Unnumbered Document

EXPLANATORY MEMORANDUM ON EUROPEAN UNIONDOCUMENT

Special Report No. 3//2013 by the European Court of Auditors

‘Have the Marco Polo programmes been effective in shifting traffic off the road’?

Submitted by the Department for Transport 2August 2013

SUBJECT MATTER

1. The European Court of Auditors (ECA) has published a Special Report assessing the planning, management and effectiveness of the Marco Polo (MP) programmes (the Report). These programmes financed transport projects that shifted freight transport from road to rail, inland waterways and short sea shipping. The aim was to reduce international road freight traffic and so improve the environmental performance of freight transport, reducing congestion and increasing road safety.

2. The first Marco Polo programme (MPI) ran from 2003 to 2006 and had a budget of 102 million Euros. The current, second programme (MPII) runs from 2007 to 2013 and has a budget of 450m Euros.

3. The ECA found the programmes were ineffective in that:

(i) The targets set were reached only to a very limited degree. The annual target for modal shift for MPI was 12 billion Tonne-Kilometres (tkm)[1]but over the lifetime of the scheme, a total of only 22.1 billion tkm of cargo was shifted. This does equate to removing from the road 1,230,000 truck journeys of 1,000 km, each carrying 18 tons of freight; but it is only 46% of the target. MPII is still running but from 2007 to 2010 it achieved only 23.9% of the committed traffic shift. Even if all projects are fully successful, the insufficient response to requests for funding proposals means that the target of 20.5 billion tkm a year will not be met.

(ii) There was little impact in terms of shifting freight off the roads. In 2013, 46% of total freight transport in the EU was on roads. By 2010, this had increased to 50%. The modal shift of 22.1 billion tkm for MPI represented only 0.3% of all EU international road freight transport for the same period.

(iii) There are no data to assess the expected benefits of reduced environmental impact, lower congestion and improved road safety. The ECA noted the Commission’s estimate that for each Euro invested in MPI, environmental benefits worth 13.3 Euros were generated. However, the Report states that the real impact cannot be assessed as there is no agreed official methodology and no harmonised data on congestion and the data on accidents are incomplete. It also says that since 2004, road transport has gradually become much cleaner so that in some cases, the benefits of alternative modes of transport are not much greater than those of road transport.

4. The ECA also found that:

(i) Only in 2004 were funds disbursed in full;

(ii) It is likely that a significant amount of funding for MPII will not be used;

(iii) It took the 16 scheme beneficiaries audited by the ECA for two years on average to obtain access to the scheme, which they considered too long to wait in a volatile business environment;

(iv) Ancillary infrastructure investments remain entirely at the beneficiaries’ risk;

(v) Programme conditions were considered by the beneficiaries too complex for the reality of everyday business and participation was too costly – an average of 10,000 Euros for the 16 schemes;

(v) 13 of the 16 schemes would have started anyway without funding;

(vi) The ECA accepted that management of the programme did improve but this could have started earlier.

5. The Report recommends that the European Council, Parliament and Commission should: consider ending funding for transport freight services similar to the MP programmes; make further funding of such schemes conditional on an ex ante impact assessment showing the extent of added value, requiring a detailed market analysis of potential demand; and other measures to improve management of the schemes.

6. The Report includes a response from the Commission, which included the following points:

  • The programmes have delivered substantial mode shift in terms of billions of tonne kilometres. MP I achieved 22billion tkm – 46% of the target; and Marco Polo II is still running.
  • The budget for MP I is about 0.01% of the EU budget and that for MP II around 0.05%. Given the size of the programme against the EU transport sector, the Commission did not expect any significant change in the balances between the modes atEU level. However, the Commission believes that MP helped the transport sector to test innovative solutions and move traffic off congested roads, for a small proportion of the EU budget.
  • The projects are about giving limited incentives for switching from easy and non-risky transport solutions to more complex and difficult intermodal systems. Therefore the projects were particularly vulnerable to the economic crisis. Despite this, over 650 companies have been supported so far.

The Commission does accept some of the Report’s recommendations for management of such schemes. It has pointed out that a market analysis was carried out for MP I and an ex ante evaluation for MP II.

The Commission considers it advisable to continue to provide EU support for innovative solutions to pursue the EU transport policy objectives of integrated inter-modal services, reduced congestion and environmental impact and new solutions, markets and technologies.

The Commission has not proposed an MPIII but has included outlines for the support of freight transport in future plans. It will be up to the legislative authorities to determine the future of this scheme.

The Commission has separately issued a Communication on The Marco Polo programme – results and outlook, which was the subject of EM 10982/13 and which concludes that, based on the achieved results and taking account of the evolving policy context, the Marco Polo II programme will be discontinued.

