House of Commons - Transport - Written Evidence

Select Committee on Transport Written Evidence

Memorandum from the English Regional Development Agencies (FT 38)

1. EXECUTIVE SUMMARY

1.1 Freight Transport plays a vital role in supporting and driving sustainable economic growth across the English Regions.

1.2 The Department for Transport (DfT) has a key role to play in planning and delivering a national strategic and integrated transport network that enables the efficient and reliable free movement of goods and people within, between and across the English Regions, and sets the context for regional transport planning and decision making.

1.3 The RDAs endorse those schemes identified in the December 2006 Productivity TIF announcement and are looking to Government to make some early decisions regarding the delivery of these schemes.

1.4 Government should clarify future plans in relation to productivity TIF.

1.5 In order to reduce CO2 emissions across the English Regions, Government needs to put in place policies which promote a reduction in road freight emissions alongside policy actions which encourage modal shift to rail, inland waterway and coastal shipping.

2. INTRODUCTION

2.1 This evidence is being submitted by Advantage West Midlands on behalf of the nine English Regional Development Agencies (RDAs). Our role is to help transform the regional economies by connecting need and opportunity to create better places in which to invest, work, learn, visit and live. RDAs take the lead on developing Regional Economic Strategies, which set the context for the sustainable economic development of the English Regions.

2.2 This evidence provides a collective view of the importance of Freight Transport in supporting economic growth across the English Regions. It is set in the context of the Regional Economic Performance Public Service Agreement which requires "Improve the economic performance of all English Regions and reduce the gap in growth rates between regions".

2.3 The RDAs have identified transport as a top priority because it is a critical ingredient of successful and sustainable economic growth. The provision of high quality transport networks aid business efficiency and support productivity. Improvements in transport infrastructure can have a very significant and a relatively swift impact on business performance, and can enable longer-term improvements, through improved enterprise and innovation.

3. IMPORTANCE OF FREIGHT TRANSPORT TO SUSTAINABLE REGIONAL ECONOMIES

3.1 Freight Transport plays a vital role in supporting and driving sustainable economic growth across the English Regions. It is a key part of the supply chain and the performance of the sector directly impacts on the ability of suppliers, manufacturers, distributors and retailers to compete in the global marketplace. Increasing the efficiency of freight transport is directly linked to improvements in productivity which in turn support and promotes business competitiveness across the English Regions. In the period from 1989 to 2004, transport, storage and communications directly contributed 8.4% of the Gross Value Added (GVA) of the English Regions, demonstrating its importance to regional economies.[52] The turnover of UK freight transport and distribution companies is projected to grow at between 4% and 5% over the next four years.

3.2 The freight transport sector employs a significant number of workers in a variety of roles and activities, ranging from warehouse operatives and goods vehicle drivers to senior executives. The number and value of jobs in freight and logistics has grown significantly in the 10 year period from 1994 to 2004. The number employed directly in the sector (excluding the operation of harbour and piers) has increased by more than 20% from 663,000 to approximately 800,000.[53] Current forecasts suggest that the total number of jobs in the sector will remain broadly static in forthcoming years as the increasing use of technology and automation of product handling will reduce the need for manual workers.[54] However, the volume of goods handled is still expected to increase in line with general trends over the last 25 years.[55]

3.3 The skills profile of those employed in the sector is also changing. The proportion of highly skilled staff has risen over the same 10 year period. The number of managers in the sector has risen from 9% of the transport and logistics workforce in 1994 to 10.5% by 2004. Forecasts suggest that this will rise to 12.5% by 2014. Indeed forecasts expect an increase in the numbers employed in all job groups with the exception of machinery and transport operatives and elementary occupations, which are forecast to fall by 3.9% and 24.8% respectively. The value of jobs in the freight and logistics industry is therefore increasing.[56]

3.4 The RDAs have collated a range of evidence about the importance of elements of the transport and logistics to the economies of individual regions. The express delivery industry in the East Midlands provides one example. This industry directly employs 4,700 people and supports a further 10,200 jobs in the region, generating £300 million GVA (taking into account indirect and induced multiplier effects). The sector's contribution to regional employment is expected to rise to almost 16,000 by 2014. The availability of express delivery services in the region enables other East Midlands companies to compete more effectively in the global market place and acts as an attractor of other business activity.

