Column - April 2014
Growing importance of LEPS in transport
The emerging role of the Local Enterprise Partnerships (LEPs) is important in any analysis of future transport funding. Three years ago LEPs, which are business led partnerships with council participation, had no funding and an ill-defined role. However LEPs are now positioned to take over a significant element of transport funding decisions from local authorities through the Local Growth Fund of £2 billion per annum which will fund transport, housing and skills schemes for a five year period starting in 2015. In particular, the Department for Transport which is the largest contributor, is putting in £1.19 billion into this scheme, where there will be no ring fencing so no guarantee of spending on transport.
Therefore the rail freight industry needs to demonstrate to LEPs why and how enhancements to the rail network translate into economic growth. Time is short as LEPs have already submitted their priorities in draft Strategic Local Plans (SEPS) to be finalised in March with the Government announcing grant allocations this Summer for the years 2015/16 with up to £5bn of the £10 bn identified for the remaining four years.
Freight transportation is fundamental to the economy; rail is taking a growing share of the market in transporting consumer products long distance between conurbations and the ports as well as the traditional bulk commodities. Increasingly, the big logistics operators such as Stobart and The Malcolms Group, are diversifying into rail as an alternative to the congested road network on key freight arteries. Their supermarket customers are also looking to reduce their carbon footprint and improve their safety record. The Government has already committed significant funds to the development of the Strategic Rail Freight Network (SRFN) with further planned enhancements for the next five year period. Additionally, there are opportunities via the Local Growth Fund for more localised enhancements to the network such as small electrification links to ports and enhanced links to new depots which could re-generate the local economy and bring extra jobs. The Daventry Strategic Rail Freight Interchange, where Tesco has a terminal, already employs 5000 people which will increase to 9000 when the latest expansion is completed.
Targeted rail freight upgrades work; rail’s market share out of Southampton port increased from 29-36% within a year of completion of the gauge upgrade which was led by the RDA with partners AWM, ABP, Network Rail (NR) and European funding, demonstrating the direct benefits of rail enhancements. Financial analysis demonstrated that the £70.7 million project had a Net Present value of £376m.
The CEO of HPUK highlighted the need for multi modal freight solutions; he told the Transport Select Committee hearing on Access to Ports in Spring 2013 that improved rail capacity was key to Felixstowe port and would improve the competitive position of the port relative to ports such as Rotterdam. He said that less than three per cent of containers from the port were transported via the A14.
Transport schemes did not fare well out of the Regional Growth Fund so it is important we make a strong case for rail freight projects. Consumer rail freight increased by 86% in the past decade and the rail freight the industry invested over £2 billion in the sector in the same period.
The industry predicts that rail freight overall will have doubled by 2030 with intermodal traffic growing fourfold or even fivefold which demonstrates the need for further funded rail upgrades as part of a sustainable distribution solution. Rail freight has a key role in providing a low carbon, energy efficient safe alternative to road which reduces road congestion.