Memorandum by English, Welsh and Scottish
Railways (EWS) (TYP 19)
INTRODUCTION
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.
ASSUMPTIONS
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.
IMPLEMENTATION
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.
TARGETS
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.
INTEGRATED TRANSPORT
POLICY
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.
| 
