Memorandum from the Rail Freight Group
(RFG) (FT 32)
1. Rail Freight Group (RFG) is pleased to
submit this evidence to the Transport Committee Inquiry into Freight
Transport.
2. At its highest level, RFG agrees with
DfT's stated role—that is facilitating the reliable and
efficient movement of freight, whilst minimising its impacts....
RFG would not want to see an overly deterministic approach to
the planning of freight services, and believes that, generally,
an open and competitive private sector industry is best placed
to deliver efficient freight distribution.
3. That said, Government clearly has a significant
role to play in ensuring that this can occur. This includes areas
such as planning policy, taxation, capital investment, and also
other areas of regulation which affect freight movements. Whilst
there has been good progress in some areas, RFG is concerned that
there is a lack of an overall strategic direction within Government
for modal shift.
4. This submission covers some general comments
on Government's role, and then addresses the specific questions
raised by inquiry.
ROLE OF
DFT IN
THE MOVEMENT
OF FREIGHT
5. As set out above, at the highest level
we support the DfT's role within freight transport. That said,
the translation of that into specific areas of policy and the
treatment of different modes is not always clear, or aligned to
the overall role.
6. Within Dft, responsibility for freight
and logistics (including rail freight grants) rests within the
Safety, Service Delivery and Logistics directorate, specifically
within Transformation, Licensing, Logistics and Sponsorship team.
As the names suggest, this Directorate covers a range of disparate
activities largely unrelated to logistics policy (including sponsorship
of DVLA and VOSA).
7. We would have expected logistics to fit
more readily within one of the three teams designed around the
Eddington outputs—that is City Regions, Rail and National
Networks or International networks. Within these teams, there
is some consideration of freight (for example there is a small
rail freight team) but overall, there is an apparent lack of alignment
between areas.
8. For example, the Rail White Paper made
no reference to rail freight grants but did discuss freight growth.
We would have expected that the strategy would also have discussed
the ongoing grant requirements to facilitate growth, and, even
if not quantified, the expected reduction in grant rates as Network
Rail's efficiency improves and the gauge clearance schemes are
progressed.
MODAL SHIFT
9. Within DfT policy, there is no stated
presumption towards modal shift. This was also reflected by the
Eddington report which suggested that a comprehensive assessment
of value for money should be the determinant of mode choice. We
would however have expected a more sophisticated policy on modal
shift highlighting (for example) the type of schemes which are
likely to represent value for money. The Rail White Paper does
go some way towards this with its discussion on freight growth
potential, but does not specifically discuss modal shift.
10. Given the acknowledged carbon benefit
of rail (and water) over road haulage, we would also have expected
Government to play a more significant role in promoting modal
shift. For example, the Freight Best Practice programme, which
has been running for several years, (and arguably has achieved
little that would not have happened commercially) is only now
producing a modal shift guide.
11. We are aware that DfT are reviewing
their appraisal techniques post Stern and Eddington. We are concerned
that the current approaches favour road over other modes (for
example in the treatment of taxation in appraisal) and the opportunity
to ensure fair treatment of all modes in appraisal must now be
taken.
TREATMENT OF
FREIGHT WITHIN
OTHER AREAS
OF GOVERNMENT
12. Outside of DfT, the treatment of freight
within other areas of Government can also cause difficulties between
modes. For example, recent proposals from DEFRA would include
fuel used in rail traction within carbon trading whilst fuel for
road haulage was excluded. Given rail already has a superior carbon
performance this is perverse, and is likely to make rail growth
more expensive or difficult if introduced.
13. As described in paragraph 29, the Planning
White Paper included road schemes within the reforms but excluded
all rail schemes including rail freight terminals. This is likely
to hinder even further the development of large scale rail freight
interchanges without which rail freight growth will be constrained.
14. Generally this reflects a lack of understanding
about freight and logistics within other areas of Government and
suggests that DfT could be more effective in influencing policy
in other Departments.
SUSTAINABLE DISTRIBUTION
FUND
15. The Sustainable Distribution Fund is
particularly important for rail freight. The REPS scheme within
it principally supports the movement of intermodal boxes by rail
and the now reopened FFG scheme is important in encouraging new
traffic onto rail where capital equipment is needed.
16. The REPS scheme, and its predecessors,
have supported the intermodal sector since privatisation and encouraged
significant growth. As the sector has become more efficient, the
grant rates have reduced, and value for money increased. (Grant
is only paid for traffic moved, and only flows whose environmental
benefits exceed the grant rate qualify, therefore value for money
is guaranteed).
17. However, since April this year, there
has been an emerging problem for grant applicants. The REPS budget
was significantly reduced from previous years, and is now almost
fully committed. This means that any operator seeking to grow
traffic must either do so without grant, or apply for grant in
the slim chance that some funds will be found from underperformance
on other contracts. This is a clear disincentive for operators
in seeking new traffic.
18. Further, the limited bid rounds, and
the need in some cases to `underbid' to secure grant adds further
uncertainty for operators and customers. Actual grant rates become
unpredictable, which makes it difficult to bid accurately for
traffic.
