Memorandum by English Welsh and Scottish
Railway Limited (RI 09)
The development of freight on rail has been
a success. £1 billion of investment by operators and terminal
providers has contributed to a growth of 41 per cent in five years.
Net tonne kilometres are at their highest level for over 20 years.
Maintaining this growth will require high-quality,
low-cost infrastructure. Research commissioned by EWS has identified
a number of international practices that could be adopted in the
UK. These practices, together with productivity plans already
in place, will allow the achievement of efficiency reductions
in excess of the Regulator's proposed range of 3 to 5 per cent
Lower track access charges are fundamental to
the competitiveness of freight on rail. They are needed to correct
the imbalances created by recent government announcements on 44
tonne lorries, Vehicle Excise Duty and fuel duty escalator. They
are justified by Railtrack's efficiency potential within infrastructure
provision and by ensuring that freight traffic covers only Railtrack's
genuinely avoidable freight costs adjusted for international best
The growth of rail freight by 8 per cent a year
will create between £10 billion and £12 billion of external
benefits over the next 10 years. The rail network will need additional
capacity and capability for longer, higher, wider and heavier
trains. EWS has developed a £5 billion 10 year network investment
plan that identifies the necessary capacity and capability. This
expenditure should be incorporated into the Government's Ten Year
Transport Strategy and Comprehensive Spending Review. It should
also be included in the Strategic Rail Authority's freight strategy
and overall strategy.
EWS has made a number of recommendations that
the sub-committee may wish to review with the organisations concerned.
EWS recommends that the Rail Regulator should
undertake a detailed review of the benefits of using high quality
infrastructure components on the UK rail network.
EWS supports the Regulator's proposals for asset
monitoring in the next control period.
EWS believes that the monitoring of freight
assets and freight routes should receive specific attention.
EWS believes that the Regulator should review
the freight commitments within the 2000 NMS.
The Rail Regulator must research all the issues
relating to freight track access charges given the long-term impact
of his eventual conclusions.
The Regulator should employ independent engineering
advisers to review the research undertaken to date and to identify
the best international practices and efficiency available to Railtrack.
Higher efficiency targets and lower Railtrack's costs will benefit
both passenger and freight.
The Regulator should ensure there is a widespread
understanding of the genuinely avoidable costs of freight operation.
These findings should then be incorporated in Railtrack's efficiency
targets. For passenger lower track access charges will mean lower
subsidy and the ability to reallocate subsidy to investment.
EWS recommends that the Strategic Rail Authority
should review the impact of Railtrack's efficiency potential on
track access charges and subsidy.
EWS recommends that the external benefits of
existing traffic should be included in the assessment of the network
EWS recommends that the £5 billion network
investment plan should be incorporated in the Government's Ten
Year transport strategy and that early commitments should be in
the comprehensive spending review.
EWS also recommends that the network investment
plan should be incorporated in to the Strategic Rail Authority's
freight strategy and overall strategy.
EWS recommends that that Strategic Rail Authority
should undertake a joint study with the Rail Regulator on freight
investment funding. EWS believes that the proposal to introduce
third-party investment in infrastructure should be give serious
The Strategic Rail Authority must protect freight
interests during the refranchising process otherwise freight growth
opportunities will be extremely limited.
English Welsh & Scottish Railway
English Welsh & Scottish Railway (EWS) is
the largest rail freight haulier in Great Britain. It was formed
in 1996 following the outright purchase of the majority of British
Rail's freight operating units. In 1997 it purchased British Rail's
international freight business.
A grouping of overseas and UK investors own
EWS. This consortium has also invested in rail freight operations
in the United States, Canada, New Zealand, Australia and Jordan.
This overseas experience has proved extremely helpful in benchmarking
the performance of the national rail network against best international
Rail freight growth
EWS is part of a rail freight industry that
has grown by 41 per cent since 1994-95. Figures published by the
Department of the Environment, Transport & The Regions show
that 18.4 billion net tonne kilometres (bntkm) of rail freight
were moved in 1999-2000. This is the highest figure since 1979-80
and an increase of 5.4 bntkm since the low point in 1994-95. The
DETR statistics show that 1.6 bntkm of this growth came from coal
traffic whilst 3.8 bntkm came from other traffic.
