Memorandum from the Department for Transport
(FT 03)
1. The efficient and predictable movement
of goods is central to the success of the UK economy—as
highlighted by the Eddington Transport Study (ETS). Areas where
freight activity is inappropriately constrained can have significant
undesirable consequences for the economy, society and the environment.
Freight and logistics operations are therefore significant to
all four of the Department's strategic objectives, which are to:
— sustain economic growth and improved
productivity through reliable and efficient transport networks;
— improve the environmental performance
of transport;
— strengthen the safety and security
of transport; and
— enhance access to jobs, services
and social networks, including for the most disadvantaged.
2. However, the Department recognises that
the lead responsibility for the provision of freight services
and the management of supply chains in the UK rests with the private
sector. Government intervention is normally only considered appropriate
in one of three circumstances. These are where:
— the Government has responsibilities
for the provision or funding of network infrastructure;
— there is a demonstrable need for
a long-term, strategic planning framework; or
— the market fails to capture its own
externalities—such as adverse impacts on environment, safety
and congestion—and Government action can contribute to the
achievement of the Department's strategic objectives.
3. These rationales for intervention underpin
the Department's freight strategy, which has five main elements
within it. They are:
— investing in network and IT infrastructure
required to support effective freight services where it is affordable
and the overall project can be delivered in accordance with the
Department's value for money policy;
— regulating proportionately (both
domestically and internationally) to minimise the administrative
and other burdens placed on industry;
— increasing compliance with regulations,
adopting a more targeted approach to minimise the burden on those
operating within the law;
— ensuring a long-term planning framework
which recognises the needs and aspirations of both industry and
the overall public interest; and
— promoting, incentivising and/or funding
behavioural change where benefits are affordable and can be delivered
in accordance with the Department's value for money policy.
4. These activities are undertaken both
by the central Department and by its Executive Agencies. The Highways
Agency's (HA's) core activity—the operation and provision
of the road network—is essential for effective logistics,
and the Vehicle Operator Services (VOSA), Driving Standards (DSA),
Driver and Vehicle Licensing (DVLA) and Maritime and Coastguard
Agencies (MCA) all also have regular interactions with the sector.
VOSA has the most significant interactions with the freight industry
and has particular responsibilities for supporting Traffic Commissioners
and increasing compliance within the road haulage sector.
5. Following its recent re-organisation,
from 1 April 2007, Ministers have agreed that the Department should
bring greater coherence to its freight strategy through the establishment
of "logistics" as one of its key cross-cutting themes.
Led at Board level this work (although at an early stage) is already
delivering a stronger focus on and understanding of freight issues.
6. The remainder of this memorandum provides
further information on each of the five elements of the Department's
strategy. In doing so, reference has been made to issues raised
in the Committee's call for evidence. Annex 1 identifies the elements
of this memorandum most relevant to each of the Committee's questions.
INVESTING IN
NETWORKS
7. The single most important thing the Department
does for the freight industry is to invest in the maintenance,
operation and improvement of the national road and rail networks.
Benefits to freight users form an important input into all scheme
appraisals, though the routes through which investment is delivered
vary between modes and funding sources. Key elements include:
— national roads (including those which
serve airports) funded directly by the Government through the
Highways Agency;
— more local investment in road infrastructure
through existing local authority funding mechanisms;
— the Strategic Freight Network (SFN)
announced in the Rail White Paper in July 2007—for which
£200 million has been provided for Network Rail investment;
— freight access charging for the rail
network on a marginal costs basis (with the Department funding
"avoidable costs" of freight as are not met by Track
Access Charges through a direct grant to Network Rail); and
— the Transport Innovation Fund (TIF)—the
Department recently announced that the enhancement of the Gospel
Oak to Barking line will receive £18.5 million in funding.
A number of other schemes offering substantial freight benefits
are also currently under consideration for TIF funding.
