Examination of Witnesses (Questions 500-520)
JIM FITZPATRICK
MP AND MR
STEPHEN FIDLER
27 FEBRUARY 2008
Q500 Mrs Ellman: Will you not accept
then that the amounts of investment are very, very different?
On the day that there was a very welcome visit from the Transport
Minister to Liverpool to talk about the Olive Mount Chord project
there are announcements in the South East of vastly larger amounts
of funding. Do you not recognise the problem there?
Jim Fitzpatrick: I recognise the
issue. I do not recognise it as a problem. Were there no investment
taking place at all in the North, then I would recognise there
was a problem. Given that we clearly have investment in the North
and that we have some of our biggest ports in the North, we are
in a competitive market worldwide. The shipping companies will
argue very strongly about the extra cost of extra nautical miles
they have to travel to reach a port. We need to ensure that we
provide anchors to be able to service those international fleets.
We need to make sure that around the country, as much as we possibly
can, they are attractive, which is why the approvals, as I mentioned,
in Liverpool and Tees Port have been given and why we are doing
everything we can to support the ports in the North as much as
making sure that the UK has the port requirements it needs to
be able to trade effectively.
Chairman: We are going to have to be
a little bit more concise, Minister, if we are going to get through
all of your brief, unless you are thinking of taking up residence!
Q501 Mrs Ellman: Are you satisfied
with the rate of transfer of freight to inland waterways?
Jim Fitzpatrick: I cannot imagine
that instinctively one would be satisfied, but we are not doing
anything to impede it, we are doing everything we can to encourage
it.
Q502 Mrs Ellman: What are the targets
you have got?
Jim Fitzpatrick: It is not a question,
if you will forgive me, Mrs Ellman, of laying targets, it is a
question of outlining the grant available, and that money is available
and it has not been spent.
Q503 Mrs Ellman: So does that lead
you to think you should be doing more to encourage that movement?
Jim Fitzpatrick: I think the freight
industry could be looking to use it, but then it needs to be efficient
and effective, and clearly it is not attractive enough at the
moment to attract that attention.
Q504 Mrs Ellman: What more can be
done to encourage freight to be moved along the coast rather than
on congested roads?
Jim Fitzpatrick: Again, this is
very much part of our water freight grant which is available.
We are discussing with the Commission at the present time and
my understanding is that the state aid criteria laid down says
that the grant should only be available on a start up basis, other
than for inland waterways. We want to try and open up that grant
to be available for shipping lanes around the UK, so that operators
can get the grant for that and not just for inland waterways.
Mr Fidler: If I could just add
to that? We are currently reviewing the Waterborne Freight Grant
scheme with the aim of making it more acceptable and more useful
for short sea shipping than it is today, and when it was brought
in, in 2004, we had hoped that it would be used for short sea
shipping much more than it has been. The state aid conditions
the European Commission has put on it seem to have been a real
barrier and we are trying to see what we can do about that.
Mrs Ellman: Thank you.
Q505 Graham Stringer: Could Network
Rail do more to improve its service to freight operators, who
are quite critical of the service they are getting?
Jim Fitzpatrick: I guess that
every organisation can always improve its outlet. Certainly the
latest forecast from the Freight Utilisation Strategy says that
there is going to be a 30% growth in rail freight tonnage by 2014.
Q506 Graham Stringer: Network Rail
missed its freight performance by 18% in 2006-07. Is the Government
concerned about that?
Jim Fitzpatrick: One is obviously
concerned when targets are not being met, but in terms of the
transfer of freight from road to rail, that has been moving in
that direction and we want to encourage it to move even further.
Q507 Graham Stringer: But are you
doing anything to encourage Network Rail to improve its performance?
Mr Fidler: The primary responsibility
for that rests with the Office of the Rail Regulator in terms
of the targets, so the Department's concern about targets which
are missed is obviously something that ORR is taking into account.
Q508 Graham Stringer: I am sure it
is and I am sure the Department talks directly to Network Rail
as well.
Mr Fidler: It does indeed.
Graham Stringer: And I would expect them
to be pretty concerned about being a missed target when it is
clearly Government policy to encourage freight onto rail. I was
just trying to find out how you were encouraging them.
