Select Committee on Transport, Local Government and the Regions Appendices to the Minutes of Evidence

Memorandum by English, Welsh and Scottish Railways (EWS) (TYP 19)


  English, Welsh and Scottish Railways (EWS) is Britain's largest rail freight operator hauling over 100 million tonnes of freight a year throughout the length and breadth of Britain. EWS services use over 80 per cent of the rail network and provide transport for bulk freight such as coal, steel, stone and petroleum, high-speed freight such as mail and parcels, international freight through the Channel Tunnel and for new sectors such as Fast Moving Consumer Goods (FMCG), chemicals, timber, cards, food and drink.

  EWS employs 6,000 people and has invested £750 million in rail freight in the last six years. EWS is part of the rail freight industry that has grown over 40 per cent since 1996 and wishes to play a full part in achieving the Government's objective of a further 80 per cent growth in the next 10 years. Whether this target is achievable depends on whether a number of fundamental policy issues are resolved in such a way as to support rail freight.

  EWS welcomes the opportunity to respond to the Transport Sub-committee's request for evidence and we would be pleased to answer questions from the Committee. We have sought to answer the questions posed that relate to the development of rail freight and we have also taken the opportunity to raise other relevant topics.


  The 10 Year Plan was produced before Government took a number of measures that favoured road users. These included the ending of the fuel duty escalator, the standstill in fuel duty and the reduction in the cost of ultra low sulphur diesel. These measures were taken in response to the then increasing price of road fuel. Although the underlying cost of road fuel has since reduced these measures remain in place. When added to the introduction of 44 tonne lorries these measures seriously weakened rail freight's competitive position.

  Whilst the Sub-committee may wish to explore this contradictory position we do not believe that any assumptions about the growth of rail freight should change. By encouraging additional car and lorry use through these pro-road measures the likelihood of congestion has increased as a result and therefore the economic and environmental arguments for rail freight are unchanged, perhaps even strengthened.

  The 10 Year Plan assumed that the structure of the rail industry would continue as it existed at the publication date in July 2000. The consequences of the derailment at Hatfield and the placing of Railtrack in administration have challenged those basic assumptions. We identify below the reasons why the assumptions about the industry structure should remain unchanged even if the ownership of some of the parties may alter.

  We share the sub-committee's concern at the shortage of skills and capacity to deliver the Plan. Inevitably our focus is on the rail industry where engineering skill shortages have resulted in resources being restricted to a few high profile projects that have to be delivered to meet contractual and public commitments. These include the installation of the Train Protection Warning System (TPWS) and the West Coast Main Line Upgrade. As a result smaller projects, including those to attract more freight to rail, are stalled for a lack of resources. These projects include the opening and reopening of rail connected terminals and the reopening of key rail routes. We are told that Railtrack will not have resources to address such projects until 2004 at the earliest.

  We are further concerned by the demand on skills—and funding—of major projects that have yet to be scoped such as the introduction of the European Rail Traffic Management System (ERTMS), European safety and interoperability directives and the recommendations emerging from recent inquiries. The sub-committee may wish to consider whether sufficient funding and skills are available to meet these requirements and even whether they represent the best value for money for the transport industry.

  The training and development of additional skills, especially in signal and civil engineering is crucial. In the meantime the sub-committee may wish to review which projects are absorbing the available technical resources and whether the scope of these projects is still relevant.

  We are concerned as to whether there will be sufficient capacity to deliver the 10 Year Plan. Under this heading we include not only the space on the rail network for freight but also the characteristics of that space such as the ability to operate longer, higher, wider, heavier and faster trains. Whilst provision of some of the additional capacity may emerge from more intelligent timetabling there is a fundamental need for additional infrastructure—recent events on the railway have undermined the provision of this capacity.


  The 10 Year Plan identified the following investment necessary for rail freight growth:

    "£4 billion investment in rail freight, including investment in gauge enhancements, new terminals, new rolling stock and capacity to meet a projected 80 per cent increase in rail freight volumes by 2010."