8. It is rare for the Department to invest
in infrastructure that benefits only freight traffic. This is
primarily because many areas of high congestion for freight traffic
are also locations where non-freight traffic from different origins
and destinations converge. As freight users are therefore one
of several beneficiaries of investment it is important for the
Department to model predicted freight traffic increasingly effectively
and to value it appropriately in appraisal. Work to review our
approach in these areas is underway (in the light of the ETS and
as part of the cross-cutting logistics work). This will take full
account of expected trends in international freight movements,
including predicted unitised sea freight and airfreight growth.
9. The Department also invests in IT infrastructure
to enable the services provided by its Executive Agencies to be
delivered more effectively to industry—including the freight
sector. For example, since 2005, road freight operators have had
the option of renewing their tax discs on-line.
REGULATING PROPORTIONATELY
10. Regulation has an important role to
play in improving and maintaining safety standards and the welfare
of industry employees. Despite growth in the goods vehicle fleet
and vehicle-kilometres travelled, there has also been a reduction
in fatal and serious accidents involving these vehicles. However
the Department is concerned to ensure that the regulatory burdens
placed on the freight industry are the minimum considered necessary
to achieve its objectives. It will:
— review domestic regulatory requirements
for the sector on a regular basis to ensure that they remain appropriate
(eg review of UK domestic drivers' hours rules is planned for
2008);
— take action to reduce burdens where
opportunities are identified (eg the modernisation of Operator
Licensing will secure annual savings of around £15 million
for the industry); and
— ensure that industry is consulted
at an early stage on European regulatory proposals and that the
Commission, other Member States and the European Parliament are
aware of UK concern that all regulatory proposals should deliver
significant opportunities for business, address a demonstrable
market failure and deliver benefits that clearly outweigh the
overall costs (eg DVLA engagement on the requirements of the Third
Directive).
11. Given the international nature of the
freight industry, and in the interests of fair competition, much
of the regulation for the sector is agreed at a European level.
The Department considers that it has had some success in ensuring
a proportionate approach from European proposals. Examples of
this include:
— the withdrawal by the Commission
of its proposals for supply chain security and ports regulation
following concerns expressed by the UK and other Member States,
as well as the European Parliament;
— the agreement of proposals to liberalise
the European rail freight market which have delivered significant
business opportunities for UK companies;
— application of a derogation in Council
Directive 96/50/EC, on competency of masters operating vessels
commercially on coastal and inland waterways, to minimise the
financial and human resource impact of the legislation; and
— the implementation of digital tachographs
which are estimated to reduce administrative burdens for the HGV
and PSV sector by £15 million per annum (compared to the
use of analogue tachographs) from 2009.
12. The Department supports new regulatory
proposals where they are appropriate and proportionate. For example
the Department:
— supports including aviation in the
EU emissions trading scheme. The Commission published draft legislation
in December 2006 which outlined an ambitious scheme for aviation
which would apply to all flights arriving at or departing from
an EU airport. This proposal is now being negotiated in the Environment
Council and the European Parliament;
— has recently agreed measures that
will require the mandatory retrospective fitment of enhanced mirrors
to the passenger side of most Large Goods Vehicles (LGV) that
were registered after 1 January 2000, in order to help drivers
to see pedestrians and cyclists better;
— is currently negotiating requirements
for the mandatory fitment of stability control systems to LGVs
to help prevent accident occurrence; and
— intends to consult shortly on a package
of proposed regulations concerning access to the road haulage
profession and market currently being negotiated in the Council
of Ministers. It is keen to ensure that any agreement to liberalise
further access to the road haulage market is accompanied by appropriate
measures to deliver improved consistency of compliance so that
road safety is not compromised. The Commission's proposals reflect
virtually all of the key issues raised in the UK's response to
its consultation last year.
13. Whilst the Department seeks to minimise
burdens on UK business it recognises that there are concerns in
the freight sector about the effectiveness of implementation of
European proposals outside of the UK. Any delay in some other
Member States implementing requirements can contribute to actual,
or perceived, distortions of competition. It therefore welcomes
the Commission's intention to make increased use of directly applicable
Regulations in the freight sector.
