Examination of Witnesses (Questions 860-879)
MR GRAHAM MILLER, OBE, MR JAMES HOOKHAM AND MR CHRISTOPHER WELSH
WEDNESDAY 20 MARCH 2002
Miss McIntosh
860. Can I ask what impact the suspension of rail freight services through the Tunnel has had on your membership?
(Mr Hookham) It has made us weep. We have led delegations to ministers here. We have communicated with the French Government, with the European Commission. Many of our members were either using this service or indeed were hoping to use this service. One particular importer of newsprint three years ago made major investments in a new short sea and international rail freight operation to bring much of the newsprint for the daily newspapers in this country into the UK via the Channel Tunnel and, after having staked his reputation and a lot of his business's own money on that, to find it all now disappearing for want of, with respect, a bit of fencing and a few French policemen—
Chairman
861. What answer did you get from the French Government? When you say "the French Government", what level? To whom did you speak and what answer did you get?
(Mr Hookham) We had a two-pronged attack, madam Chairman. We communicated directly with M Gaggsot. And we also worked through our French counterparts, a similar organisation based in Paris, and they have brought pressure to bear on their own Government. Polite indifference I think might be the best way I could describe their reaction. He has not seen it until very recently as an issue that need attract a great deal of attention. Clearly the international traffic passing from France into the UK is a relatively small proportion of the French total so, seen from their angle, perhaps one can understand the statistics but, as I say, it has been depressing to see the way in which the traffic has collapsed in just a few months.
(Mr Miller) Could I perhaps add a follow-up to that? Mr Hookham has graphically described the problems of existing users of the Channel Tunnel and the problems that they are having. My company, Scottish and Newcastle, is not a transport company and if one takes things like the problems with the Channel Tunnel, if one takes the problems with Railtrack, the problems with rail strikes, the problems with major disruptions to the network through the weather problems that we have had recently, as a logistics development director trying to persuade a FTSE 100 company that it might be in their interests to put traffic on to rail, these people are not transport experts, they are directors, but their perception, even as not users of the rail industry, is damaged by this kind of situation. It makes it very much harder to sell rail as a viable alternative. Let me remind you what the economics are. Not only is the Channel Tunnel dispute damaging existing traffic; it must also have a detrimental effect on potential traffic.
Miss McIntosh
862. We just need a bit more Scottish courage, I think.
(Mr Miller) I will vote for that.
863. You mentioned that your membership covers three modes at least. Has it been swings and roundabouts and have the road members been benefiting from the lack of rail facilities, ie, are there many more lorry movements as a result of it?
(Mr Hookham) Sadly, madam Chairman, I expect it is their continental competitors that have benefited from any transfer. It is important to point out that other solutions have been found and some of the traffics to which I have referred I believe are now brought in via short sea routes to the east coast ports and attempts have been made to move those into London by rail. Given the uncertainty of the future of the Channel Tunnel service, long term commitments have not been entered into, so inevitably road haulage lends itself to the spot type of business which is now having to be placed.
864. Are you disappointed that perhaps the targets for coastal shipping , as I prefer to call it because it is easier to say, are not quite as specific as they could be in the 10 Year Transport Plan?
(Mr Hookham) Our view on targets, Chairman, is that business will use any mode of transport if it delivers the right level of service so we do not have a great stake in achieving specific targets as such. In answer to an earlier question, is 80 per cent of rail freight growth, for example, a tough enough target—if the economics were got right and the reliability and other issues were got right in what is now a private market for rail freight, then arguably that will be exceeded. It is the ground rules, the mechanics of the situation that have to be addressed. You have covered all of those already this afternoon. We do not have a view as to whether or not targets as such are a good or bad thing. It is really the service conditions we are looking for. Indeed, as Mr Welsh was describing earlier, we have done a lot of work on that and we know what users and consignors of freight are looking for in shipping.
865. How confident are you that the private sector finance will be raised, particularly for rail in London as regards multi-modal studies? How confident are you that the Government will accept and implement the projects that are suggested in them?
(Mr Hookham) I do not think we have a view on the viability of the finance, that is not an area in which we have a view, only perhaps to make the point the FTA would see the planning process as being the more difficult part rather than the financing for those projects. In respect of the multi-modal studies we do hope that the Government honours what has been a very thorough review at local and regional level involving all the stakeholders. Having sat through a number of committees, and a large number of our colleagues having sat through these committees, they have covered all of the issues and we believe that not only should the recommendations of these studies be honoured, we would also make the point that they should be accelerated through the planning process because, as I said just now, we believe that would be the biggest constraint on delivery.
Mr O'Brien
866. On the question of congestion and congestion charges, I suppose you have read Professor Begg's report on the congestion situation? Where do the FTA start with their congestion policy, on motorways or in towns and cities?
