COUNCIL RESOLUTION of 27 June 1974 on the proposal for a Council Decision on Article 8 of the Council Decision of 13 May 1965

THE COUNCIL OF THE EUROPEAN COMMUNITIES,

- notes the following:

The railways of Europe, both in general and in their capacity as public undertakings, play an important part in the transport system. They operate in a way relatively favourable to the environment and are economical in their use of space and in consumption of energy. They are often the most effective means of carrying out many transport operations and, in most European countries, they are irreplaceable from both the economic and the socio-political point of view;

In recent years, however, they have required ever increasing amounts of financial assistance from the State. This cost must be kept commensurate with the services provided and their importance. Disclosure of how these public funds are being used and what services are being provided by the railways should prevent, or at least hinder, political intervention at the level of commercial management, unjustified by socio-economic considerations. Improved presentation of the accounts should have the effect of increasing the responsibility of railway management.

Of course, it is essential that in modernizing their productive assets and increasing their commercial responsibility, these undertakings should be enabled to improve their performance significantly with a view to achieving financial balance.

The financial resources applied must, however, be in proportion to the scale and importance of the services provided by the railways; - convinced of the need to establish principles for financial relations between railway undertakings and Member States, as provided for in Article 8 of the Council Decision of 13 May 1965 (1) on the harmonization of certain provisions affecting competition in transport by rail, road and inland waterway;

- on the basis of the proposal for such rules submitted by the Commission to the Council,

HAS AGREED TO THE FOLLOWING GUIDELINES:

Financial relations between national railway undertakings and Member States should be governed by the following principles: 1. Even if the undertaking has no legal personality, the railways assets, budget and accounts must be separated from those of the State. This will permit of the independence of the undertaking and exact knowledge of the cost of the services provided. The railways shall draw up annual accounts and balance sheets.

2. The accounts and balance sheets of the various railway undertakings shall be made mutually comparable and costings shall be made on (1)OJ No 88, 24.5.1965, p. 1500/65.

uniform principles. At the European level, this will both make possible improved cooperation and provide a basis for comparing the financial performance of the railway undertakings.

3. The railways shall concentrate basically on activities appropriate to this mode of transport. Bearing in mind the public nature of the undertaking, Member States may require that diversification should first be submitted to the Government for approval.

4. Railway undertakings are to be managed in accordance with economic principles. This applies also to their public service activities with a view, in particular, to providing efficient and appropriate services at the lowest cost possible for the quality of service required. Member States shall decide which public service activities the railway undertakings are to perform.

5. The railway undertakings shall submit their business plans, including those dealing with investment and financing, within the framework of each Member State's overall policies and taking account of national transport planning, particularly infrastructure. These shall be adopted in the context of a procedure decided by the State and based on consultation between the State and the undertaking. The State shall supervise their implementation.

6. The railway undertakings shall set their own rates within the framework of general prices policy and taking account of both national and Community rules on transport rates and conditions, with the aim of optimizing their financial performance and achieving financial balance.

7. Without prejudice to the provisions of Regulation (EEC) No 1107/70 (1) compensation may be made in accordance with procedures to be laid down in Community provisions in respect of tariff obligations which arise from public service activities, apply only to railway undertakings and are not covered by Regulation (EEC) No 1191/69 (2).

8. Member States may appoint the members of the governing bodies of the railway undertakings.

9. In collaboration with the railway undertakings, Member States shall draw up financial plans aimed at achieving the financial balance of the undertaking. With this objective, the Member States, in their capacity as owners, may provide the railways with sufficient funds on a scale commensurate with their functions and with the size and financial needs of the undertakings.

The Council hereby instructs the Permanent Representatives Committee to re-examine the Commission proposal for the implementation of Article 8 of the Council Decision of 13 May 1965, in the light of the principles set out above. In this connection, it is desirable to aim at the greatest possible alignment of the rules in the various Member States governing financial relationships between the Member States and the railways. Account should also be taken of particular conditions affecting the role and importance of the railways in each individual Member State. The rules must, therefore, be sufficiently flexible without, however, jeopardizing common objectives. (1)OJ No L 130, 15.6.1970, p. 1. (2)OJ No L 156, 28.6.1969, p. 1.