Q509 Mr Martlew: Just on that last
point, what has been telling on the railways is the heavy goods
business, the coal, and we have the nonsense on the West Coast
Main Line of the coal being brought into a port, a deep sea port
in Scotland, and I think there are 38 of these trains every day
which go to the power stations in Yorkshire. Surely we should
be actually encouraging that coal to be landed at one of the ports
in Yorkshire and then taken to the power stations? It does seem
nonsensical, especially on a congested line like the West Coast
Main Line. No doubt it helps your targets, Minister, but it does
not help the railways and it does not make any sense.
Jim Fitzpatrick: We have grants
available to try to encourage the conversion of road freight to
rail freight. That money is certainly there for companies to come
forward. We do everything we can to encourage that and that investment
would obviously assist.
Q510 Graham Stringer: Can I just
go back to the dissatisfaction the users of Network Rail have
with freight? It is predicted that costs will go up. The costs
are 20% of rail hauliers' costs and we have the second highest
charges in Europe. How can this be the basis of a sensible policy
for getting freight off the roads?
Jim Fitzpatrick: We have got a
minimum of £18.5 million in the annual revenue budget for
this in terms of trying to encourage greater use of rail. Over
£44 million has been allocated from this budget over the
next three years. The value of money has improved. You mentioned,
Mr Stringer, the cost. Rail has become more competitive with road.
For example, the rate from Felixstowe to the North West dropped
from £22 per container to £8 per container. There were
33 bids accepted, taking 801,000 containers off the road this
year. So we are doing what we can to encourage it. We are making
money available and we are encouraging the industry to come forward
with bids for this grant to try and assist that process, and we
do think that rail is becoming even more competitive simply because
of the change in prices.
Q511 Graham Stringer: But that is
simply at odds with the facts. If the Office of Rail Regulator
is saying that in Control Period 4 prices are going to go up by
25%. They are already the second highest in Europe. That is a
rum and strange policy for encouraging goods off the road, is
it not? There are more goods in the economy and there is less
aggregate, coal, cement, those kinds of things, in the business.
Freight is breaking down, it is coming in smaller bits. You are
partly seeing that. But it is a strange policy which encourages
modal change by putting the prices up, which are already higher
than elsewhere in Europe. That is just simply at odds with what
you were saying.
Mr Fidler: Perhaps I can comment
on this area of work on Track Access Charges. Their work on the
constant charges really is ongoing at the moment, and as I understand
it the sort of range of possible charges for freight ranges from
about £46 million to £104 million compared with about
£93 million now. So whilst the top end of that range is,
yes, clearly above current charging levels, there are possibly
some scenarios where it might not go up and we are still waiting
for the final determination.
Q512 Graham Stringer: Are you saying
my figures about the Office of Rail Regulator's projections are
wrong?
Mr Fidler: The figures I have
had are slightly different. I suspect they are different sets
of figures. I was merely commenting that I think we are still
waiting for October, for the final determination, they now being
the interim figures.
Q513 Graham Stringer: When we look
at the roads against rail, we see passenger fares going up by
more than the rate of inflation and we see freight going up by
more than the rate of inflation. Is the Government concerned about
this? The economy is growing, so you get increased figures on
the railway, but it is not really driving freight or passengers
to use the more environmentally friendly, more sustainable railway,
is it?
Jim Fitzpatrick: If I can refer
back to the figures I gave a moment ago, last year there were
33 bids accepted. There were 801,000 containers taken off the
roads. £18.5 million is the Government's minimum annual revenue
budget and there is capital budget money as well. We are putting
our money where our mouth is. The industry is taking it up by
applying for those grants and a number were refused. We are doing
what we can to support the shift in mode.
Q514 Graham Stringer: I will just
leave you with one fact which you may want to comment on. Ten
years ago, when we had EWS here, they were saying that they would
increase the amount of freight on the rail by 300% over, I think
it was a 15 year period. They have flatlined over that period
and the actual Canadian owners have walked away. Do you not think
that Railtrack and Network Rail, and all the different regulators
we have had, putting on high prices has meant that those aspirations
have not been met?
Jim Fitzpatrick: Clearly, any
company which raises its prices beyond the level the customer
wants to pay will have an impact on its business.
Chairman: That is not really quite the
problem.