(Mr Miller) Our view on congestion is that so far as industry is concerned what we are looking for is something Mr Hookham mentioned originally, which is reliability. If you are planning a complex distribution operation, whether you are planning to move all your traffic regularly at 30 miles an hour or 40 miles an hour or 50 miles an hour, provided it is predictable and provided it is measurable and deliverable, then the level of congestion is not always a problem for us. The problem that is presented by operating a cost-effective distribution business is the variability of the network.
867. Where do you stand on charging? You are in favour of charging in principle, so where do you start, where do you come from?
(Mr Miller) We have supported Professor Beggs' inter-urban charging proposal.
868. You say that the FTA support congestion charging in principle.
(Mr Miller) Yes, indeed.
869. Where do you start? On motorways, cities and towns? What recommendations have you made?
(Mr Hookham) We start with the proposals that have been put forward by the Treasury and the proposals in there were for "electronic road pricing", nominally for the whole of the network because this will be a way of raising taxation from lorries in substitution for fuel duty and vehicle excise duty. We start from where the Treasury starts.
870. You are talking about fuel duty, we are talking about charging on motorways.
(Mr Hookham) Yes and I believe that is what the Treasury is proposing now as an eventual substitution for fuel duty.
Chairman
871. It is interesting because what you are saying is you take it away from equal treatment of all lorries irrespective and put it on to those lorries who are using the roads, which might disproportionately impact on smaller firms, might it not?
(Mr Hookham) As we understand the proposals, it is a distance-based charge so it is more to do with the distance your vehicles travel.
872. So you are assuming that the smaller haulier would only do the shorter runs?
(Mr Hookham) Yes.
Mr O'Brien
873. The spin-off from the charging is to try and keep some of the larger lorries out of city and town centres. That was a suggestion put many years ago. How do you handle that situation? Some of the waggons that come into the cities create the congestion. How would you handle that?
(Mr Hookham) The arguments have been that one larger vehicle, were it to be broken down into smaller loads, would be replaced by a much larger number of smaller vehicles.
874. They could move more quickly.
(Mr Hookham) I am not sure that necessarily follows because you have three or four times the number of vehicles that you otherwise would have had. Particularly for retailing premises that are able to receive a large vehicle load at one go, that represents not only a very efficient means of delivering the business but has the least impact on congestion because all the goods are delivered in one go rather than spread throughout a number of journeys. Our views are that congestion charging for towns and cities is not going to produce any great change in the distribution patterns because, by definition, those goods need to be there for the operation of that town or city.
875. Professor Begg suggested that perhaps we should base the congestion charging on the hours that the roads are being used, in other words take it away from the peak periods. How does the FTA address that situation?
(Mr Miller) Madam Chairman, the problem is if you are in total control of your supply chain then you do have the option to vary the hours at which you deliver to your own stores or your own RDCs or your own warehouses. If you are Boots the Chemist and distributing to Boots the Chemist shops in London, it may well suit you to operate from midnight to six because the roads are quieter, it may attract lower congestion charging and it may be more economic to have the store open specially to take goods. However, that only accounts for those companies which have total control of their supply chain. If, like me, you are responsible for delivering to a free trade and tied trade pub estate where we have no control over when our customers take their beer and, indeed, given the extended licensing hours that now operate in that business our opportunities to deliver beer in these areas are constrained even more than they were through shortages of staff, we have no option but to go when our customer demands it. If that attracts higher cost because we are there only in times when urban charging is at its peak, we will incur that cost and that cost will be passed on to the customer and in due course, unfortunately, will be passed on to the ultimate consumer of our products. We need to differentiate between where the supplier has total control over when he is there and those who are demand-led by the requirements of their customers. I think there are two different answers to that.
876. If we pass these costs on to the consumer, then competition comes into play greater if someone can deliver it off peak. Would your company then allow competition in the deliveries?
(Mr Miller) Of course we have competition. The beer market is one of the most price-sensitive markets at the moment and if our competitors (being the other brewers) can operate their distribution fleet more efficiently by loading their vehicles better, by incurring less charges, by operating out of hours, the price they ultimately offer to the customer will determine who buys their product. We are in a very competitive market not only with other brewers but with third-party contractors, who are the transport professionals, who would gladly take a share of our business if they could.
Andrew Bennett
877. You just told us that you would lose out but other people could shift their delivery times. Mr Spellar told us that we could perhaps get rid of some of the restrictions for night-time delivery. Supposing that just means that a small proportion of the congestion during the daytime is removed, is that not worth having?
(Mr Miller) We certainly believe it is. We are absolutely in favour of that.
878. If it was time and distance then it would have a big advantage?
(Mr Miller) Yes.
879. Would not the Mayor's proposals have the same advantage in that his charge is daytime rather than 24 hours?
(Mr Miller) If there are opportunities for companies delivering into the City to do so out of hours then they will take a rational, economic decision for the whole delivered process. If that is such that they can minimise the cost of delivery and still provide an acceptable service to their customer, then they will move out of the charging area into the non-chargeable time zone.
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