Particularly encouraging is the growth in the
final quarter of the 1999-2000 financial year compared with the
final quarter a year previously. Coal Tonne kilometres grew by
21.4 per cent, other traffic grew by 9.3 per cent giving overall
growth of 12.5 per cent. Tonnage, whilst not as strong an indicator
of transport demand as tonne kilometres, also grew 7.1 per cent
in the final quarter of 1999-2000 compared with the same quarter
in the previous year.
Whilst rail freight has grown by 41.5 per cent,
road freight has grown by only 9 per cent.
As a result, rail freight has increased its
market share of the road and rail market from 8.3 per cent in
1994-95 to 10.7 per cent in 1999-2000.
Part of this increase has been due to the restructuring
of the railway industry, bringing a sharpened focus to the train
operators such as EWS. There have also been structural changes
in some of rail's traditional markets such as the coal industry
where significant flows of long-distance imported coal have replaced
indigenous production. The freight operators have won new traffic
to rail and recaptured traffic lost in earlier years. New and
recaptured traffic flows include:
additional mail traffic and new express
parcels business at 110 mph;
parcel traffic using road/rail "piggyback"
consumer and industrial products
supermarket traffic including secondary
distribution movements to stores;
car bodies and components;
bulk and bagged cement;
containerised domestic waste.
At the heart of the growth of freight on rail
has been investment by the freight operators and by the end customers.
This investment has allowed the industry to attract new markets
and to reduce costs. The investment has been across a wide range
of areas. For EWS the key investments are:
EWS Capital Expenditure
|250 Class 66 heavy haul locomotives||299
|30 Class 67 high speed locomotives||44
|Operational control system||30
|400 60' flat wagons for standard gauge containers
|300 flat wagons for high gauge containers
|280 bogie coal hopper wagons||17
|260 steel coil carrying wagons||16
|300 box wagons for bulk materials||16
|100 well wagons for 9'6" gauge containers
|Customer Service Delivery Centre||9
|390 box wagon conversions for bulk materials
|400 low sided box wagon conversions for spoil traffic
|80 "piggy-back" wagons||4
|50 steel bar carrying wagons||3
Source: EWS internal
These investments are part of a £700m programme that
has allowed EWS to expand its business and enter new markets.
Beyond this other operators and terminal developers have also
invested heavily in freight by rail.
The need for further investment
The investment committed so far has provided the bedrock
for future growth but the operators' investments cannot produce
this growth alone. Having made significant investments we now
look to others to match our confidence in the industry. The key
to growth is the investment in infrastructurethe most up-to-date
rolling stock will contribute little if there are insufficient
facilities to load and unload traffic, if there is inadequate
space on the network and if the network cannot permit full exploitation
of the innate benefits of rail. The benefits generated by the
specific characteristics of rail include:
fast journey times, significantly in excess of
both the average and legal speed on the road network
the ability to move high volumes efficiently and
an alternative to increasingly congested roads
environmental benefits such as reduced emissions
per freight tonne mile.
|Volatile organic compounds||100
Source: J. S. Dodgson, Liverpool University
Railtrack's past performance in renewing, maintaining and
developing the national rail network and the likely impact on
its plans for the future
EWS has commissioned extensive research into the way in which
the network is maintained and renewed when compared with international
best practice. EWS has identified a number of initiatives which,
if implemented, would improve network efficiency, reduce costs
and improve quality.
The rail used in the UK is lighter than best practice, is
not hardened and is not maintained in the same manner as overseas.
This reduces the resistance to flexure and wear, increases the
number of surface cracks, and facilitates the spread of defects.
As a result best practice rail lasts between three and six times
longer than UK rail and requires fewer repairs.