INCREASING COMPLIANCE
IN A
MORE TARGETED
MANNER
14. The way in which the Department seeks
to ensure compliance with regulations also has the potential to
impose significant burdens on industry. The Department's aim is
to seek to place the weight of that burden on non-compliant businesses.
Given the Committee's interest in the safety of HGVs, this is
most effectively illustrated with reference to the road haulage
sector.
15. Enforcement of HGVs is primarily undertaken
by VOSA and the police. Since 2004 VOSA has rolled out a more
targeted approach to its roadside enforcement activities, primarily
through the use of an Operator Compliance Risk Scoring system
(OCRS). All vehicles specified on a GB UK operator's license can
be immediately linked to the operator's risk score at the roadside
using either Automatic Number Plate Recognition (ANPR) cameras
or hand held data loggers which have enabled VOSA to stop a much
higher percentage of non-compliant vehicles as well as reducing
burdens on compliant operators.
16. Similar results have been achieved through
the roll out of weigh-in-motion (WIM) technology; some attached
to ANPR cameras. These weight sensors allow VOSA to detect potentially
overloaded and unsafe vehicles that can then be intercepted and
subjected to enforcement checks. Over 70% of vehicles stopped
at some sites have proved to be over load weight limits with a
significant proportion of drivers also breaching driver's hours
requirements.
17. VOSA also undertakes on-road targeting
of high-risk vehicles & drivers on international journeys
and there were almost 20,000 roadworthiness checks on such vehicles
between April 2006 and March 2007. 47% of vehicles stopped received
a prohibition. The 2007 Budget announced that 50,000 such checks
of vehicles on international journeys would be undertaken during
2007-08. On 1 October 2007, the Department also announced that
£2 million extra per year would be spent by VOSA on enforcing
vehicles on international journeys—funded from new income
to Treasury from Graduated Fixed Penalty and Deposit Scheme. These
checks are increasingly supported by ANPR and weigh-in-motion
technology.
18. Separately, the road sector has serious
concerns about perceived unfair competition from foreign hauliers
working permanently or regularly on domestic transport in the
UK in breach of European "cabotage" rules. VOSA has
taken decisive action against a number of operators breaching
these rules in the past year, including the impounding of 15 foreign-registered
goods vehicles.
19. The Department also has two studies
underway which are relevant to this area of its work. These are:
— the Freight Data Feasibility Study,
on which a progress report was published alongside the Pre-Budget
Report, to determine whether or not there is a business case for
introducing a database of foreign hauliers and their vehicles
entering and working in the UK in order to facilitate more targeted
enforcement against these vehicles; and
— the investigation of ways in which
further private sector involvement could enhance the efficiency
and effectiveness of the services VOSA provides to the industry.
PROVIDING A
LONG-TERM
PLANNING FRAMEWORK
20. The Department seeks to ensure that
there is a clear and long-term framework within which the private
sector can deliver freight services and facilities in a manner
which supports the achievement of its strategic objectives. In
doing so it recognises that different modes, supply chains, and
private sector stakeholders have different needs, expectations,
structures and planning timescales which have to be taken into
account.
21. To date, the focus of this framework
has been on the provision of infrastructure. The current key strands
are:
— the Aviation White Paper—which
set out a strategic framework for the sustainable development
of airport capacity in the UK in line with the UK's environmental
obligations. The Government continues to support two new runways
in the South East, one at Stansted and one at Heathrow, which
are both important freight airports;
— the Ports Policy Review—which
is following a similar approach. The Department confirmed in July
that it considers that a market-oriented approach remains appropriate,
and that there would in general be no additional benefit from
a locally or regionally determinative ports policy;
— Network Rail's Route Freight Utilisation
Strategy and the Rail White Paper—which together set out
how future needs of rail freight can be met and funded;
— the Programme of Major Road Schemes—which
considers anticipated road freight demand at the level of individual
network links; and
— the Strategic Rail Freight Interchange
Policy—published by the Strategic Rail Authority in March
2004.
