Speech

Rail Freight conference 2013

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

Speech to the Rail Freight Group at their annual conference.

Stephen Hammond

Introductory comments

Thank you for that introduction and welcome.

It’s a great pleasure to join you today (4 June 2013).

My colleague Simon Burns is very sorry he could not be here.

He’s in the United States promoting the British rail industry at a trade show, and speaking to the Americans about high speed rail.

So I’m delighted to step in to replace him today (4 June 2013).

In fact – though rail freight is Simon’s responsibility – my portfolio at the DfT includes haulage and logistics, so I maintain a keen interest in this industry and many of you will know I had the honour to speak at the RFG’s Christmas lunch a couple of years ago.

Three years of change

In fact this is the first time a minister has delivered a speech at the Rail Freight Group annual conference since 2010 – and the very early days of the coalition.

Those 3 years have just flashed by.

Yet we’ve also achieved a great deal over that period.

Today, more people are in work, and over one million new private sector jobs have been created.

We’ve prioritised regulation addressing red tape.

And the deficit has fallen by a quarter.

In the past couple of months, we’ve also seen some promising signs of economic recovery and the news from the OECD was particularly welcome.

There have been some considerable improvements in transport, too.

And perhaps the main reason is because transport has a higher profile in government today than it has enjoyed for decades.

The Department for Transport is no longer a political backwater.

It’s a core economic ministry.

Getting infrastructure right is a priority. It will drive economic growth and economic prosperity.

And that’s allowing us to tackle the obstacles that have held back progress in the past…

Obstacles like the lack of a national infrastructure policy…

And we want to overcome a lack of dialogue between funder, developers and the department so that we can all work together and look to the future.

Rail investment

Three years ago, there was widespread concern over the future of transport investment. I’m sure many of you were asking what would the coalition decide would be the priority in a time of austerity?

But in fact we’ve announced billions of extra transport funding …

Particularly in rail.

We’ve made a sustained and concerted effort to target investment at those parts of the economy that offer the best potential for growth and jobs.

And rail has emerged as a major winner.

That’s why Network Rail will expand the railway between 2014 and 2019.

Of that, investment over £9 billion is to deliver major improvements across the country.

This would be a considerable sum – even if we had not inherited a record public deficit.

But in the current climate, it’s an unprecedented commitment to the future of rail in this country.

A future that will deliver Crossrail and Thameslink…

850 miles of electrification…

The completed Northern Hub…

The £4.9 billion Inter City Express Programme…

And £900 million of flexible funding for smaller schemes.

Freight

Of course this investment will not just benefit passengers.

It will benefit the rail freight industry as well.

And that’s crucial.

Because every estimation I have seen suggests that demand for rail freight will grow quickly over the rest of this decade.

And we want you to be able to accommodate and profit from that growth.

We see rail freight as a national asset.

A cleaner alternative to road and air freight.

But this is not just an environmental case but a compelling economic case; rail freight is a sector that can make other businesses more profitable by reducing the cost of logistics and haulage.

And that can help reduce congestion on our busy roads.

Let me take just one example: I was fortunate to hear recently about Tesco’s operations at Daventry a good example of the move from roads to rail.

The company runs five daily trains from the distribution hub at Daventry to Livingston, Magor and Thurrock and from Livingston to Inverness and Aberdeen.

Together, this removes 14 million road miles from their network.

Freight investment

These are all reasons why in the current rail funding control period, we have supported significant investment in rail freight over and above funding for the network as a whole.

A good example is the £150 million provided through the Productivity Transport Innovation Fund, which has helped deliver the Nuneaton North Chord, among other schemes.

This major modernisation will mean better and faster links between Felixstowe and the Midlands, the north west and Scotland.

We’ve provided £200 million in ring-fenced funding to develop the strategic freight network in the period up to 2014. This enables Network Rail and the rail freight industry to address the projects that they deem the highest priority.

Of course in 2011 The Chancellor added a further £55 million to that pot.

This is supporting gauge clearance work for freight routes between Syston and Stoke, and the doubling of the line between Ely and Soham, which will be completed in the next control period.

The funds for this control period are already delivering significant improvements on routes all over the country… including the recent introduction of GB1 gauge services through the Channel Tunnel on High Speed 1 to Barking.