  It is fundamental to the growth of rail freight that this funding is ring-fenced to rail freight. The rail freight industry has already invested heavily. EWS alone has undertaken the following investment:

    —  280 new locomotives have been introduced that are more fuel-efficient and less polluting than their predecessors with greater reliability and lower maintenance requirements;

    —  2,500 new high-capacity wagons have been introduced or ordered, while a further 3,500 wagons have been rebuilt;

    —  maintenance and repair facilities have been substantially upgraded;

    —  operations and customer support activities have been concentrated at a completely new "one-stop-shop" location, covering the whole of the network;

    —  company-owned terminals have been upgraded and refurbished.

  If Government does not fulfil its investment obligation this private sector investment will have been wasted and private investors will be discouraged from making further commitments. We were, however, assured by the Secretary of State's comment in Parliament on 15 October 2001:

    "Freight has often been the forgotten part of the railway network. I know from the discussions that my Department and ministerial team have had with representatives of freight companies that there has been real concern about the way in which the railway network has developed. I assure my hon. Friend that we want to ensure as part of the 10 Year Plan— in which we have a clear objective on the growth of freight— that we deliver on that commitment." (Hansard Column 970)

  The Sub-committee may wish to seek its own assurance that funding for rail freight will be ring-fenced and protected.

  Provision of funding, however, is only the starting point for implementing the 10 Year Plan. Recent events have left us with deep concerns about the industry's ability to implement the Government's 80 per cent growth target. These are summarised below:

    —  The Government's action on Railtrack was necessary. After Hatfield the network was found to be in a very poor state and service performance deteriorated rapidly. Whilst it is now recovering, customer confidence has been diminished and key rail freight customers such as Consignia (previously the Post Office) are reviewing their use of rail. Any reduction in the use of rail by Consignia would undermine the Government's growth objectives.

    —  Network condition remains poor. On 10 December 2001 there were still 645 Temporary Speed Restrictions in place, only 22 lower than four weeks previously and still higher than before Hatfield and significantly higher than the lowest point during 1999. Railtrack's solution is to demand greater access to the network at night—thus disrupting and placing at risk key freight services, including those for Consignia. More efficient use of track possessions together with daytime and weekend track occupation will provide a more equitable solution and will mean that the existing traffic base is not destroyed—essential if the Government's growth objective is to be achieved. Basically the freight railway needs to be open 24 hours a day, 7 days a week.

    —  There has been much debate about the future structure of Railtrack and the rail industry. We believe Railtrack's failure was about management not structure and in an already fragmented industry any restructuring that reinforces and increases this fragmentation would be unacceptable. The movement of freight is a national activity:

      —  six in 10 freight trains move more than 50 miles;

      —  more than 40 per cent of train miles are incurred by trains that cross at least two Railtrack zonal boundaries.

  The Balkanisation of the railway industry would significantly harm rail freight. We reject absolutely the concept of Vertical Integration, which would make long-distance and cross boundary operation a nightmare. It would also encourage discrimination by the owning operator and would create a need for more not less intrusive regulation. EWS needs a national infrastructure provider, nationally managed with centralised train and maintenance planning.

    —  The rail industry must have independent economic regulation. Private sector investment in rail was made in the expectation that independent economic regulation would be maintained. Without independent economic regulation rail freight operators will have no confidence that a fit-for-purpose rail infrastructure will be provided. The availability of such a network is crucial for the existence of rail freight—without it we cannot operate. It cannot, therefore, be left to political whim and influence as to whether the network will be maintained to the required standards. Without an independent economic regulator the prospects for minority users of the network would be bleak.