3.5 In the joint RDA response to the consultation on the Ports Policy Review we outlined the agglomeration and wider economic impacts that the hub activity of port operations have across the English Regions. An example of this is outlined in a review undertaken for the North West in 2003 where it was identified that 753 companies, employing over 17,000 staff were directly engaged in port related activities with a total turnover of £3.3 billion representing 3.3% of the region's GVA. Regional airports are also recognised as having agglomeration and wider economic benefits on sub regional economies. Indications are that inland multi modal terminals can lead to similar, although less intense agglomeration activity.

3.6 In the global market in which regionally based businesses now compete high quality access to ports and airports is a key enabler. The trend for increasing volumes of goods sourced overseas, particularly the Far East and Eastern Europe, is putting pressure on parts of the existing road and rail networks. The need for additional capacity at a number of the country's ports has been recognised by the ports industry and they have responded to this by planning and delivering additional capacity. However, these largely private sector driven initiatives to support the British economy, are being hampered by the lack of inland surface access capacity. The RDAs highlighted this issue to the Department in our response to the consultation on the Ports Policy Review, in which we also recommended that Government identify strategic port access corridors and use them as the basis for prioritising infrastructure investment to support economic growth across the English Regions.

4. IMPORTANCE OF A NATIONAL STRATEGIC AND INTEGRATED TRANSPORT NETWORK

4.1 It is essential that the regions are supported by high quality transport infrastructure which enables efficient access to global markets, and allows regionally based businesses to retain and grow their competitive edge. The DfT has a key role to play in planning and delivering a national strategic and integrated transport network that enables the efficient and reliable free movement of goods and people within, between and across the English Regions, and sets the context for regional transport planning and decision making.

4.2 The Planning White Paper proposals for national policy statements for major infrastructure projects place an onus on the DfT to produce modal transport strategies. The Eddington recommendations highlight the need for an integrated approach, which is endorsed by RDAs. In order to maximize the capacity and efficiency of the available transport networks it is essential that a multi modal integrated approach is developed. However, the initial indications are that this is not the approach being taken by DfT.

4.3 There is clear evidence that there is a direct link between the availability of transport connections and choice of business location. This is clearly mapped out when looking at the location choices for new warehouses from 1995 to 2003 (see attached Appendix 1). Demand for warehousing is directly linked to the key arterial routes and at national motorway intersections.

4.4 The national strategic road network is carry increasing volumes of vehicles. This is putting pressure on those networks, reducing journey times and consequently reliability with congestion having a direct impact on business productivity. Traffic on our roads has grown by an average of 4.3% per year since the 1950s. However, the pattern of road usage and traffic growth has changed over time, with a disproportionate increase in motorway usage compared with other roads. In the period from 1993 to 2007 there was a 2.9% increase in motorway traffic compared to a 1.6% increase on all roads.[57] Much of this growth is taken up by goods vehicles which travel 42% of their total distance on the motorway network, compared to less than 20% by other vehicles.[58] The cost of delay varies by business sector, size of vehicle etc with the average goods vehicle cost being £30 to £40 per hour. As a consequence the impact of congestion and delay on the motorway network will have a greater impact on the movement of goods vehicles and therefore implications for productivity and competitiveness.

4.5 The rail network is challenged by different issues. Following many years of decline, the volumes of freight traffic moving by rail is now growing significantly. Since 1999 there has been a 21% increase in rail freight, with 22.11 billion net tonne kilometres moved in 2006-07. Approximately 5% of the total UK freight lifted is carried by rail. This has remained relatively static since 1995.[59] However, the distance rail freight moves is increasing. Approximately 12% of the total freight by tonne km is now transported by rail.[60] Alongside this passenger demand is increasing significantly and, as envisaged in the Rail White Paper, is projected to grow further in the future. The combination of freight and passenger growth is putting pressure on the network, with pinch points at some locations. In addition, the industry trend to use larger containers means that many parts of the network, particularly on key arterial routes between container ports and inland destinations, are not able to accommodate the height requirements of the container trains.[61] [62]

4.6 It is therefore clear that there is a need to invest in key transport infrastructure, including intermodal terminals/logistics sites and links throughout the UK.

