Parliamentary briefing on transport implications of suspension of rail freight grants

10th March 2003

Background

Freight on Rail, is campaigning for the full reinstatement of funding by the Strategic Rail Authority (SRA) rail freight grants to help improve safety on the road network, control congestion and reduce pollution during 2003/04.

The SRA has announced that new awards for rail freight facilities grants (FFGs) and track access grants (TAGs) in England are to be halted from now until the end of the next financial year (2003/04). Moreover, no definite commitment has been made to reinstate grants from April 2004 at previous levels. This is due to budget constraints within the SRA, which has been forced to reduce its expenditure by £300 million. We are concerned that this government U-turn and uncertainty as to when the grants will be fully reinstated, will force industry to opt for road transport.

This withdrawal of grants runs contrary to Government policies to shift goods off Britain’s roads and onto rail, and to encourage private sector infrastructure funding. There is consistent public support for rail freight instead of road transportation.

Government freight grants have made a significant contribution to reducing road congestion, reducing noxious emissions and reducing deaths and injuries on the road network. Failure to restore the funding will mean an extra 12 million lorry journeys over the year at a time when the Government has just announced a 2.5 per cent increase in traffic for 2002 and admitted that it can no longer met targets to reduce congestion.

Freight facilities grants, (FFG) introduced 25 years ago are the only capital support given to rail freight by the Government and have contributed to a 50 per cent increase in rail freight since 1994. It now represents 12 per cent of the UK surface freight market. Governmental support for freight is about 4 per cent of its support for passenger services. FFGs lever in significant outside investment: for every pound of grant, on average over 70 pence is provided by the companies involved. The willingness of businesses to put in its own money can be seen in a range of successful applications in 2002.

Benefits of some of the latest grants

Potter Group investment at the Selby inland container depot where a grant of £1.6m secured £1m of private sector finance. As a result, 200,000 annual lorry journeys saved.
At Cottam power station where a desuplhurisation plant is being installed, a £2million SRA grant secured £4m of private sector funding. This ensured that 300,000 lorry journeys were kept off the roads.

DFDS has been awarded £382,480 which it will match with £300,520 of its own funding for facilities at Immingham. These facilities will keep 25,500 lorry journeys, equivalent to over 3 million lorry-kilometres, from the roads.

The Malcolm Group and ASDA have together been awarded £715,291 which they will match with a total of £457,317 of their own funding for terminal facilities at Daventry, which will keep over 20,000 lorry journey, equivalent to over 12 million lorry-kilometres, from the roads.

Road Safety and environmental impacts

Forecasting based on the last year in which a full set of freight facilities and track access grants was made in 2001/02 show the following:-

435 million lorry miles saved (SRA)
240,000 tonnes of atmospheric pollutants saved ( National Emissions database)
£118m in cost to society of the above pollution avoided (EU Externe studies)
£10.8m in cost to society of road accidents avoided (Leeds University Institute of Transport Studies and NERA)
£18.5m in cost to society of noise avoided
(source of data as above)

These SRA figures, calculated over the life of the flows between 5 and 10 years, are comparable to what would have happened in 2003/2004 had it not suspended the grants regime. Whilst grant expenditure on already authorised grants will continue in 2003/04, no more new grant awards are being made, with no definite date for resumption, causing industry to reconsider its use of rail and question the Government’s commitment to rail freight.

Opposition to this suspension

Local Government Association
Association of Transport Operating Officers London Sustainable Distribution Partnership
Local Government Channel Tunnel Initiative
Public Transport Consortium
The Confederation of British Industry
The Freight Transport Association
Quarry Products Association
The Aggregates Industries group.

We believe that this move is short sighted, both the public and private sectors have called for the SRA to reverse its decision which ignores the importance of the grants to local government, business and the wider freight industry. We ask you to lobby the Department for Transport to reinstate the grants immediately, restore confidence in the industry, control road congestion, protect the environment and to avoid many unnecessary deaths on the roads.

For further information contact:-
Philippa Edmunds, Freight on Rail campaigner 020 8241 9982 email: philippa@freightonrail.org.uk