Memorandum by Rail Freight Group (TYP
1. The Rail Freight Group is the representative
body of the rail freight industry. Its objective is to achieve
the maximum possible growth of rail freight.
2. We welcome this Inquiry as being timely,
taking place some 18 months after the publication of the 10 Year
Plan. This is a timescale which should be sufficiently long to
determine whether policies and actions contained in the Plan have
started to have an effect, whether the trends are in the right
direction and what further action needs to be taken.
3. Unfortunately, since the Plan's publication
in July 1999, we have had the post-Hatfield chaos and the demise
of Railtrack, which happened this year but started many months
if not years before that. We have had a period where there was
evidence of a breakdown in relations between ministers and with
top management at the SRA and ORR, and of course a change in the
ministerial team after the General Election in June 2001.
4. All these have had an adverse effect
on the railway industry, and on its ability to carry traffic reliably
5. However, in spite of this, and thanks
to strong efforts by much of the industry, rail freight was 8
per cent up in the quarter ending September 2001 compared with
the same time the previous year, which was before Hatfield. So
freight traffic has grown, and could continue to grow and meet
the 10 Year Plan target growth of 80 per cent.
6. The Financial Statement accompanying
the Plan allocated £4 billion to rail freight over the same
period; £3.4 billion was to be from the Government, the remainder
from the private sector. Rail freight would also of course benefit
from investment in mixed passenger and freight projects in the
10 Year Plan.
7. We examine below, in relation to rail
freight, some of the assumptions made in the Plan, whether policies
on which the Plan was based have been followed or modified, and
what action or changes must be made if the targets (or modified
versions of them) are to be achieved.
8. The target for rail freight growth in
the 10 Year Plan was 80 per cent. This was subsequently modified
in the draft Instructions and Guidance to the SRA by adding the
proviso "subject to the train operators improving their efficiency".
This is an extraordinary statement to make in the context of Railtrack's
total failure to operate the network efficiently, reliable or
effectively. We would generally comment that the train operators
have achieved their growth figures in spite of rather than because
of Railtrack, and we have therefore responded to the DTLR consultation
that this proviso is unnecessary and out of balance and should
be removed. If this proviso is applied to freight operators, are
we to assume that the less onerous 50 per cent growth target for
passenger traffic can only be achieved if passenger train operators
improve their efficiency?
9. However, a freight target figure of 80
per cent is a rather blunt instrument on which to measure achievement.
It is based on tonnes-kilometres, and therefore the amount of
coal traffic hauled in different years over long or short distances
can have an effect on the figures out of proportion to achievements
overall. Whereas coal traffic is good revenue for the railways,
it is not one of the main growth areas of the Strategic Rail Authority.
10. RFG agrees with the SRA that, to have
any significant impact on road congestion, rail freight must really
break into new markets such as lighter, faster types of traffic,
ranging from mail, parcels, food and drink, consumer goods, semi-manufactured
goods as well as raw materials. Much of the imported goods in
these categories already travels from major ports to inland rail
terminals by rail and, with port traffic set to grow, on some
estimates, by 10 per cent a year, rail freight to and from ports
must increase by at least this amount just to retain market share,
and by rather more to divert traffic off the roads, one of the
Government's main policies.
11. We therefore believe that the overall
target should be reviewed to reflect modal splits in different
market sectors, while still keeping the same general level of
growth. This work could be developed by the SRA with the industry
in a comparatively short space of time.
12. The other target which is given much
prominence in the 10 Year Plan is the statement that, if the Plan
is implemented in full, then road congestion will reduce. There
is no supporting evidence for this remarkable statement, and we
have been unable to find any specialist in this field who believes
it. We urge the Sub-committee to question the Government on it,
since we believe that road congestion will continue to increase,
even if the 10 Year Plan were implemented in full. There may well
be an argument for increasing the growth targets for rail freight
in order to ensure that freight can still move around and that
the roads are not completely gridlocked by the congestion that
everyone except the DTLR appears to believe is inevitable, unless
there is a real and consistent change of policies.
13. The only way in which congestion would
be likely to reduce is as a result of a severe recession, a major
road building programme (albeit only a temporary reduction in
congestion) or if much more radical policies were introduced compared
with those in the 10 Year Plan, involving major curbs to road
traffic. To make these acceptable, alternatives would have to
be in place first. For rail freight, this would probably take
well over 10 years, and would require maximum government commitment
to all aspects of policysomething sadly lacking up to now.