19. We understand that it is not possible
to have `open ended' budgets for such schemes. However it is clear
that the 2007-08 allocation is insufficient to encourage traffic
growth and support the operators in seeking to grow their business.
A modest additional budget allocation would be sufficient to ensure
new traffic could benefit in the same way as existing. It would
also help build business confidence.
20. It should be noted that in Scotland,
such budget constraints do not exist, which is welcome. However,
as many flows are cross border with the majority of the journey
in England, this is not sufficient to compensate for a lack of
budget at DfT even on Anglo- Scottish traffic.
21. As grant contracts are awarded for three
years, the lack of budget this year is also likely to be perpetuated
in the next two years. Any additional budget will need to be followed
through.
22. Strategically, there is a disconnect
between the operation of the grants programme and other areas
of policy. For example, the Rail White Paper sets out the context
for freight growth and the development of a strategic freight
network. However it is silent on freight grants. We would have
expected greater alignment between these areas.
AIR FREIGHT
23. Rail freight could have a significant
role in moving air freight internationally, particularly from
key European hubs. At present, there are a number of factors precluding
this, including;
i. Issues relating to freight access onto
CTRL (including costs, pathing and performance regimes)
ii. Ongoing issues relating to the Channel
Tunnel (principally relating to access charges)
iii. Lack of rail freight access to UK airports
for internal and export air freight traffic
24. Government needs to continue exerting
pressure to ensure freight is able to use this key international
route in an affordable and efficient manner.
PLANNING INFRASTRUCTURE
25. For rail freight, the Department has
now committed to a "Strategic Freight Network" to be
defined by the industry. It has committed £200m towards this,
and work is now underway to define what such a network is, and
what schemes are the priorities for investment. This is a welcome
step.
26. We still do not have clarity on the
overall funding approach to freight infrastructure and particularly
inland links from ports. The Rail White Paper, as well as the
commitment above, repeats the "beneficiary pays" approach
to funding which leads to significant developer contribution to
rail links. As yet we have not seen such approaches used for road
schemes. There should be urgent clarity on the approach to such
funding, which should be equivalent in all modes to ensure fair
competition.
27. TIF should continue to target schemes which
improve productivity and efficiency in freight distribution. This
includes links to ports and terminals, capability enhancements
such as gauge or train length, and certain diversionary routes.
28. The funding for SFN complements the TIF
funding. In itself £200m will not be sufficient to complete
all the currently proposed schemes (for example the Felixstowe
to Nuneaton upgrade) and TIF will need to make a significant contribution
to such schemes.
29. The planning regime for rail freight is
also in need of reform. Large scale rail freight interchanges
struggle to gain planning permission and often face lengthy and
expensive planning inquiries. The proposals in the Planning White
Paper made no reference to rail schemes and as such offered little
chance of improvement. Our response set out where we consider
reform is required—in summary;
(a) Including large scale interchanges in
the scope of the proposed integrated planning commission,
(b) Developing a national policy statement
for freight logistics,
(c) Introducing a regional tier of planning
governance to oversee schemes where benefits were regional.
CONTINENTAL EUROPE
30. As set out above, Government must continue
to press for a satisfactory outcome to freight access on CTRL
and through the Channel Tunnel.
31. UK rail companies are slowly gaining
success in entering European rail markets. This has been frustrated
by a lack of full compliance with the First Railway Package in
some Member States. It is not clear the extent to which UK Government
has pressed for full compliance across Europe, which would have
a significant positive impact on the ability of UK companies to
trade there.
FREIGHT QUALITY
PARTNERSHIPS
32. Rail freight has not seen any significant
benefit from freight quality partnerships. They have tended to
be local in focus whilst rail tends to focus on the medium and
long distance traffics.
ROAD SAFETY
33. RFG is not expert in matters of road
safety but it is clear from published data that there is a widespread
lack of compliance with existing regulations (for example, speeding,
overloading, excessive hours etc). Such non compliance increases
the safety risk, which is of paramount importance. It also keeps
road haulage prices artificially low, to the disadvantage of rail
where standards are more rigorously enforced.
34. For example, DfT statistics show that
on major non built-up single carriageway roads, 76% of articulated
heavy goods vehicles exceeded their 40 mph limit (28% by more
than 10 mph).
35. DfT are currently studying the case
for permitting longer and heavier lorries to operate (up to 83
tonnes). As well as the numerous other disbenefits, such a move
is unlikely to improve the safety record of road haulage absent
any other reform.
36. There are also serious implications
for the rail freight business from such a proposal. Widespread
introduction of such vehicles is likely to undermine the rail
freight business and cause significant traffic loss back to road.
Research by rail freight operators suggests that the introduction
of 60 tonne, 25.5m lorries would be likely to;
— cause over 40% of rail business in
the aggregate market to switch from rail to road
— cause nearly 17% of rail business
in the metals sector to switch from rail to road
— precipitate the loss of between 27%
and 66% of existing rail volumes in the deep-sea container market.
This would render several routes untenable by rail due to loss
of critical mass and reduced flexibility with a smaller portfolio
of services. By 2025, between 500,000 and 1.1m boxes could be
lost by rail.
October 2007
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