Q515 Mr Martlew: On this issue, surely
the real problem for the railways and why they can put the price
up is the capacity problem. Passenger numbers are going up, there
is limited track, and the other point, of course, if we are talking
about the aggregates, is that I am still not convinced that they
actually pay the amount in access charges to pay for the damage
they actually create to the track, because there is considerable
damage by these heavy trains, especially on the West Coast Line
and the Settle lines. So really the problem is capacity and that
is why they can put the price up?
Jim Fitzpatrick: In the past decade
it is certainly our view that the Department has announced the
most significant funding for rail freight for decades and the
White Paper announced a commitment of £200 million for Network
Rail funding up to 2014 for the development of a strategic freight
network. The productivity TIF schemes, I am sure you are familiar
with the various monies to enhance the gauge and capacity to deal
very much with the pressures you described. In gauge clearance
terms, Network Rail's Freight Utilisation Strategy identified
the priority routes for gauge clearance, Mr Martlew, in terms
of the particular priorities being the Southampton to West Coast
Main Line, at Nuneaton, Peterborough to Nuneaton, Liverpool to
the West Coast Main Line, and Gospel Oak to Barking, and work
will start in the Spring this year and all should be clear by
2011. There are other routes which are of lower priority, but
the amount of money which has been contributed and the enhancement
on these gauges demonstrates that we recognise there is a challenge
to make sure that the weights and the volumes, and the rest of
it, do not damage the network and that the network is sustainable
both for freight and for passengers.
Q516 Chairman: I want to ask you
some quick questions. I want you to get away at a reasonable hour.
Are we really utilising our UK ports properly? Have you got the
strategy which would encourage people to shift freight around
the coast?
Jim Fitzpatrick: We have got the
Interim Ports Review, we have got the National Policy coming forward
in due course. There is an expectation that in planning terms
the ports policy could possibly be the first, certainly one of
the first national policy statements to demonstrate that there
is a holistic approach to this.
Q517 Chairman: So will we expect
realistic targets for coastal shipping?
Jim Fitzpatrick: I would have
thought we would certainly have realistic targets for that which
we want to attract in terms of volumes of business.
Q518 Chairman: That is a rather carefully
qualified thing. There is a number of things that concern us.
What is the Government's attitude towards European contributions
towards initiatives on freight? What about the "Motorways
of the Sea" scheme and what about the European "Freight
Oriented Rail Network"? What is the Government's attitude
to that?
Jim Fitzpatrick: The "Motorways
of the Sea" scheme, as I have described earlier, Chairman,
is something we are supporting. Our performance in terms of the
bids we put in to Europe is better than most countries. Sixteen
bids were approved last year. Five of them were UK bids.
Q519 Chairman: How many of those
were ports?
Jim Fitzpatrick: Off the top of
my head, the companies bidding for our "Motorways of the
Sea" funding, Marco Polo funding, round one -
Q520 Chairman: Your Marco Polo funding
is something different again. Minister, what we need from you
really is a clear view. How do you make sure British freight operators
are able to take full advantage of European funding, because you
know the ports system on the Continent is different, you know
that their attitude towards gauge enhancement (which, after all,
is a very real problem for us but not for them) is different,
you know that the UK freight industry is definitely penalised
in relation to HGVs driven by foreign drivers and subsidised by
lower rates of fuel, and very frequently not complying with the
same hours directives or the same tachograph constraints? What
are you going to do so that we do not have this constant business
of European initiatives either not benefiting the freight industry
or positively disadvantaging it?
Jim Fitzpatrick: We are certainly
doing everything we can not to positively disadvantage it. We
have a strong team at the Department for Transport which helps
the shipping industry and our ports industry in terms of making
bids for MOS funding, and we are working closely with them to
make sure we can be successful in Marco Polo round 2, and subsequent
MOS funding bids. The fact that we have approved the developments
we are all familiar with right around the country in terms of
additional port capacity shows that the ports industry is gearing
up for the expansion which it has been experiencing for the past
ten years and is expected to experience with world trade growing
for the next 20.
Chairman: Minister, it is nice that you
are so optimistic! You will not be surprised if I say that I think
we shall see you again many times to discuss these problems. Thank
you very much for your help.
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