All of this work is supported by the freight
modelling and evaluation techniques discussed at paragraph 8 above.
22. The Department is considering how these
planning frameworks will relate to the proposal in the Planning
White Paper for National Policy Statements (NPS). The Ports Policy
Review Interim Report indicated that the Department envisaged
"that the overall outcome of the Ports Policy Review later
this year will form the basis of a NPS for the ports sector .
. . The coverage of the ports NPS could also extend to inland
freight distribution infrastructure, where this is the direct
consequence of port activity". Further work to develop this
position is ongoing.
23. There are also a number of gaps in the
current planning framework, which work is currently underway to
begin to address. These relate to:
— the potential use of inland waterways—the
Department is leading work to identify a strategic inland waterway
network to enable the private sector and local planning authorities
to identify the most realistic locations for modal shift to inland
waterways;
— capacity needs for lorry parking—the
central Department and Highways Agency have commissioned Faber
Maunsell to undertake a detailed study of expected future demand
for lorry parking facilities to provide a clear framework for
private sector investment, Highways Agency policies, and planning
decisions; and
— future freight grant schemes—work
has started to develop new modal shift grant schemes to apply
from April 2010.
24. In addition to these activities, the
Department:
— provides advice to industry on effective
ways of meeting the requirements of the wider planning policy
framework. Particular examples of this are the guidance on the
relaxation of delivery curfews published in November 2006 (supported
by a toolkit produced by the Freight Transport Association) and
the Freight Best Practice (FBP) guide to planning for inland waterway
facilities. Both have received strong support from industry; and
— supports the establishment and development
of Freight Quality Partnerships (FQPs) to provide a mechanism
for the freight industry, local businesses, the local community,
and local government to work together in partnership to produce
tangible outcomes to real freight transport problems. Through
FBP, the Department offers advice on the establishment and operation
of FQPs and has published case studies of good practice examples.
PROMOTING, INCENTIVISING
AND/OR
FUNDING BEHAVIOURAL
CHANGE
25. The ultimate decision on which mode
of transport to use is made by industry, who consider such factors
as access, cost, reliability and time. However, the Government
seeks to promote and fund behavioural change where the benefits
are affordable and can be delivered in accordance with the Department's
value for money policy. Inevitably the Government's role in providing
direct financial support is limited when compared to the size
of the freight industry. However, noticeable benefits of reduced
CO2 emissions, noise, pollution, safety and road congestion are
secured through the Sustainable Distribution Fund (SDF). The rationale
behind combining modal funding streams is to ensure that these
benefits are delivered in the most cost-effective way. The fund
consists of two types of programme:
— Efficiency schemes which encourage
efficient operating practices in the logistics and haulage industry—particularly
FBP and Safe And Fuel Efficient Driver (SAFED) training; and
— Mode Shift schemes which secure the
transfer of freight from road to rail or water transport. Current
mode shift schemes are the Freight Facilities Grant (FFG), the
Rail Environmental Benefit Procurement Scheme (REPS)[1]
and the Waterborne Freight Grant (WFG).
26. The two programmes have to provide funding
in accordance with European State Aids rules and require regular
reviews to ensure that the Department does not provide more than
either the benefits securable or the financial need for support.
The reduction in some rail grant scheme rates from April 2007
arose from such a review and is primarily a reflection of the
increased competitiveness of rail freight when compared to road—meaning
that less grant support is required to move similar levels of
traffic.
27. The FBP programme has achieved a significant
penetration into the road transport logistics sector. SAFED, although
initiated as a voluntary scheme to improve efficiency and safety,
has been recognised as a valid module for driver Certificate of
Professional Competence (CPC) training and the heavy lorry scheme
is now being delivered with the necessary DSA endorsement. The
van scheme remains primarily a voluntary scheme for operators
but is being well received.
28. Where carbon savings alone are considered,
the efficiency programme has a greater potential for reductions
than mode shift. However, the mode shift programme secures substantial
alternative benefits—such as in the reduction of road congestion.