SCRUTINY HISTORY

7. On 12 March 2002 the Department for Transport, Local Government and the Regions submitted EM 6093/02 entitled, 'Proposal for a Regulation of the European Parliament and of the Council on the granting of Community financial assistance to improve the environmental performance of the freight transport system'. The House of Commons European Scrutiny Committee considered the EM on 17 April 2002, recommended it to be of political importance and cleared it (Report 24, session 2001/02, 23229). The House of Lords Select Committee on the European Union referred the document to sub Committee B on 19 March 2002 (1096th sift). The Chairman wrote to the Minister on 27 March 2002 lifting the scrutiny reserve.

The Proposal for a Regulation establishing the second 'Marco Polo' programme was the subject of EM 11816/04 submitted by the Department for Transport on 23 August 2004. The House of Commons European Scrutiny Committee considered the EM on 15 September 2004. The Committee recommended that the document was politically important and did not clear it (Report 31 - Session 2003-04, 25876). A Ministerial letter was sent on 1 April 2005. The House of Commons European Scrutiny Committee recommended that the document was of political importance and did not clear it, on 8 April 2005 (Report 15 - Session 04-05). Further Ministerial letters were sent on 18 July 2005 and 9 May 2006. The House of Commons European Scrutiny Committee considered and cleared the document on 17 May 2006 (29th Report, Session 2005-06). On 18 May 2006 a Ministerial letter was sent ahead of the Transport Council, and the Chairman responded with a letter of thanks on 24 May 2006.

The House of Lords Select Committee on the European Union referred EM 11816/04 to Sub-Committee B (1190th sift of 7 September 2004). The Chairman wrote to the Minister on 15 September 2004 and did not clear the document. Ministerial update letters were sent to the Committee on 18 July 2005, 9 May 2006 and 18 May 2006. The Chairman wrote to the Minister on 23 May 2006 in response to the Minister’s letter of 9 May, asking for confirmation on cost and to be updated on the EP plenary and June Transport Council. On June 2006 the Chairman wrote to the Minister in response to the Minister’s letter of 18 May, lifting the scrutiny reserve.

The proposed Regulation amending Regulation (EC) No 1692/2006 establishing the second “Marco Polo” programme was the subject of EM 17294/08. The House of Commons European Scrutiny Committee considered the EM on 21 January 2009. The Committee recommended that the document was politically important but cleared it (Report no 5, session 2008-2009, 30281). The House of Lords Select Committee on the European Union referred the EM to Sub-Committee B at the 1345th sift of 20 January 2009. The Sub-Committee considered the EM on 26 January 2009 and cleared it (Progress of Scrutiny 3 2008-09).

The Commission Communication: The Marco Polo programme – results and outlook was the subject of EM 10982/13. The House of Commons European Scrutiny Committee considered the EM on 26 June 2013. The Committee recommended that the document was politically important and cleared it (Report 7, Session 2013/2014, 34977). The House of Lords Select Committee on the European Union cleared the EM at the 1510th sift on 26 June 2013.

MINISTERIAL RESPONSIBILITY

8. The Secretary of State for Transport has lead responsibility for EU transport negotiations and policy implementation.

INTEREST OF THE DEVOLVED ADMINISTRATIONS
9. The negotiation of the Marco Polo programme is a reserved matter, but Ministers for the Northern Ireland Assembly, Scottish Government Ministers and Ministers of the Welsh Government have an interest because funding has been available to all parts of the UK. The Devolved Administrations have been consulted on the ECA’s Report.

LEGAL AND PROCEDURAL ISSUES

10. TheECA’s Report does not form a proposal for legislation and does not, therefore, raise any legal or procedural issues.

APPLICATION TO THE EUROPEAN ECONOMIC AREA

11. The programme applies to initiatives within the European Economic Area provided that the international freight initiative also involves the territory of a MemberState.

12. It also applies to initiatives in countries that are candidates for accession, and to member countries of EFTA provided that the initiative also involves the territory of a MemberState.

SUBSIDIARITY

13. The ECA’s Report is not a legislative proposal, and there are no subsidiarity issues directly flowing from it.

POLICY IMPLICATIONS

14. The UK Government notes the content of the ECA’s Report. We are broadly supportive of measures to encourage modal shift from road. We have already noted that, while the Marco Polo schemes have delivered a significant amount of modal shift, it has fallen short of the amounts anticipated; and that much of the allocated funds have not been used. Therefore we supported the decision not to continue the Marco Polo programme in its current form.

FINANCIAL IMPLICATIONS

15. The scheme is centrally administrated so there are no UK associated costs with its administration.

TIMETABLE

16.There are no timetable implications.

NORMAN BAKER

Parliamentary Under Secretary of State

Department for Transport

[1] “tkm” = the transport of one tonne of cargo over a distance of one kilometre.