House of Commons - Transport - Written Evidence

Select Committee on Transport Written Evidence

Memorandum from the South East England Development Agency (SEEDA) (FT 11)

Summary of main points:

High correlation between capacity for efficient movement of goods and economic development.

Strategic development of primary road network to ensure commercial growth.

Resilience and capacity for anticipated freight levels.

Air Freight

Alignment with European policy.

Innovation; a wider role for new technologies.

Non LGV traffic.

Safety; limited scope for effective results through policy.

Railfreight

Railfreight gauge enhancement to improve network.

Interchange facilities.

Targeted expenditure of TIF/P to rail freight network.

BACKGROUND

1.1 SEEDA is one of nine Regional Development Agencies responsible for delivering economic development and regeneration in England. Together with the South East Regional Assembly, SEEDA is responsible for drafting the Regional Economic Strategy (RES) and the transport and spatial planning strategy document known as the South East Plan. The English RDAs, led by Advantage West Midlands have made a joint response to the Department.

1.2 The South East region is a significant economic entity with a population of 8.2 million and a regional GVA at 15.6% of the national total. Together with London and the East of England Region this greater south east represents a globally significant and successful region with a population of 21 million (35% of UK) and a GVA of £450 billion.

1.3 Despite the growth in financial services and invisible earnings, over 60% of the nations trade is in physical goods, therefore the movement of freight is vital to the trading prospects and economic performance of both the region and the nation.

REGIONAL PRIORITIES

2.1 The South East England Development Agency has identified the following as regional priorities.

2.2 Enterprise & Global Competitiveness—Increase the businesses operating internationally from 10% to 15% by 2015 in the region.

Smart Growth—Invest in integrated, intermodal transport hubs of national and international economic importance.

Sustainable Prosperity—Promote & contribute to the delivery of local, regional and national infrastructure that is resilient to climate change.[16]

2.3 These actions are dependent upon the capacity to move goods and people efficiently and reliably. This in turn requires appropriate infrastructure investment.

ECONOMIC VALUE

3.1 The Eddington Transport Study concludes in the first chapter that "The evidence presented shows that transport, under the right conditions, can deliver GDP and productivity benefits although the scale of this is difficult to assess". Eddington also states that "freight movement could be better managed though improved reliability, which would allow reductions in inventories and optimisation of vehicle usage". However, the headline conclusion from the study was that given predicted growth rates, the cost of congestion to business would be £10 billion per annum by 2025.[17]

3.2 SEEDA fully endorses the Eddington approach to policy making in full consideration of the economic and social costs, sophisticated policy mix in examining solutions and seeking to maximise use of existing infrastructure.

SEEDA believe that strategic plans for infrastructure of ports, roads and rail should be premised on the ability of that investment to maximise economic potential rather than match predicted growth. Therefore SEEDA will seek to adopt the Eddington approach of commencing evaluation of infrastructure provision with a thorough economic analysis of the project.

NATIONAL IMPORTANCE

4.1 Whilst the high volume of international freight represents a considerable relevance for the south east it should be recognised that this movement of goods is of national importance with 28% of GDP in international trade.[18]

4.2 A significant proportion of goods traded with the EU come through Kent (42% of international lorry traffic). In terms of seeking the continued resilience of this major corridor, it should be recognised that systematic failure will have considerable national consequences. Therefore, there is national interest, for instance in measures to cope with the consequences of Operation Stack.[19] In June 2007 the Secretary of State announced plans to invest in a Quick Movable Barrier system to manage queuing vehicles on M20. Stephen Ladyman MP also gave a commitment to seek an off road solution to this particular problem. SEEDA would welcome the Department's assurance that they are still committed to seeking a permanent solution.

TRADE AND THE SOUTH EAST

5.1 The South East Region is an area in which international freight movement is highly significant. As the closest region to the near continent, the vast majority of goods traded with partner nations in the European Union transit the area through the ports of Dover, Ramsgate, Portsmouth and the Channel Tunnel Rail Link. The development of high speed rail links with continental Europe has been a spur to attracting and developing businesses in the region. The expansion of states in the EU and the aspirations of other countries to join will provide additional trade through this south eastern corner.

5.2 Trade with the rest of the world has also increased for the UK deep-sea ports. The south eastern ports of Southampton and Medway, adjacent to the busy international shipping lanes and the proximity to the major ports of Rotterdam, Antwerp and Le Havre have seen a strong growth in trade, particularly in containerised cargoes.