14. For rail freight,the need for regional
targets would come out of particular characteristics of an area
or region, alongside considerations of the suitability of freight
to be carried by rail and the possibilities of terminal and other
facilities. This could, for example, apply to London, where the
provision of suitable terminals, and the exemption of rail freight
connecting road services from congestion charges or night time
lorry bans could play a major part in reducing overall levels
of road freight.
15. Following the launch of the 10 Year
Plan, the rail freight industry had expected that Government would
work towards its implementation, encouraging participation and
providing leadership to enable the industry to deliver the target.
16. In many instances, the opposite has
happened. For example:
The Fuel Duty Escalator for road
freight was cancelled, and Vehicle Excise Duty on lorries was
reduced, benefiting the road freight industry by some £800
million per annum, and rising. Since road freight is rail freight's
main competitor, rail freight might have expected to receive the
same amount pro-rata, about £80 million based on rail freight
having a 10 per cent market share of land freight traffic. Over
10 years, this loss of competitivity to rail freight is about
£1 billion. There has been no comment from Government as
to why they made such decisions in complete contravention of the
policies on the 10 Year Plan, and there has been no offer of matching
funds even to maintain a level playing field between the two modes.
The promotion of Channel Tunnel rail
freight is specifically mentioned in the 10 Year Plan, the SRA's
Freight Strategy (published in May 2001) and in the draft instructions
and Guidance to the SRA. Firstly, the Government introduced Regulations
to impose a Charge on the train operators of £2,000 for every
illegal immigrant who gets in on a freight train, even though
the industry told them that this would be impossible to implement
and would likely cause the cessation of services. Then in November
2001, because its workers started being attacked, SNCF suspended
all rail freight through the Tunnel. This has now restarted at
about 30 per cent of the already low traffic levels but, unless
major change is made, it is unlikely to survive many months, resulting
in some 8,000 job losses, businesses going into liquidation, and
an additional 6,000 lorries a week on the M20 and other motorways.
It is also worth noting calculations by Lord Bradshaw (Lords Hansard
5 December) that the Government has invested £500 million
in Channel Tunnel rail freight facilities in the last 10 years.
Perhaps the Public Accounts Committee or NAO will wish to consider
the reasons for such a large sum having to be written off on account
of Government action (or inaction). It is clearly Government's
duty to police and protect out frontiers, and an EU requirement
on them to maintain free movement of goods. At the moment, the
lack of action or urgency on the part of the Government is very
distressing to the industry.
17. Implementing the relevant parts of the
10 Year Plan also needs the acceptance and/or adoption by the
Treasury of the need to review values attributed to road congestion,
environmental pollution, road and structure damage and social/quality
of life, time lost both personally and corporately, whether for
people or goods. Whereas it is right that new projects or traffic
flows should be subject to tests for Value for Money, it is essential
that the Treasury and DTLR agree up-to-date values for the costs
to society of road congestion, environmental and structural damage
etc and that the differences between, for example, a heavily congested
motorway and a heavily congested urban road need urgent review.
18. For example, for rail freight grants,
the current values of "lorry miles saved" are £1.50
for urban roads, £1.00 for other roads and 20p for motorways
and dual carriageways. The latter figure takes no account of regular
and widespread motorway congestion. The Rail Freight Group recently
calculated that, if freight were excluded from the West Coast
Main Line and all capacity allocated to Virgin Trains, an additional
400 lorries an hour would be transferred to the adjacent M1 and
M6, requiring dedicated lorry lanes and one less lane for cars,
or the construction of additional lanes. Either way, this illustrated
the need for up-to-date values to attribute to lorry, car or other
traffic, and to people/passengers across both modes of transport.
This should at least enable a proper debate to take place as to
the costs and benefits of each mode.
10 YEAR PLAN
19. The recent problems of Railtrack have
undoubtedly reduced the likelihood of private sector finance playing
such a major part as originally envisaged. However, it must be
noted that the private sector has already invested over £1
billion in rail freight in the last five years, in wagons, locomotives,
other equipment, terminals and many other items. There is no reason
why this should not continue for the period of the 10 Year Plan,
only provided that those investing see better and continuing evidence
that the Government is putting in place policies to enable the
Plan to be achieved, rather than the opposite (see above). This
of course includes the ability of the rail infrastructure to accommodate
the growing volumes of freight.