Impact assessments of FBP and SAFED (HGV only) covering the past
two years will be published by DfT this autumn. The FBP scheme
cost over the past two years was £2.2 million which secured
savings of over 65,000 tonnes of carbon. The SAFED HGV scheme
cost over the past two years was £1.8 million which secured
savings of over 28,000 tonnes of carbon. There are also (unquantified)
safety benefits.
29. The table below summarises the benefits
secured through the Department's Mode Shift Programme. The table
shows an increasing overall benefit:cost ratio (BCR) over the
two years, which is a reflection of the decreasing need for grant
funding as the rail and water sectors become increasingly more
competitive.
| | |
| | | |
| Mode Shift Programme
| | | |
| |
| Funding | CNRS / REPS / TAG
| | FFG
|
| Year | Spend |
Lorry
Journeys
Removed | BCR
| Spend | Lorry
Journeys
Removed
| BCR |
| | |
| | | |
| 2006-07 | £24m | 900,000
| 2.8 | £2.7m | 200,000
| 2.3 |
| 2007-08[2]
| £17.5m
| 850,000 |
3.6 | £2.5m | 400,000
| 2.7 |
| | |
| | | |
| | |
| | |
|
30. The shift of freight from road to rail or water through
the SDF is primarily limited to the domestic bulk (aggregates,
steel, waste) and intermodal sectors. These are the sectors of
the logistics industry most suited to modal shift. Other types
of time sensitive traffic (eg international premium air freight)
do not easily consolidate into significant loads and are often
not moved quickly enough for rail or water transport to be a generally
attractive alternative on a significant scale.
31. These funding programmes sit alongside other incentives
to encourage the use of rail and water transport. These include
the continued low duty on red diesel, zero duty on bunker fuels,
tonnage tax for shipping companies and the exclusion of electric
rail freight from the climate change levy. If designed well, a
trading scheme for aviation emissions could potentially create
financial incentives to the freight sector to prioritise the use
of air only where there is a genuine need. Other measures such
as voluntary initiatives, research and development and operational
improvements will be used to manage the environmental impacts
of air and other freight transport.
CONCLUSION
32. The Department looks forward to receiving the Committee's
contribution to the development of its continued work on freight
transport.
Annex 1
INDEX OF RESPONSES TO ISSUES RAISED IN COMMITTEE'S CALL
FOR EVIDENCE
Committee's question |
Relevant paragraphs |
Is the Department's investment in logistics programmes—including the Sustainable Distribution Fund—good value for money and meeting the objectives?
| 25-31 |
| International distribution patterns involving air freight increase carbon dioxide by up to 30 times that of sea transport—what more can be done to promote modal shift from road and air freight to inland waterway, shipping and rail? How can the Government encourage and incentivise further efficiency improvements?
| 12 30 31 |
| Air freight in the South-East is forecast to grow from 2.2 million tonnes a year in 2003 to 14 million tonnes by 2030. Has the Department adequately planned for the capacity and access implications of this very significant growth? How will transport networks need to adjust to serve the growing air freight market?
| 7-8 20-21 |
| Should the Department have more responsibility for planning and delivering integrated infrastructure which might promote `free movement of goods'? How is this to be balanced with the Department's other commitments? What should be the priorities for the Transport Innovation Fund productivity stream?
| 7-8 20-24 |
| How successfully has the Government influenced European negotiations regarding freight operations? How could the Government help to ensure a level playing field between UK and overseas freight companies?
| 10-13 |
| How effective are the Freight Quality Partnerships in improving the local experience of freight and deliveries? Are the restrictions on night-time deliveries still appropriate? What impact would weakening the restrictions have on quality of life and other factors?
| 24 |
| How can the road safety record of haulage vehicles be improved?
| 10-13 14-19 |
October 2007
| |
1
REPS replaced the Company Neutral Revenue Support (CNRS) and Track
Access Grant (TAG) schemes from 1 April 2007. Back
2
Estimates as at 1 September 2007. Back
| 