5.3 These principles equally apply for the ports of London, Harwich and Felixstowe as well as the new ports at Bathside Bay and London Gateway (formerly Shellhaven). Although outside the SEEDA region, traffic from these ports will affect the transport infrastructure of the greater South East. It is important that the growing traffic is reflected in long term policy options for both road and rail.

GROSS TONNAGE LIFTED UK PORTS

Category	SEEDA Region	Greater South East
Gross tonnage	17%	31%
Containerised cargo	26%	74%
Focus on Ports DfT 2006 % of UK totals

MODAL SHIFT

6.1 The most realistic aim of securing continued economic growth and addressing climate change is in terms of increasing the use of rail freight. Government has recognised this fact in that the Rail White Paper and in its application of the Transport Initiative Fund. Both initiatives have contained specific measures aimed at improving rail freight. Whilst this represents a high volume of expenditure in infrastructure improvements for the rail industry it aligns well with the conclusion of the Stern Review ie current expenditure that can mitigate the effects of climate change is a worthwhile investment. It is also the case that in order to effectively meet potential demand, the rail freight network requires a suitable network of interchange facilities. Whilst these exist in part and there are a number of potential developments we would ask that the Department for Transport is supportive of such developments with other departments and local authorities.

6.2 SEEDA has recently successfully coordinated a bid for TIF/P funds to improve gauge capacity from Southampton docks to the Midlands. SEEDA secured matched private sector contributions and ERDF funding through the Interreg IVB strand. We feel that this multi-national and collaborative approach is an appropriate model for future projects.

6.3 Gauge capacity of the network is a restriction on the ability of rail freight to offer commercial tariffs. In cases where limited gauge capacity has required the use of well wagons this has been at the expense of high volume capacity for that train. The current Rail Utilisation Strategy for rail freight has endorsed an Eddington like approach to developing a rail network capable of carrying high cube containers (W10) in directing investment at removing bottle necks within the current limited network. SEEDA is supportive of these measures The RDAs endorse Network Rail's long term aspiration for increasing the network to be able to carry wider and refrigerated containers a requiring W12[20] gauge clearance.

6.4 SEEDA is aware that the Channel Tunnel Rail line offers clearance to continental standards. It is also underused in terms of rail freight at current levels of less than 10 per day. This facility parallels the M20 from Kent to London which is carrying over 4 million LGVs per year, the juxtaposition of these two modes represents a highly visible opportunity of strategic and effective policy implementation. The level of charges and the penalties for delaying passenger services through the tunnel are believed to be depressing potential demand. SEEDA invite the department to examine these tariffs and possibly influence a more conducive financial basis to international rail freight.

CAPACITY CONSTRAINT AND NETWORK SYSTEMS

7.1 Although SEEDA can identify successful interventions in seeking modal shift it remains the case that there will be a high[21] and growing volume of road freight placing a high level of demand on the available infrastructure. Set in the context of growing volumes of road freight the following are areas of concern.

M20 Main route for Dover and Channel Tunnel.

A2/M2 Main route for Ramsgate RoRo traffic and alternate route of Dover.

M25 London Orbital; includes Heathrow and Gatwick airports.

A34 and M3 Main route north for Southampton and Portsmouth.

7.2 Whilst recognising the above as particular examples of bottlenecks it should be recognised that the strategic road network in the south east is interrelated. The consideration of growth in particular international freight flows will need to be considered along with general population growth in the south east, in particular the designated growth areas in the Thames Gateway.

7.3 The pressure from growth in traffic is focused on the strategic motorway and primary road network in the south east. The matrix of correlated demand for journeys and their interrelated functions will include:

— Growth of RoRo traffic through Dover and Channel Tunnel.

— London Gateway and Felixstowe port development.

— Ebbsfleet International Station and its potential to be catalyst for development.

— Shift of the centre of gravity for the financial services sector eastwards with the development of Canary Wharf.

— Increased volumes of air freight centred on Heathrow.

The product of these predicted factors could overstretch the capacity of the M25 M26 M20 and M2 on more than just peak hour basis. The ability to circumnavigate London is fundamental for the continued performance of the region.

7.4 SEEDA, together with the London Development Agency and EEDA have undertaken to examine the connectivity of the Thames Gateway, this joint initiative will examine transport links in the area and will include the following

— Access and capacity enhancement on M2/M20/M26/M25.

— Lower Thames Crossing.

— Upgrade A2/M2 corridor to Dover.