    —  The availability of vital rail arteries is fundamental to the implementation of the 10 Year Plan. For freight the single most important route is the West Coast Main Line. However the rail freight industry in general and EWS in particular fear that current developments may see freight excluded from the West Coast and growth prospects seriously diminished. Our concerns arise from the continuing discussions between Railtrack, the SRA, DTLR and Virgin regarding the upgrade of the route. Freight and other operators were excluded from the original Passenger Upgrade 2 (PUG2) agreement in 1998 and the Hartwell agreement between Virgin and Railtrack that was negotiated before Railtrack went into administration. Despite intensive lobbying freight needs continue to be marginalised and we have yet to see any detailed timetabling options. We do know that provision of sufficient capacity on the Trent Valley for freight growth is no longer part of the core option—we do not know why. The sub-committee may wish to make its own enquiries regarding this fundamental part of the 10 Year Plan implementation.

    —  We are equally concerned about the method of the upgrade where Railtrack is insisting on closing two of the four tracks at night for at least the next three years. This will undermine our existing service levels and discourage potential customers from transferring to rail. There is little point renewing the network if there is no traffic to take advantage of the result.

    —  A core part of the 10 Year growth targets is the development of international traffic. This, though, is becoming increasingly remote as the British and French governments struggle to deal with the issue of asylum seekers using freight trains to enter the United Kingdom. We are currently operating only one-third of planned international services because the French Railways have imposed a partial blockade because of security problems in Calais. EWS has urged the British Government to apply pressure to the French authorities to resolve the problem that threatens the continuation of international freight traffic.

  Each of these issues emphasises the impact of external influences on the delivery of the 10 Year Plan. None of these issues are trivial and each could derail the growth objectives shared by Government and the rail freight industry. Some of them illustrate inconsistencies in Government Policy; others highlight the potential conflict between the passenger and freight railway. They all demonstrate that rail freight is vulnerable to the political imperatives of other pressures and policies.


  The foundations of the Government's 10 Year Plan lie in the 1998 white paper "A New Deal for Transport: Better for Everyone".

  The white paper treats road congestion as a high priority for attention by Government policy— "Business is concerned about the costs of congestion" (para 1.2) and "The CBI has put the cost to the British economy (of congestion) at around £15 billion every year" (para 1.7).

  Higher fuel consumption caused by slow moving vehicles also increases exhaust emissions and thus reduces air quality, contributing to morbidity: "Up to 24,000 vulnerable people are estimated to die prematurely each year . . . We must do everything we can to cut this loss of life" (para 2.7).

  The 10 Year Plan follows this lead. The highest priority is given to congestion: "Our strategy for transport is to tackle congestion and pollution" (page 9). The 10 Year Plan aims to support and contribute to "many of the Government's long-term objectives" by helping to "sharpen the competitiveness of British industry" and to "lessen the impact of transport on the environment at both local and global levels".

  The Lex Transfleet Report on Freight Transport 2000, sponsored by the Freight Transport Association (FTA), highlighted the freight industry's concern about growing road congestion: "Another major issue is congestion" which represents "a serious barrier to efficient distribution and a ... matter of widespread concern in the freight industry. . . . Two-thirds of fleet managers believe congestion on Britain's roads is a major concern".

  The 2001 edition repeats the calculation that "congestion is costing UK industry £20 billion a year in lost time and costs". The FTA comments that "Britain has one of the worst congestion problems in Europe". Recent changes to HGV taxation may have reduced overhead costs but will have done nothing at all to address congestion. EWS regards as fully justified the high priority given in the 10 Year Plan to reducing road congestion and related environmental pollution. We believe that the growth of rail freight is one of the most important elements of dealing with this problem.

  EWS fully endorses the Government's target of 80 per cent growth in rail freight although we are disturbed that recent comments have referred to "up to 80 per cent". That said, Ministers have reassured Parliament on a number of occasions over recent weeks that the Government's commitments to the 10 Year Plan will be honoured.

  At the Select Committee's hearing on Wednesday 14 November 2001, the Secretary of State for Transport, Local Government and the Regions confirmed the target for 80 per cent growth in the use of rail for moving freight. "We remain, in Government, committed to (this) target despite the disruption caused by last October's crash at Hatfield" and said that the 10 Year Plan "backs up our vision with a commitment for massive investment". These assurances were repeated in the House of Commons by the Secretary of State on Tuesday 20 November, when referring to the Rail Regulator's recent decision to reduce rail freight's track access charges: "That will make a significant contribution ... towards achieving our objective in the 10 Year Plan of seeing up to an 80 per cent increase in freight on the railway system".

