payment system, in response to concern that the existing rules are "not very clear."

The aim of the measures is to steer traffic, especially freight, back to the railways from roads, which have been winning market share for the past two decades.

Rail's share of freight traffic fell dramatically from 26.7% in 1975 down to just 14.9% in 1994, according to the Community of European Railways. During the same period, road's share of the market rose from 54.5% to nearly 72%.

In a report due to be released next Wednesday (25 November), the Commission will stress that "rail market access" will be a transport policy priority for 1999-2000.

National diplomats say the move is long overdue, but they expect progress on getting agreement on Kinnock's proposals to be slow, given the strength of Belgian and French opposition.

"The railways are being run in much the same way the Soviet Union ran everything," said one diplomat.

"The Commission wants to create a single market in rail and have railways function as private companies."