The RDAs are committed to undertake considerable expense in research of economic potential of these links. It is our intention to ensure that there will be a sophisticated evaluation of the freight and traffic patterns associated with these contributing factors. We therefore would welcome the opportunity to collaborate with DfT and their agencies in this work and offer to make results and conclusions available.

MARKET DIFFERENTIATION

8.1 Whilst considering wider policy on freight, perhaps the most pressing matter is for road transport, this being the majority mode and its consequences are highly visible. It is worth noting that the logistics and freight industry is diversified. The industry actually made up of a number of distinct sub sectors, including waste, construction, groceries, consumer goods, finished goods, and agricultural as well as international traffic. What is certain that whilst they have differing economic drivers they are competing for scarce resources including road space. It is also true that number of these grouping are a function of population and therefore likely to have proportional consequences on the more populous areas of the country which clearly applies to the south east.

AIR FREIGHT

9.1 This has been a significant growth sector. It has benefited from the expansion in low cost air travel in that some 70% of cargoes travel in the hold of passenger planes. It may be that taxes levelled in the hope of changing travel behaviour are less effective as the commercial costs for the flight can be recovered from the freight element.

9.2 In the South East region there has been a concentration of this industry upon Heathrow,[23] with a number of carriers establishing bases there resulting in a high volume of road traffic centred on these hubs. Whilst not in the SEEDA region Heathrow is adjacent to the region and the effect of this increase in traffic is felt directly. Potential use of regional airports for freight (eg Manston in Kent) could reduce pressure on stressed sectors of the road system.

INNOVATION

10.1 There has been considerable development in the area of technical advancements in engine technology, alternate fuels and IT applications aimed at reducing transport's environmental impact.

10.2 SEEDA is aware of the work the Department has undertaken in relation to Sustainable Distribution Fund in disseminating best practice to the industry. However, we feel that this reflects current methodologies in distribution and logistics and that there may be scope for this fund to include more radical solutions. One area that can have notable environmental and economic benefits is in consolidated centres, whether retail, construction or waste, these centres by their conglomeration effect can have the possibility of combining loads to achieve the critical mass necessary for rail or waterborne alternatives.

SAFETY

11.1 In terms of safety the modal choice is a determining factor with rail and waterborne freight being significantly safer. Although this means that road transport is by comparison the most dangerous, it should be remembered that the safety record for UK hauliers is good and there was a reduction from 597 to 486 deaths involving lorries in the 10 years 95 to 2005 despite an increase of the number of LGV by 6%.[24] This may be due to the more sophisticated activities of the enforcement agencies (VOSA[25] and the police) that have used automatic number plate system linked to data bases and the increasing use of electronic tachographs.

11.2 The KSI[26] number on UK roads is increasingly harder to reduce with policy initiatives being ineffective as the proportion of "rump" groups of motorcyclists, children and young male drivers increasingly influence the statistics. It is unlikely that further directives aimed at the haulage industry will be noticeably effective.

NON LGV

13.1 The comparative low cost of goods vehicles under 7.5 tonnes (vans) together with the growth of home deliveries through e-business has seen an increase of the proportion of goods transported by these vehicles. The scale of this sector of the logistics industry will need to be considered in policy formation on congestion and climate change.

EU POLICY ALIGNMENT

14.1 The realisation that increasing economic activity and population is linked to higher volumes of freight but that in turn leads to degradation of the environment is not confined to the UK.

14.2 The European Commission is currently considering initiatives aimed at reducing the carbon footprint and reliance on oil inherent in our current distribution patterns. Part of the strategy is aimed at delivering both the Lisbon and Gothenburg agendas. These policy initiatives including the Marco Polo scheme are aimed at consideration of the wider distribution pattern in a more sustainable way with multi modal solutions from start to finish for goods journeys.

14.3 Similar to Eddington in the UK, the Commission have focused their attention at identifying international bottlenecks and have drawn up a Freight Logistics Action Plan which is due to be adopted by the Commission on 17 October 2007.

14.4 SEEDA would urge Government to consider policy alignment with the EU to maximise the potential effect of UK policy and look to combined funding for potential solutions.

CONCLUSION

15.1 SEEDA welcomes the Departments interest in the question of "freight". It is difficult to separate the subject from consideration of climate change, traffic management and land use planning. SEEDA is actively engaged in seeking improvements in access to global gateways and promoting alternatives to road freight. Freight movement will remain central to economic activity and growth.

October 2007