We are specifying gauge enhancements to enable larger 9’ 6’’ containers to be conveyed on freight wagons.

This opens up additional routes for freight between ports and major cities.

Above and beyond these investments, last summer we announced another £200 million of ring-fenced funding for the strategic freight network between 2014 and 2019.

Electrification

Rail freight is also a big winner from our electrification programme.

Electrification will help make rail freight more commercially attractive across England, supporting our growing international trade and the transfer of container traffic from road.

That’s why we’re investing in 850 miles of electrified railway, compared with just 10 miles during the previous decade.

A key part of that programme is the new electric spine, which will provide a freight corridor linking core cities and economic centres in the south of England with the West and East Midlands and Yorkshire.

Electrification of the line between Acton and Willesden in Greater London will boost freight flows between the West Coast Main Line, Reading and the West Country…

At the time of the Growth Review, we confirmed our support for the principle of strategic rail freight Interchanges in a joint written ministerial statement from the DfT and the Department for Communities and Local Government.

We also issued policy guidance and at the same time gave a clear steer to the Planning Inspectorate that we view these developments as extremely important.

And I hope that the Department for Communities’ recent decision to give minded approval to the proposal at Radlett will increase investor confidence.

I’m sure today you will discuss at this conference about the national policy statement. Let me state that the policy guidance we issued was very clear and that I have seen no evidence that schemes have been hindered by the lack of a national policy statement.

We’re also working to support modal shift across the freight sector.

Mode Shift Revenue Support Grants encourage a shift from road freight to rail or water, where this is currently more expensive than by road, and are helping to remove more than 800,000 lorry journeys from the road network each year.

As many of you know, the DfT will shortly be carrying out a review of the grant scheme and will be engaging with the industry as we look beyond 2015 to understand the most effective way forward.

Europe

Looking further afield, I know the industry wants us to seize opportunities beyond our borders, as well as modernise the rail infrastructure within them.

The long term competitiveness of rail freight will certainly be influenced by connections to the European mainland.

So we recently announced our participation in the European rail network for competitive freight.

This is an important development which will see the UK becoming part of a freight corridor linking the Netherlands, Belgium, France, Luxembourg and Switzerland.

We are proposing to extend this corridor through the Channel Tunnel to London.

London provides a central hub from which freight can access the Strategic Freight Network for destinations throughout Great Britain.

That extension will provide better opportunities for operators and rail freight customers across the country to benefit from links to Europe.

But we want to ensure that the proposals in the 4th railway package are flexible enough to work in the UK – and compatible with our reform plans.

We have one of the most liberalised rail markets in Europe.

So we will be carefully considering the details of the proposals to make sure that they will fit our structure and the competency stays where it should.

ORR charges

Before I finish I’d like to touch on the issue of freight charges, which I know has been much discussed in recent months.

Of course these are a matter for the ORR, which is due to publish draft determination for consultation in a week or so.

To afford the investment programme I’ve spoken about today…

The biggest rail investment strategy for more than 50 years…

We have to reduce the costs of the railway – which was the most expensive in Europe when we took office.

The rail freight industry has already achieved impressive efficiency gains.

But that process needs to continue.

And the regulator has an important role to play in driving out those efficiencies.

But our objectives remain those set out in the statutory guidance we issued to the regulator last year.

We are very clear as a government that the regulator must support a competitive, efficient and dynamic rail freight industry.

And that policies and regulations should not create unnecessary transactional costs or other obstacles to the achievement of these objectives.

Conclusion

So today, in this short speech, I’ve spoken about the progress the industry has made over the past three years. I congratulate you on your achievements thus far.

Our railway is carrying more passengers and more freight than it has done for decades. Services are improving. And costs are coming down.

But we have also set a clear trajectory for the future…

Sustained investment in infrastructure…

Better services for all rail customers…

There is, from industry and the government, a real focus on delivering better value.

Make no mistake, rail freight has a massive role to play – not just in the railway’s renaissance – but in helping us achieve our overall vision for a greener and more efficient transport network.

So we are committed to supporting you.

To meeting shared challenges together.

And to working with you so the rail freight sector can take full advantage of rising demand and economic recovery in the years ahead.

Thank you for your time.

Published 4 June 2013