EWS's research has shown that, under British traffic conditions,
the use of the rail best suited to the UK network (an average
head hardened US rail) would reduce the defects which lead to
broken rails by 93 per cent. Alternatively Railtrack could improve
the cost effectiveness of their existing section by adopting different
maintenance techniques. Rail maintenance consists chiefly of lubrication
(applying a grease based solution to minimise friction) and grinding
(wearing away early life surface defects before they become serious).
Research has shown that lubrication and grinding would reduce
the defects which lead to broken rails by 77 per cent.
Ballast is the largest cost driver on the UK infrastructure
but is relatively insignificant on best practice railways. Research
has shown that deeper, harder and better drained ballast will
last 25 per cent longer than Railtrack's current specification.
Failure to drain by ditching and to replace partially by shoulder
cleaning (rather than totally by cleaning) leads to frequent renewal
of ballast. Best practice railways rarely need to replace ballast.
UK practices also increase the load on ballast unnecessarily
by spacing sleepers at 26-30 inches. High density and best practice
railways specify a minimum spacing of 24 inches and often lay
sleepers at 19 inch intervals.
EWS's work has concluded that, at fully-absorbed current
unit costs, use of high integrity track components could halve
the real long run infrastructure costs to Railtrack of EWS's business.
Such premium components would prove equally relevant and cost-effective
for passenger services.
Different track components wear out at different rates depending
upon usage, line density and track curvature. UK practice is to
renew all simultaneously. This means that many components are
discarded with 30-50 per cent of life remaining. Under previous
practice such components were cascaded to low density lines and
could provide another twenty or thirty years of use.
Railtrack acknowledges that its past performance on maintaining
and renewing the rail network is inadequate. At a recent hearing
held by the Regulator into the proposals to upgrade the West Coast
Main Line Railtrack explained that one of the reasons for the
significant escalation of costs was that Railtrack only now understood
the condition of its assets. This raises questions about its knowledge
of its assets on the rest of the network and the adequacy of its
maintenance and renewal performance. The Regulator's own consultants
Booz Allen & Hamilton examined this issue in their March 1999
report that covered, inter alia, network performance, the network
asset base, efficiency and stewardship. Their wide-ranging report
covers many of the issues being reviewed by the Committee. On
the subject of asset knowledge, Booz Allen & Hamilton said
"The quality of inherited data concerning asset information
was poor but improving data quality has not received great focus
in the control period to date" (para 7.38, pp 7-6).
Condition and retention of freight infrastructure
EWS is concerned that the condition of Railtrack's freight
infrastructure is deteriorating. The evidence is an increasing
number of speed and weight restrictions, both of which have a
significant effect on the efficiency and performance of freight.
Initial research has indicated that the cost of speed restrictions
affecting EWS's services could be as high as £8 million per
annum. We have asked Railtrack to provide separate information
on its freight assets and restrictions so we can monitor its stewardship
role in this respect. We have given our support to the Regulator's
intention to introduce a range of measures which monitor the serviceability
and condition of Railtrack's network assets and the threat of
enforcement action if these reveal a significant deterioration.
Settle & Carlisle
The Settle & Carlisle line is a key Anglo-Scottish freight
route which has rapidly deteriorated as the maintenance and renewal
regime did not match the advertised capability of the route. This
has led to severe disruption to EWS's trains using the line as
Railtrack have imposed ongoing speed restrictions over the majority
of the 90 mile route limiting freight trains to just 30/40 mph
rather than the normal speed of 60 mph. In addition Railtrack
have taken month-long blockades of the line where no traffic can
operate at all in order to halt the deterioration and return
the line back to normal. The first blockade was in November 1999
and a second is planned for November this year. These blockades
cause major disruption to our services affecting performance,
customer confidence, lead to increases in costs and decreases
Bedford to Bletchley
The route is 16 miles long with a normal line speed of 60
mph. Restrictions are currently in place over the whole route
limiting freight trains to 20 mph and passenger trains to 40 mph.
Glasgow to Edinburgh
Speed restrictions over shorter stretches of line than those
examples highlighted above can also have a significant disruptive
effect on freight trains as they have to constantly slow down
for each restriction then speed up again afterwards. This can
also cause "knock on" delays to passenger trains. Over
a 23 mile section of a freight route between Edinburgh and Glasgow
there are six separate speed restrictions totalling four miles.
