Speech

Listening to Industry workshop

Explaining the key projects, programmes and practical steps being undertaken to improve the freight sector.

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

The Rt Hon Mike Penning MP

Introductory remarks

I’d like to kick off proceedings by giving by warm welcome to one and all.

It’s great to see so many of you here today (1 February 2011) - so thank you for making the time and taking the trouble to come along, it really is appreciated.

This event is all about listening to you - you are the experts, the people who know what works and what doesn’t, you’re the ones who really understand the big issues facing the sector.

Freight and logistics organisations matter

Since taking up my job there is something I’ve come to learn pretty quickly - namely that this country’s freight and logistics organisations matter.

The companies and operators you represent generate economic growth and drive job creation, enhance our social well-being and improve our individual quality of life.

In its own right the UK freight and logistics sector employs well over 2 million people and is worth over £74 billion to the economy.

But the sector’s wider social and economic importance lies in the fact that it delivers the goods and raw materials for producers and consumers, importers and exporters.

Indeed, just try to imagine a world without freight and logistics - our shops and supermarkets would have empty shelves, our power stations would struggle to produce energy, construction projects would face severe delays, factories would grind to a halt and access to the global economy would be closed off.

But, as we know, the sector also has significant environmental impacts. Emissions from freight transport account for around 27% of domestic transport greenhouse gas emissions and HGVs contribute to many urban air pollution ‘hotspots’.

We need to work together to meet the UK’s challenging environmental targets. You know best how to manage your operations and reduce your fuel consumption and emissions; and I thank you for the work many of you in the room are doing on this within your businesses and with the department - especially in areas such as lower carbon technologies, consolidation centres and freight modal choice. But we need more progress and so I’ll return to this challenge later in my speech.

Investing in transport, investing in recovery

If you’re in the freight and logistics sector then, at the core of your job, is a determination to ensure that the right thing arrives in the right place, at the right time.

At the heart of my job is a determination to ensure that we have the transport networks, the policy frameworks and the proportionate regulations that enable you to do what you do best.

But, of course, both of us, industry and government, are working in a new economic landscape - one that’s been shaped by the unsustainable levels of debt bequeathed to the coalition when we came into office.

So this government’s top priority is tackling the inherited fiscal crisis. From our emergency budget, to our spending review, we have taken the tough decisions needed to cut waste and control spending, repair our public finances and rebalance our national economy.

Among those tough decisions have been ones on VAT and fuel duty - decisions we had to take to deal with the biggest budget deficit in the G8 and one of the worst records on debt anywhere.

But, we understand how painful and difficult price rises at the pump are. That’s why the Treasury are looking at a fair fuel stabiliser. The Chancellor has asked the Office for Budget Responsibility to undertake an assessment of the effect of oil price fluctuations on the public finances. Informed by this assessment, the government will examine options for the design of a fair fuel stabiliser.

So yes - there have been tough decisions and hard choices. But the rescue mission we have undertaken has won the confidence of the international markets and taken this country out of the danger zone. It is also creating the conditions that will help private businesses to grow, to thrive and to hire more people.

Relative to other areas of government spending, transport did well out of the recent spending review. We recognise that, by investing in transport infrastructure, we are also investing in economic recovery.

A modern, fit for purpose transport system is also crucial for the future success of the freight and logistics sector. So while I have this opportunity I’d like to highlight some of the key projects, programmes and practical steps we are taking to support you and the valuable work that you do.

Projects, programmes and practical steps

We are investing in major road schemes on key freight corridors - for example, on the M62, M1 and M25. Moreover, the use of managed motorways technology will make all journeys more reliable.

We are also able to support continued investment in the rail freight network to 2014, with £150 million being available from the Transport Innovation Fund for Port of Southampton and Port of Felixstowe gauge clearance; and £200 million for the strategic freight network schemes.

To improve capacity at our ports we have given consent for major container terminal developments at Bathside Bay (Harwich), Felixstowe South, Liverpool, London Gateway (Shellhaven), Teesport and the Port of Bristol.

I’m convinced that our proposals to invest in high speed rail will have a positive impact on the rail freight industry by freeing up much-needed space on our existing railway for freight services - for example, on the WCML to the West Midlands

I’m making sure that targeted HGV enforcement remains a central plank in our overall approach to supporting the haulage industry.

And of course we’re introducing an HGV charging scheme to ensure that UK hauliers get a fairer deal - which officials will discuss with you this afternoon

I also believe that our localism agenda provides real opportunities for you as an industry. Under the new Regional Growth Fund, £1.4 billion is available in 2013 to 2014 to provide a mixture of support for private sector investments and basic infrastructure schemes.

I would encourage you all to get involved in the new local enterprise partnerships which we expect to play a role in taking decisions on local strategic transport priorities.

Cleaner, greener challenge

Earlier I mentioned the sector’s environmental impact. Well this government is determined to back you in your efforts to meet the challenge of making freight and logistics cleaner and greener

One example of that support is our mode shift grant support scheme, designed to assist companies with the operating costs of running rail and water freight services, where rail and water is more expensive than road.

We have a confirmed budget for these grants of £20 million for 2011 to 2012 and £19 million for 2012 to 2013. In addition an indicative budget is in place of £19 million for both 2013 to 2014 and 2014 to 2015.

Another example of support is our work with the Low Carbon Vehicle Partnership to promote and speed up the development and adoption of greener vehicle technologies and fuels for road freight movements.

We should also shortly be consulting on increasing the length of semi trailers to £2.05 million - and I’m pleased to say that you will get an opportunity today to contribute to development of this consultation.

I welcome the progress being made to shrink the sector’s environmental footprint. But as I’ve already said, emissions from freight must fall further if we are to meet our wider climate change objectives - and especially emissions from road freight if road is to compete with other modes in a future low carbon economy.

And let me be clear on this - the more progress the industry itself makes, the easier it will be to ease the burden of regulation on industry.

I took the decision in October not to make eco-driving training mandatory. Instead I want to encourage and support industry-led schemes to improve fuel efficiency and reduce emissions.

In 2012, I will need to review progress made by industry and re-consider the case for government intervention. I have written to the chief executives of the major freight associations on the department’s Low Carbon Supply Chain group to reinforce the importance I place on this review.

So now is the time for you to put in place measures in your business that will lessen your fuel consumption and environmental impacts - and to tell us about them. Today is an opportunity for you to discuss these measures with officials. And also to discuss how to cope with the challenges that our climate throws at us - the recent inclement weather conditions have highlighted the importance of today’s session on supply chain resilience.

Partnership working

I’m not just encouraged by the steady progress that’s being made on meeting the environmental challenges facing the sector - I’m also delighted by the partnership working that underpins it.

I know many of you in the room have worked hard with the department to develop joint industry-government recently published guidance on carbon reporting. I see this guidance as a vital first step towards any industry-led action on reducing emissions and I thank you for your help in taking it from drawing board to final document.

I also know some of you are involved with the Freight Transport Association and UK Major Ports group in considering how to take forward industry-led actions to promote greater use of rail and coastal shipping, where they are appropriate and I will be supporting your efforts to do so…

Conclusions

It just remains me to thank you again for coming along and to say that I look forward to hearing your views both in the question and answer session and also when officials feed back to me the outputs of today’s workshops.

Published 1 February 2011