Supplementary memorandum from the Department
for Transport (FT 03A)
During your Committee's oral evidence session
on 27 February, we undertook to write to the Committee on a number
of points. I also thought it would be helpful if I provided some
further information on a number of the areas that, due to time
constraints, we covered only briefly towards the end of the hearing.
Oil prices used in DfT modelling (question 487)
The Department uses the crude oil price projections
(low, high and central) produced by the Department for Business
Enterprise and Regulatory Reform (BERR). BERR's latest projections
are for oil (in 2006 prices) to fall gradually to $50 by 2015
before then rising to $52.5 in 2020 (approximately $75 in nominal
prices). BERR's low and high projection are for prices of $25
and $80 (about $115 nominal) in 2020. BERR are currently revising
their oil price projections in light of a recent consultation.
These figures are converted to petrol and diesel
prices within DfT. The Department forecasts congestion in different
scenarios including ones where high prices are assumed. This is
to check the robustness of estimates were high oil prices, such
as those observed currently in crude oil markets, to continue.
We will develop new traffic and congestion forecasts with the
new BERR oil price projections once received.
Aviation Emissions Trading (question 498)
The proposed scheme will cover any aircraft
operator, whether passenger or freight, operating international
flights on routes to, from or between EU airports. All airlines
will therefore be treated equally. Including aviation in the EU
emissions trading scheme will have a smaller impact on prices
than if the same environmental improvement were to be achieved
through other market based measures.
Track Access Charges for Rail Freight (questions
511, 512, 513 and 515)
I have asked my officials to confirm the status
of the statistics on track access charges which Mr Fidler provided
to Mr Stringer. The Office of Rail Regulation (ORR) is entering
the last stages of review work on charges for both freight and
passengers for 2009-14 on which it is due to publish its final
conclusions in October. At the request of the freight operating
companies ORR work on freight charges was both started early and
based around the principle of a cap above which charges wouldn't
rise, to give greater price certainty to users.
Emerging figures published by the ORR in February
and October 2007 indicate that the annual freight variable usage
charges in the next control period will range from £41 million
to £99 million (compared with approximately £93 million
at present). The new freight-only line costs will be capped at
£15.3 million per year (for 2014) spread between the market
sectors of electricity supply industry coal and the carriage of
spent nuclear fuel: the only market sectors which the ORR has
determined can bear such additional charges. The October 2007
report points to a number of variables that are still being analysed
and have the potential to reduce charges, saying that ORR "consider
charges should come in below [the £99 million] cap and could
be below current levels".
Freight growth (relevant to question 513)
Across all modes (including pipelines and coastal
shipping) published DfT statistics shows that freight traffic
(measured in TonneKm) has decreased by 2% between 2000 and 2006.
If these are adjusted to include non-UK registered vehicles this
may be estimated to change to a 1% increase. In this same period
rail freight has grown by 22%.
Between 2007 and 2015, the Department forecasts
road freight growth (in VehicleKm—including vehicles of
all nationalities) of 6% and Network Rail predicts rail freight
growth of 30% (a figure reached in discussion with rail operators).
European Funding (questions 518 to 520)
Motorways of the Sea funding is available from
a range of different funding streams, including Trans-European
Network Transport funding (TEN-T) and the Marco Polo programme.
The Department has promoted these grants widely, including through
email circulation lists and industry events. We are also working
with other Member States with an interest in services on the North
Sea and to and from France and Ireland to publish an early call
for future funding rounds so that industry have sufficient time
to prepare high quality proposals.
Motorways of the Sea is a new scheme, with the
first call under TEN-T still open. There has been comparatively
little take up across Europe; of 55 bids for the recent Marco
Polo II funding call, only four related to Motorways of the Sea
projects.
I hope that this further information is helpful.
March 2008
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