The capacity and capability of the network can be reduced
as facilities not currently used, but of strategic importance
for the future, are withdrawn. This can lead to short-term cost
savings for Railtrack at the expense of increased costs for rebuilding
the asset in the future. An example of this occurred in Manchester
where Railtrack removed a connection to a former freight terminal
that had to be restored within two years.
Railtrack's 2000 Network Management Statement
The freight section of Railtrack's 2000 Network Management
Statement was extremely disappointing. Railtrack's opportunity
to state its long-term vision for rail freight growth was missed.
Instead Railtrack chose to focus on:
critical comments about recent freight growth.
Their pessimism is contradicted by the recent DETR statistics;
their perception of the economics of rail freight
and a call for significant increases in freight track access charges.
This contradicts the research undertaken by EWS and ORR.
The NMS also shows that there are 26 disputes between EWS
and Railtrack regarding the development of our "reasonable
requirements" for the rail network. Many of these disputes
relate to the feasibility studies and introduction of additional
capacity and capability (to enable longer, wider, higher and heavier
trains) for freight. We do not accept Railtrack's assertion that
all freight growth can be accommodated on the network in the next
A copy of our response to Railtrack's 2000 Network Management
Statement can be supplied to the Committee.
EWS recommends that the Rail Regulator should undertake a
detailed review of the benefits of using high quality infrastructure
components on the UK rail network.
EWS supports the Regulator's proposals for asset monitoring
in the next control period.
EWS believes that the monitoring of freight assets and freight
routes should receive specific attention.
EWS believes that the Regulator should review the freight
commitments within the 2000 NMS.
The adequacy of the oversight exercised in the past by the
Office of the Rail Regulator of Railtrack's performance, its contribution
to the development of Railtrack's future plans with particular
reference to the review of track access charges, and the means
by which the Office of the Rail Regulator intends to ensure that
Railtrack in future honours its commitments.
Track access charges
The review of track access charges is fundamental to the
future of freight on rail. Track Access charges are 30 per cent
of EWS's costs and a significant reduction will be necessary to
ensure that rail freight can remain competitive. There have been
a number of recent announcements by the Government that will enhance
the competitive position of road haulage:
The decision to permit the general introduction
of 44 tonne lorries with a target date of 1 January 2001. EWS
has estimated that up to 19 per cent of existing rail traffic
could transfer to road as a result.
The reduction in Vehicle Excise Duty for 44 tonne
and 40 tonne lorries. VED is the charge closest to rail track
access charges as it is deemed to represent the impact of the
Heavy Goods Vehicle on the road infrastructure.
The decision not to increase fuel duty above the
rate of inflation although the previous policy had:
reduced the imbalances of road and rail costs;
recognised that Heavy Goods Vehicles pay only
70 per cent of their external costs;
acknowledged that road vehicles produced significantly
higher emissions per tonne kilometre than rail-especially CO2.
In addition we understand that Government are
considering a road building and widening programme. This will
further aid road haulage productivity.
This, when combined with our analysis of Railtrack's efficiency
potential and Government's policy to increase freight on rail,
has led EWS to argue for significantly lower track access charges.
EWS's position is summarised by the Rail Regulator in his consultation
document on freight track access charges Review of freight
charging policy, a consultation document. In paragraph 1.7
the Rail Regulator states:
"Freight operators have generally argued that Railtrack's
track access charges should be as low as possible to ensure that
rail can compete with other transport modes. Access charges should
therefore, in their view, be no higher than Railtrack's avoidable
costs from freight operations. In addition, they argue that these
avoidable costs should reflect Railtrack's potential for improved
efficiency and that this potential should be measured against
international best practice. They generally argue that the variable
charge should be low to reflect their view of the marginal costs
of freight operation."
Essentially freight is a marginal user of a passenger network
and should, therefore, pay only its genuinely avoidable costs.
