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What rail freight needs from the Government to support economic growth.

In reply to the Rail Minister, Claire Perry’s request, at the Rail Engineers Forum conference on June 15th 2015, for the industry to tell the Government what it needs to continue expanding the green economy 1:-
The Government needs to provide a stable and consistent framework so that the industry has confidence to invest 2. In particular, the industry needs the following:-

  • Railway restructuring - Ensure that the needs of freight are protected in any proposals for structural change in the railways, including Regional Devolution. National commercial and competitive freight services need national access, timetabling and possession planning. [1]
  • Longer-term affordable freight access charges
    Work with the Rail Regulator to ensure rail freight operators have affordable and longer than the existing five year  network access charges  period at the next periodic review (PR 18) to give industry and its customers certainty  [2]
  • Continuation of the investment in the Strategic Rail Freight Network, to provide capacity for freight growth and more efficient and productive rail services. Analysis by KPMG shows that rail freight generates £1.6 billion in economic benefits to the UK economy now 3; KPMG also suggests that if rail freight volumes double by 2045 in line with Network Rail’s Freight Market Study forecasts which are based on an unrestrained network, rail freight could deliver over £4 billion per year in productivity, congestion and environmental benefits.  [3]
  • Retain revenue support mode shift grants (MSRS) in recognition of the environmental, social and economic benefits – especially road congestion relief- of rail taking HGVs off congested roads. The present scheme which is perfectly risk-adjusted as it is paid only on actual containers removed from roads, ends in March 2016. It has a benefit cost ratio of 5:1 with annual funding of c£19 million. [4]
  • Devolved bodies should be sufficiently funded to take account of freight services.


[1] Speedy resolution of the Network Rail review needed as uncertainty is bad for UK PLC. The vast majority of rail freight flows cross regional boundaries so any restructuring and devolution needs to take freights’ needs into account.

[2] Any review of rail freight charges must take into account the scale of subsidy given to HGVs; the latest research carried out for the Campaign for Better Transport 4 using DfT values, found that HGVs pay less than a third of their costs, such as road congestion, road collisions, road damage and pollution which equate to an annual subsidy of around £6.5 billion. These conclusions are in line with a MDS Transmodal study in 2007 which found a very similar amount of underpayment: £6billion.  The Government needs to recognise HGV costs in discussion about rail freight costs so that policy implications can then be understood in both directions with road and rail being examined across the piece. The level of HGV subsidy makes a compelling case for supporting rail, which imposes much lower costs on society and the economy, equivalently.

[3] 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. Financial analysis of the £70.7 million project showed a Net Present value of £376m

Rail freight is vital for the future well-being of the British Economy and has a key role to play in reducing pollution, reducing road congestion and road collisions. Each year the rail freight industry carries goods worth over £30 billion ranging from high end whiskies and luxury cars to supermarket products, steel, cement and coal. A quarter of consumer goods imported into the UK are transported by rail.

[4] We are urging the Government to retain and adequately fund the scheme so that operators and customer have the confidence to carry on investing in the industry. A sudden cessation of the scheme will abruptly force back onto the roads significant rail flows and customers will lose confidence in the user of rail; estimates indicate that the direct impact would be flows to the Midlands reverting to road causing around 250,000 containers to shift back to road with further knock-on impacts on other routes. There is now a chance to increase movements by rail following considerable investments by all the major ports in increased rail terminal capacity, linked with the government investment in the Strategic Rail Network.



2. Rail freight industry has invested over £2 Billion since 1994

3. Rail Delivery Group reports Freight Britain. & Keeping the Lights on and the traffic moving

4. Addendum to Metropolitan Transport Research Unit MTRU 2014 report February 2015. Heavy Goods Vehicles – do they pay for the damage they cause 2014


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