20. The problems of private investment remain
with the infrastructure, where the Rail Freight Group has warned
over several years, not only of the inefficiencies of Railtrack,
but of its aversion to risk, its attempts to transfer as much
of this as possible to others, and its generally high cost structure,
which made both maintenance and enhancement work several times
more expensive than when British Rail was in charge. In addition,
there is more and more clear evidence that maintenance and renewal
work has been delayed.
21. Ministers have also made commitments
to introducing automatic train protection on most if not all of
the network. We understand that some finance has been allocated
to this, but it is nowhere nearly enough. The needs and value
for money for such widespread introduction must be addressed but,
in the mean time, the cost will yet again eat into the amount
of Government funding allocated in the 10 Year Plan and the much
needed network enhancements.
22. We do not find that the multi-modal
studies have generally been very effective. In few cases have
the options for rail freight been seriously considered; for example,
a study on the M6 between Birmingham and Manchester or across
the Pennines might conclude that, since rail freight was uneconomic
over that distance, none would transfer to rail. The fact that
much of the freight on the adjacent motorway travelled a much
longer distance overall and therefore might well be capable of
economic transfer to rail appeared difficult to grasp.
23. We were also told that, since the parallel
rail line was at capacity anyway, there was no point in considering
transferring more freight from road to rail. We commented that
the studies should then consider the costs and benefits of increasing
rail capacity as an alternative to increasing road capacity. We
conclude that, in general, these studies are being used to provide
independent support for more road building.
24. Finally, the additional costs of maintaining
Railtrack in Administration must be added to the financial needs
to implement the 10 Year Plan.
25. Thus the 10 Year Plan envisages a modestly
growing role for the railways; the consequences of Railtrack's
failure to maintain the network, failure to operate even as efficiently
as British Rail, failure to invest in enhancements to the extent
needed to meet growing demand, and now its Administration, means
that virtually all finance must come from the Government, at least
in the short term and until a restructured infrastructure company
has demonstrated competence.
26. The financial provisions in the 10 Year
Plan are therefore totally inadequate to achieve its objectives.
A new, efficient Company Limited by Guarantee could be the drive
for this new approach, and the initial high level appointments,
both of John Armitt and Jim Cornell to Railtrack in Administration,
and Ian McAllister and Adrian Montague to the CLG bid team, are
27. Beyond that, Government must accept
that putting right the disaster that was Railtrack is going to
be expensive and will need long term commitment to funding. The
outcome, however, could be positive and lay the foundations to
achieving an infrastructure that works efficiently and effectively,
and allows the train operators to achieve the growth that they
and their customers desire, and offering better value for money
than the equivalent for road when the calculations are done in
an up-to-date and objective manner.
28. RFG has welcomed the European White
Paper on Transport, particularly in connection with matters relating
to railways and rail freight on the continent. Most of the proposals
are already allowed for or in place in the UK, but the importance
of achieving open access for rail freight across the European
Union, for interoperability of equipment etc are vital for the
future of European rail freight, assuming that the present serious
problems relating to cross-Channel rail freight services are solved.
29. We regret the lack of a clear policy
on road tolling or congestion charging for freight. Such a policy
framework would give a clear signal that the full costs of the
damage caused by heavy lorries must be paid by those who cause
the damage. However, we welcome the proposals that revenue from
such charges could be applied to expenditure on rail or water
transport. This is already provided for in Switzerland and we
believe that it should become possible throughout the EU in pursuit
of a sustainable transport policy.
30. In welcoming the open access arrangements
for freight, we are conscious that, in may member states, financing
of local or regional rail services is frequently being transferred
to regional devolved governments. Not unnaturally, these bodies
do not always see the importance of long distance freight or,
for that matter, passenger services. The difficulties of finding
or enhancing train paths for international freight trains is therefore
31. We believe that a solution must be found
to this if reliable, cost effective rail freight services are
to be achieved, and we urge the Government to press the Commission
to introduce measures so that, at the regular timetable planning
meetings of international and national train services, a reasonable
number of international freight train paths are put into the timetable
first, along with international passenger trains, and that national
and regional trains are timetabled around them. As for all freight
trains, the paths must be preserved whether the train runs every
day or notthat is the nature of freight business.