In contrast Railtrack are arguing that freight access charges
should be increased by at least 25 per cent (Financial Times,
8 April 2000).
Railtrack's case is based on the misconception that its variable
freight costs are significantly higher than previously thought.
This view has been dismissed by our own research and, equally
importantly, by the Regulator's own consultants who have estimated
that Railtrack's variable freight costs are very similar to the
level currently paid by EWS.
Even the view of the Regulator's consultants overstates variable
freight costs. Their work underestimates Railtrack's efficiency
potential, allocates the cost of passenger assets to freight,
fails to take into account the low traffic density of the Railtrack
network and ignores key areas of cost causation such as curvature,
rail wear, switches and crossings and ballast maintenance.
EWS believes that efficiency savings in excess of the five
per cent per annum target proposed by the Regulator should be
achievable. EWS has undertaken extensive research into the efficiency
potential of Railtrack. Using the techniques outlined above the
United States Class 1 (major) railroads have achieved average
efficiency improvements of nearly seven per cent a year for the
last 17 years. In the early years this was without the benefit
of mechanisation techniques now available to Railtrack and without
the international benchmarking now also available to Railtrack.
Supplier unit cost reductions
The supplier contracts in place during the last control period
have been replaced by new maintenance and renewal contracts offering
unit cost reductions of between 15 and 25 per cent. Although the
Regulator's consultants have yet to report on the effect of the
new rates on efficiency levels, EWS's believes that they will
help to achieve improvements in excess of the Regulator's proposed
range of three to five per cent.
Improved Methods of Work
Railtrack is introducing some efficient methods of working.
These should be reflected in the future efficiency targets. Examples
Track machinery equipment recently introduced includes:
stone-blowers that reduce track geometry maintenance
frequency from one to three years
track relaying machines that increase renewals
productivity rate by two to three times.
It is argued that the limited amount of track time prevents
efficient work being done, however until very recently a typical
eight hour possession of the line has yielded only two to five
hours productive work time. Recent changes in the management of
possessions has added another productive hour.
Other areas of potential efficiency have been identified
by the Regulator's consultants:
Railtrack should incentivise their contractors
to achieve best practice or bench-mark them against one another.
Railtrack's Corporate overheads are 20 per cent
higher than comparative industries as a result to HQ staffing
Railtrack's project management costs contribute
to overall costs up to 40 per cent higher than comparable projects.
The Rail Regulator must research all the issues relating
to freight track access charges given the long-term impact of
his eventual conclusions.
The Regulator should employ independent engineering advisers
to review the research undertaken to date and to identify the
best international practices and efficiency available to Railtrack.
Higher efficiency targets and lower Railtrack's costs will benefit
both passenger and freight.
The Regulator should ensure there is a widespread understanding
of the genuinely avoidable costs of freight operation. These findings
should then be incorporated in Railtrack's efficiency targets.
For passenger lower track access charges will mean lower subsidy
and the ability to reallocate subsidy to investment.
What role should be played by the (currently shadow) Strategic
Rail Authority in the renewal, maintenance and development of
the rail network both directly and by securing investment from
sources other than Railtrack, including from train operating companies
through the franchise replacement process? What criteria the Authority
is using to decide on the replacement of franchises?
The Strategic Rail Authority should take a keen interest
in Railtrack's efficiency potential as the resulting lower access
charges will enable funds to be deployed on investment. EWS has
presented its research on efficiency potential to the SRA.