5. PROVIDING CAPACITY TO SUPPORT GROWTH

5.1 The RDAs welcomed the announcement of the Transport Innovation Fund, in particular the productivity stream. The RDAs responded to an invitation from the Department and jointly submitted a list of candidate schemes for funding from productivity TIF, in March 2006. At the DfT's request the list was comprised of schemes which could commence in the period 2008-09 and 2009-10, and was supplemented by detailed information from individual RDAs.

5.2 In developing the list the RDAs referred to the joint RDA research on Surface Infrastructure of National Economic Importance (SINEI), which had considered the links between transport and economic growth and we detailed additional criteria which should be considered in identifying and prioritising schemes for PTIF funding:

— improving connections between domestic and international business partners;

— improving access to domestic and international markets and suppliers;

— improving access to labour markets, and the movement of people;

— enhancing business efficiency and raising productivity by reducing "dead time" in the supply chain through improving journey time reliability and a reducing total journey time;

— improving access and connectivity between regions and key urban centres;

— improving links between peripheral regions and key cities and international gateways;

— improving opportunities for clustering of economic activity; and

— improving access to global city functions of London.

5.3 The National RDA Short Term Priorities were expressed in terms of themed headings and specific schemes.

(a) Schemes which address congestion bottlenecks on the national strategic road and rail networks (in particular to improve capacity and reliability on parts of the motorway network which suffer daily congestion, and provide additional capacity at congestion hotspots on the rail network, including hub railway stations).

— Active Traffic Management on congested parts of the M62 Junctions 25 to 28, M1 Junctions 21 -30, Birmingham Motorway Box.

— A14 Ellington to Fen Ditton.

— Birmingham New Street Station.

(b) Schemes which improve national road and rail freight routes (in particular to upgrade the rail freight gauge on parts of the rail network which provides access to key ports and address congestion hotspots on the national road trade routes).

— Midlands to Southampton Rail Freight Upgrade.

— Felixstowe to Nuneaton Rail Freight Upgrade (Ipswich to Peterborough, and Peterborough to Nuneaton).

— Improvements to West Anglia Rail Network, including links to Stansted Airport.

5.4 The RDAs endorse those schemes already outlined in the December 2006 Productivity TIF announcement and are looking to Government to make some early decisions regarding delivery of these schemes. We are also undertaking some work to review and update the previously submitted priority list. Alongside this we are working with the Highways Agency and Network Rail to develop the necessary evidence base to support delivery of schemes which enhance national productivity and increase regional economic opportunities.

5.5 The RDAs are currently receiving conflicting information about the future of productivity TIF funding, with some reports suggesting that it no longer exists and other reports that DfT are asking for a list of schemes that can be delivered in the period 2011-12 to 2014-15. Government should clarify future plans in relation to Productivity TIF.

5.6 The Rail White Paper announced £200 million to support a Strategic Freight Network. However, it is not clear how this funding aligns with Productivity TIF.

6. SUPPORTING LOW CARBON ECONOMIES

6.1 The RDAs have developed their Regional Economic Strategies to enable sustainable economic development. The RDAs are committed to supporting low carbon economic growth.

6.2 The RDAs support modal shift from road to rail, inland waterway and coastal shipping where it offers the most efficient and sustainable transport solution and can bring demonstrable environmental benefits. The CO2 reduction benefits of rail freight are clear; tonne for tonne rail freight produces 90% less carbon dioxide than road transport. The RDAs are actively supporting modal transfer for rail freight and are working with Network Rail on developing schemes for rail freight gauge enhancement. However, modal transfer can only offer the solution for a limited volume of freight traffic given the capacity constraints of the rail and inland waterway networks and the time, cost and efficiency requirements of business.

6.3 The majority (64%) of domestic freight is currently moved by road.[63] It is estimated that 91.8% of domestic freight transport CO2 emissions are generated by heavy goods vehicles and commercial vans.[64] Therefore there is a need to look at other ways to reduce the CO2 impacts of goods vehicles and vans. Research has identified that changes in operational practice such as transport collaboration, redesigning transport systems and larger vehicles,[65] as well as fuel management and driver training[66] can deliver CO2 emissions savings. The RDAs are supporting innovation in the automotive and associated industries. Our role is to support the delivery of low carbon economies through championing innovation in low carbon technologies and encouraging modal shift and sustainable operational practices.