Select Committee on Transport, Local Government and the Regions Appendices to the Minutes of Evidence


Memorandum by English Welsh & Scottish Railway (PRF 48)

PASSENGER RAIL FRANCHISING

INTRODUCTION

  The Transport Sub-Committee has extended its terms of reference to take into account the implications of the placing of Railtrack PLC into Railway Administration. English Welsh and Scottish Railway (EWS) believes that this action has major implications for the future of freight on rail and believes the committee should take this into account during its deliberations. Our response focuses on the relationship between Railtrack's successor, the freight operators and the rest of the railway industry.

SUMMARY

  In summary EWS believes that:

    1.  Government's provision of £4 billion for rail freight in the 10 year plan must be protected;

    2.  there must be independent economic regulation;

    3.  there is a need for a national infrastructure provider with centralised train planning and control;

    4.  there should be national standards of maintenance and renewal;

    5.  there are many unanswered questions relating to vertical integration;

    6.  the future enhancement structure must take freight needs into account to avoid a repeat of the West Coast Main Line upgrade fiasco.

BACKGROUND

  EWS is the largest rail freight operator moving over 100 million tonnes a year. EWS employs over 6,000 people and, as with other rail freight operators, owns its business, it is not a franchise. Rail freight has been one of the successes of rail transport policy over the last six years. Rail freight has enjoyed growth of over 40 per cent despite:

    —  the impact of post-Hatfield speed restrictions on service quality;

    —  the introduction of 44 tonne lorries;

    —  the ending of the fuel duty escalator;

    —  the standstill on fuel duty;

    —  the reduction in Vehicle Excise Duty.

  Despite this the Government has made rail freight growth a central part of its transport policy.

INVESTMENT

  The 10 year plan states that there should be 80 per cent growth in the rail freight in the next 10 years and provides £4 billion funding primarily for infrastructure enhancement. Rail freight has attracted private investment of over £1 billion, including investment of £700 million by EWS in:

    —  280 new locomotives;

    —  2,500 new wagons;

    —  new depots and terminals;

    —  a centralised customer service delivery centre;

    —  new systems, including an internet-based customer ordering and planning system.

  Given the scale of private sector investment, it is essential that Government stands by its commitment to invest £4 billion in rail freight to ensure a fit-for-purpose network.

INDEPENDENT ECONOMIC REGULATION

  The recent announcement by the Office of the Rail Regulator of reduced track access charges for freight traffic will stimulate new business growth and provide the economic structure to permit operators to invest in rail freight growth. This is a key assumption in the 10-year plan. Freight operators have welcomed the announcement, which will go some way to offsetting the negative policies of recent years.

  The announcement reinforces the argument that the provision of the right economic structure for future investment will be absolutely crucial for the future of rail freight. Part of this structure will be the continuation of an independent economic regulator. EWS has joined the passenger train operating companies (TOCs) in pressing for the retention of independent economic regulation. Without it the risks of investing in rail freight are multiplied.

NATIONAL INFRASTRUCTURE PROVIDER

  EWS believes that it is essential to retain a national infrastructure provider, managed nationally. Rail freight has grown despite of, rather than because of, the fragmentation of the rail industry. Freight by rail is a national activity—freight trains can use any part of the rail network providing that space is available, and that it is maintained to the requisite standard. Any fragmentation of infrastructure provision will undermine this flexibility, a crucial selling point of rail freight.

  Only a national infrastructure provider will be able to manage national train planning, national real-time train control and national possession planning.

  Only a national infrastructure provider will be able to ensure:

    —  the provision of seamless train paths throughout Great Britain;

    —  consistency of maintenance and renewal standards that guarantee there will be no freight exclusion zones;

    —  that there would be no discrimination between different operators' services, be they high-speed or low-speed; direct or stopping; passenger or freight.

VERTICAL INTEGRATION

  We are concerned that proposals for mini Railtracks will fail to provide the benefits of national infrastructure provision. Railtrack's existing zonal structure already creates dysfunctional problems for national operators and any reinforcement of artificial boundaries will worsen the situation.

  EWS is extremely concerned that the concept of localised vertical integration will produce freight "no-go" areas. We believe that there are a number of fundamental issues that have not been addressed in the enthusiasm for vertical integration. We have posed these in the form of a series of questions.

    —  Railtrack is a multi-faceted company with a wide range of activities. It is not clear just what supporters of the concept would want to be integrated:

    capacity planning?

    signalling?

    procurement of maintenance and renewal?

    network enhancement?

    safety management?

    —  Who will decide the standard to which track and structures will be maintained? If there are no common standards it would become increasingly difficult to operate national services.

    —  Who will ensure that there are fit-for-purpose freight routes and freight paths throughout the country?

    —  EWS operates long-distance service such as:

    Scotland—Channel Tunnel (international)

    Teeside—South Wales (steel)

    Cornwall—Scotland (china clay)

    West Country—East Anglia (aggregates)

    London—North West (mail)

    —  Who will ensure that such trains will run through each vertically integrated area unhindered?

    —  How many additional interfaces will be created by vertical integration dealing with such issues as access rights, access charges, performance guarantees and liabilities?

    —  What evidence exists that there is sufficient competence amongst the operators and at local and geographical level to manage the procurement of track maintenance and renewal?

    —  Who will ensure that local operators do not discriminate against the services of other operators in their area?

    —  Will vertical integration mean there is a need for more, rather than less, intrusive regulation?

    —  Who will ensure that there is a consistent approach to the provision of sufficient track capacity for future growth?

    —  Who will ensure that there is the appropriate capability to operate:

    longer trains

    heavier trains

    faster trains

    wider trains

    higher trains

    in the future?

    —  What are the implications of vertical integration in the light of EC directives that require separation of track and operational management?

RELATIONSHIPS WITH THE SRA AND TOCS

  Railtrack's successor will need to maintain close working relationships with the SRA and TOCs, especially in the area of network enhancements. Whilst EWS supports the use of Special Purpose Vehicles to undertake enhancements it is crucial that the interface with Railtrack is understood and managed.

  It will be particularly important that the rights and requirements of existing users are taken into account in planning and implementing upgrades. 43 per cent of freight traffic uses the West Coast Main Line during its journey including the core of Consignia's Royal Mail business, express parcels, international traffic, deep sea containers, and extensive volumes of freight traffic. However, freight needs were not taken into account during the planning process for the West Coast upgrade until the Office of the Rail Regulator forced Railtrack to consult with the rest of the rail industry. This emphasises the need to retain a completely independent regulator, separate from any other part of the administrative super structure, such as the SRA.

  EWS would be deeply concerned if any other network enhancements were undertaken without consultation with the rest of the rail industry, including the rail freight industry. This includes any change of scope to projects such as the West Coast Main Line Upgrade. Any change which further worsened the ability of rail freight to use the WCML would be vigorously opposed.

CONCLUSION

  EWS would ask the sub-committee to consider the needs of rail freight in its deliberations regarding the successor to Railtrack. Only an independent national infrastructure provider combined with an independent economic regulator will produce the certainty and consistency of network provision and investment to ensure that rail freight meets its objectives of 80 per cent growth in the next 10 years.

English, Welsh & Scottish Railway

26 October 2001


 
previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2002
Prepared 8 March 2002