Ten Year Network Investment Plan
The Strategic Rail Authority has a fundamental role to play
in the development of the rail network to ensure that the potential
for rail freight growth is realised. EWS has identified a five
billion pound network investment programme for the next ten years
that will be a key part of achieving at least a doubling of the
current level of rail freight activity. This programme has been
adopted by the campaign Transport Choices for Industry-the railfreight
opportunity. The campaign members are the Confederation of British
Industry, the Freight Transport Association, the Rail Freight
Group, EWS, Freightliner, GB Railfreight and Railtrack. They are
pressing the Government and the Strategic Rail Authority to include
this five billion pound investment plan in the Ten Year transport
strategy and the Strategic Rail Authority's strategic plan. We
wish to see the Government's Comprehensive Spending Review including
sufficient funds to cover the first years of our network investment
The £5 billion investment, spread over 10 years, is
far outweighed by the external benefit of the existing and future
levels of freight on rail. Research undertaken by OXERA has identified
the benefits of existing levels of rail freight as worth £750
million per annum based on 4.3p per tonne kilometre. Growth of
8 per cent per year will produce total external benefits of over
£10 billion. If increased congestion and the environmental
effect of emissions increases the per tonne kilometre rate by
3 per cent per annum (based on the average increase in congestion
over the last decade) the 10 year external benefit will rise to
EWS believes that the benefits of current traffic levels
should be included in the calculation of the overall return on
the £5 billion network investment. This is because without
investment in the network for freight capacity existing volumes
will reduce as passenger traffic expands to absorb available capacity.
Scope of the investment plan
In summary, the network investment required for freight in
the next 10 years is:
|Increased train length||526
EWS has not quantified the total terminal investment required
but we have identified land being sold by BR with a value of £23
million that would be suitable for freight use. EWS has argued
that this land should be retained by the Strategic Rail Authority
and drawn down for transport use rather than being lost to the
rail industry because it has been sold to higher bids for retail,
leisure or housing purposes.
The Rail Freight Group has identified further capital expenditure
requirements for terminals and yard projects that bring the total
sum required to £5 billion.
This investment covers a wide range of facilities and is
focused on a variety of outcomes. These include:
Sufficient capacity on the rail network to accommodate growth
in freight as well as passengers. The provision of this capacity
can range from minor enhancement of the network to avoid conflicting
moves, through the provision of additional capacity on existing
arteries to the development of primary freight routes in parallel
with passenger routes. The capacity must be adequate to accommodate
high-speed services with passenger train operating characteristics
as well as to service more traditional freight services.
It is absolutely vital that this capacity is available 24
hours a day, 365 days a year.
The ability to run freight trains at high speed with reduced
journey times. This includes ensuring that the network is free
of speed restrictions that have an adverse effect on freight services.
High-speed services will operate day and night and it is essential
that the maintenance and renewal strategy of the network accommodates
nighttime freight services.
Initiatives to make more productive use of the rail network
and the resources required to run:
Heavier trains (1). If the network could
take heavier axle weights it would be possible to convey more
product within one train. The maximum axle-weight in Great Britain
is 25.5 tonnes whilst in the USA it is 36 tonnes with the average
exceeding 30 tonnes. Work needed to achieve heavier trains includes
a review of structures and network formation and the design of
wagons to accommodate the additional weights.
Heavier trains (2). The absolute weight
of a train is affected by the power of the locomotive, coupling
strengths within the train and the ability of the train to attain
and maintain speeds compatible with other services. In developing
routes for freight traffic it will be important to design them
in a way to maximise the total weight of the train.
Longer trains. Services for both bulk freight
and lighter goods benefit from longer trains, especially on long-distance
journeys. This allows more freight to be moved per network path
thus easing rail congestion. Longer trains require compatible
infrastructure on the network (such as bypass loops), extension
of tracks in yards and the upgrading of terminals.
Investment to provide a network that can accommodate the
trend for all freight equipment to become higher and wider. This
initiative, generically known as gauge enhancement, is focused
on intermodal equipment such as containers and swapbodies, piggyback
(the ability to convey road vehicles by rail) and conventional
high capacity wagons.
Terminals, yards and sidings
Access to the rail network is essential if the benefits of
other investment are to be realised. Terminal developments can
range from the small, single commodity facility used on an occasional
basis, through larger facilities associated with a customer's
premises, to major storage and distribution centres offering modal
transfer facilities. The potential of ports should not be underestimated.
The volume of traffic handled by Britain's ports517 million
transportation to and from the port facility.
The operation of a rail freight network requires modern facilities
for marshalling and stabling trains. This is particularly important
for networks moving less than full trainloads. Such facilities,
known as yards and sidings, need to be able to handle long trains
and be laid out to permit rapid interchange between services.