  At the Select Committee's hearing on Wednesday 14 November, the Secretary of State also confirmed that the Government's key priorities set for the SRA include:

    —  implementation of an improved system of support for freight operations;

    —  increasing the capacity of the railway to accommodate expected growth in passenger and freight traffic;

    —  improving significantly the resilience of railway operations.

  EWS looks forward to working with the Government to ensure that it turns these assurances into reality over the life of the 10 Year Plan. Tackling road congestion and environmental pollution must remain the aims of the Plan; ensuring that rail moves a greater share of the country's freight will reduce use made of lorries, improve air quality and offer UK industry a congestion-free means of moving its goods.

  Turning to the ways of achieving the aims of reducing road congestion and related environmental pollution, EWS endorses the Government's view in the 10 Year Plan that rail has a key role to play in reducing road congestion and its costly impacts on business and the environment. "Our aims are to increase the use of the railways by passengers and freight, to provide new capacity to meet demand. ... A large expansion of rail services will make an important contribution to reducing future levels of congestion on the roads" (para 6.9).

  This is confirmed in the list of outcomes expected by the Government from the implementation of the 10 Year Plan, which include: "a significant increase in rail's share of the freight market to around 10 per cent—an additional 15 billion tonne-km of rail freight, equivalent to one billion lorry trips in 2009/10" (para 6.22)

  The 10 Year Plan follows the lead given by the 1998 White Paper to making greater use of rail to move freight. The White Paper states: "We can move more freight by rail, relieving pressure on the road network and bringing environmental benefits ... for every percentage point reduction on road freight that is achieved some 1,000 to 2,000 heavy lorries could be taken off our roads" (para 3.33).

  Continued progress in implementing the 10 Year Plan depends upon tangible support from all the parties involved, as well as the fine words in policy statements. The 10 Year Plan makes this clear: "Government alone can only achieve so much. ...The industry's performance and efficiency will need to improve significantly" (para 6.16). Perhaps unlike other parts of the rail industry, EWS has improved both its performance and efficiency. Since 1996:

    —  the volume of freight moved has risen by over 40 per cent;

    —  the number of staff employed has fallen by one third;

    —  the mainline locomotive fleet has fallen by 35 per cent;

  with punctuality and reliability better than many passenger operators with the performance for Consignia being better than any other train service provided by any other operator.

  Even at this early stage of the 10 Year Plan's implementation, some examples show what rail is achieving:

    —  The premium parcels company Securicor Omega uses high-speed trains provided by EWS to move time-sensitive packages between Walsall and Motherwell, Aberdeen and Inverness. Additional services are planned to link Scotland with Greater London.

    —  The supermarket chain Safeway uses an EWS shared-user service to move temperature-controlled consumer goods to its retail outlets throughout the north of Scotland.

    —  The world-acclaimed car manufacturer BMW uses EWS to move its new Mini from Cowley to Purfleet for export in trainloads which convey some 250 cars at a time.

    —  The UK's leading steel producer, Corus, now uses EWS to haul 200,000 tonnes per year of high-grade steel billets from Scunthorpe to Rotherham on a just-in-time basis, with trains forming part of the production line.

    —  EWS working with Railtrack to obtain authority to operate its class 67 locomotives at 125 mph and its intermodal container-carrying wagons at 90 mph in order to offer faster and thus more competitive freight services to UK industry in the near future.

  Providing the major issues identified above can be resolved without harming freight, these successes can be perpetuated.


  Rail freight is a key part of the integrated transport policy, rail plays a fundamental part as the trunk haulier of a road / rail transport offer. The importance of rail freight is reinforced by the European White Paper that focuses heavily on increasing the absolute amount and market share of rail freight. We trust that the Government will give its full support to this European approach to rail freight.

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