Memorandum by English Welsh & Scottish
Railway (PRF 48)
PASSENGER RAIL FRANCHISING
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.
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.
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.
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:
new depots and terminals;
a centralised customer service delivery
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.
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.
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 activityfreight
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.
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:
procurement of maintenance and renewal?
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
Who will ensure that there are fit-for-purpose
freight routes and freight paths throughout the country?
EWS operates long-distance service
ScotlandChannel Tunnel (international)
TeesideSouth Wales (steel)
CornwallScotland (china clay)
West CountryEast Anglia (aggregates)
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
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
Who will ensure that there is the
appropriate capability to operate:
What are the implications of vertical
integration in the light of EC directives that require separation
of track and operational management?
THE SRA AND
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.
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