All terminals require land. Some of this land exists within
the industry's ownership, including that held by the Strategic
Rail Authority, and needs to be regards as a long-term resource
that may not be utilised straight away. It is essential that land
for potential rail use is protected in local development plans.
An immediate need is to protect land still owned by the British
The full list of network investment schemes is too extensive
to be included in this evidence. The full details are available
in the EWS 10 year network investment plan that is available on
our web site and can be supplied to the Committee. A summary of
the key schemes is listed below.
West Coast Main Line upgrade
Provision of replacement capacity and increased capability
on the main UK freight artery. Includes commitment to provide
42 additional paths on the "slow" line.
East Coast Main Line upgrade
Provision of a parallel freight primary route and increased
capability as part of the upgrade for passenger services.
East Coast port routes
Increased capacity and ability to move longer, heavier trains
on east-west and Transpennine routes.
London route upgrade
Development of existing routes to increase capacity and reduce
journey times for freight traffic that has to travel through London.
West Midlands routes
Re-open and upgrade routes to separate freight and passenger
traffic through Birmingham. Reopen the Stourbridge to Lichfield
Enhance the loading gauge on key rail arteries to enable
the movement of 96 containers, high capacity wagons
and Piggyback services.
Funding of investment
In parallel with the development of the 10 year network investment
plan it will be necessary to identify the funding options.
direct funding of capital investment by the railway
direct funding of capital investment by customers;
direct funding of capital investment by Government;
direct funding of capital investment by third-party
direct funding of capital investment by other
parties benefiting from the industry such as port and terminal
grant funding of capital investment by Government
for developments underwritten by customers, infrastructure providers
grant funding by Government to support the operating
costs of traffic that would not otherwise move by rail but offers
environmental and economic benefits.
We do not support third-party funding recovered through access
charges as this obscures the efficiency benefits that should be
reflected in access charges.
The sources of such investment could include equity, debt
and leasing as well as Government funds. To maintain credibility
the industry should be able to demonstrate that all efficiency
reserves have been obtained either as a result of competitive
pressure or by regulatory requirement.
It is EWS's view that the primary role of the operators is
to invest in rolling stock and facilities and systems associated
with train operation. EWS is investing around £700 million
in these areas. Given the speed and extent of operators' investment
we are looking for others within the rail industry, Government
and third parties to make the necessary investment in infrastructure.
Investment of an essentially infrastructure nature takes
time to put into place especially where planning permissions are
required. To give customers confidence that the network will be
able to accommodate freight growth it will be important for commitments
to be made to the investment early in the life of the 10 year
Decision criteria for franchise replacement
EWS's prime concern with the franchise replacement process
is that the needs of the freight railway are taken into account.
Franchise bidders will be constructing service enhancements that
will absorb capacity on an increasingly congested railway. There
is a distinct risk that such aspirations, if accepted by the SRA,
will adversely affect existing services and also absorb capacity
necessary for freight growth. The experience of the West Coast
Main Line upgrade shows the result of accepting one operator's
expansion plans without taking into account the needs of other
operators. The commitment by Railtrack to provide 42 additional
paths on the slow lines of the West Coast Main Line only replaces
existing spare capacity taken to allow the enhancement of Virgin
EWS recommends that the Strategic Rail Authority should review
the impact of Railtrack's efficiency potential on track access
charges and subsidy.
EWS recommends that the external benefits of existing traffic
should be included in the assessment of the network investment
EWS recommends that the £5 billion network investment
plan should be incorporated in the Government's 10 year transport
strategy and that early commitments should be in the comprehensive
EWS also recommends that the network investment plan should
be incorporated in to the Strategic Rail Authority's freight strategy
and overall strategy.
EWS recommends that the Strategic Rail Authority should undertake
a joint study with the Rail Regulator on Freight investment funding.
EWS believes that the proposal to introduce third-party investment
in infrastructure should be given serious consideration.
The Strategic Rail Authority must protect freight interests
during the refranchising process otherwise freight growth opportunities
will be extremely limited.
Maritime Statistics 1998, DETR. Back