Rail Freight Group annual conference
This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government
How best government can provide the right conditions for rail freight to grow and flourish, and be an important part of the future of transport.
It’s a pleasure to be here to give my first major speech as rail minister to your annual conference.
When I took on the transport brief in opposition there was a truth I came to learn very quickly - rail freight matters.
It matters for our economy and our prosperity.
It matters for producers and consumers, importers and exporters.
And it matters for our environment.
And I pay tribute to the work of the Rail Freight Group and its chairman putting the case for your industry with clarity, skill and determination.
Ladies and gentlemen, there are many good reasons why we want rail freight to grow in the years ahead.
The facts will be familiar to this audience but it bears repeating that rail freight produces five times less CO2 per tonne-kilometre than road haulage.
Add to that the benefits to be gained by taking lorries off our congested road network with the traffic flow and road safety benefits that brings and you have a good case for promoting the transfer of freight from roads to rail.
So rail freight is an important part of our vision for the future of transport.
One of the many reasons why the coalition supports high speed rail is the benefits it will bring by releasing more paths for freight on our existing railways for example on the WCML to the Midlands and beyond.
And although the proposed new high speed lines are viewed principally as passenger focused we expect the lines to be designed to make them freight capable as well.
But the broader question that needs to be addressed is how best can the new government provide the right conditions for rail freight to grow and flourish and capture market share from the roads?
The first and arguably the most important strand of government policy which is relevant here is one that goes well beyond the transport sector.
I am speaking of course, of the very difficult work we are undertaking to tackle the deficit, put the economy on a sound footing and relieve the burden of red tape and regulation on the business community as a whole.
There will be pain in the months and years to come as we seek to grapple with the devastating crisis in the public finances we inherited from our predecessors.
But painful as it will be, it’s the only way to secure the economic stability needed for your industry and your customers to invest and flourish in the way needed to create jobs and revive prosperity.
In the run-up to October’s spending review, we are looking at every area of departmental expenditure for affordability and value for money including rail.
I am well aware of how strongly the industry supports the retention of the mode-shift revenue grant and the Freight Facilities Grant programme.
I’m afraid, for the moment, I can’t give any promises on the future of these grants.
It would be unwise of me to do so while work continues on the difficult task of preparing for the comprehensive spending review.
However, I can confirm that we have agreed the revenue grant budget for the 2010/2011 and 2011/2012 financial years and the quarterly bid rounds will continue for grant applications until then.
Secondly, we need to get the balance right between the interests of passengers and freight.
I promised this in opposition and I’m determined to live up to that promise in government.
But whether one is talking about passengers deciding between the train and the car or businesses deciding whether to move their goods by road or rail, we need a railway that’s more accountable and better incentivised to deliver high quality services for users.
If we’re to deliver that, we need an infrastructure provider that is responsive to customer concerns.
So the third means of improving the climate for rail freight that I’d like to look at today is reform of Network Rail.
In my view the status quo is simply not acceptable.
For example, it is a matter of serious regret that Network Rail pressed ahead with paying massive bonuses to it staff despite the concerns expressed both by the Secretary of State and the regulator.
While it may technically be a private company, the fact that its funding derives almost wholly from the taxpayer and its debt is backed by the government, means payment of such high bonuses to its senior management at a time when the public sector has been asked to accept a pay freeze is to say the least unattractive.
It is patently clear that the current mechanisms for delivering accountability and efficiency are inadequate.
The coalition agreement carries forward the Conservative manifesto commitment to reform Network Rail so that it becomes more responsive and accountable to its direct customers the train and freight operators and to the passengers and business customers they serve.
And we are determined to see costs come down.
This issue will be at the heart of the McNulty Review of costs in the rail industry and I am grateful to those of you here who are submitting your views and suggestions to Sir Roy’s work.
We’re carefully considering the best options for reform at Network Rail.
And let me make it clear that the new government will judge the issues on their merits.
We will not be driven by tortuous attempts to keep Network Rail off the nation’s balance sheet.
While it is too early today to set out exactly what changes we will make at Network Rail, I can guarantee you that there will be change.
The fourth policy area I’d like to touch on is perhaps even more difficult than the controversial questions around Network Rail, and that is the future for important freight upgrade projects around the network.
The pressing need to deal with the deficit will clearly have an impact on how far and how fast we can go in delivering the enhancements that the freight industry wants to see.
But I want to reassure you that I understand how important these projects are to your industry and to the economy as a whole, and to assure you that we will take forward this upgrade work where this can be reconcilable with our commitment to cut the deficit and the budgetary constraints this imposes.
I welcome the work done by the previous government on the Strategic Freight Network which had much to recommend it, not least the fact that the rail freight industry was positively engaged in the process of setting priorities for the programme.
By way of example, I should single out the importance of the Peterborough to Nuneaton scheme.
I believe that it provides a genuinely sustainable answer to the increase in maritime container flows from Felixstowe.
I was pleased to see another major step towards the completion of the project was taken just a couple of weeks ago when the Transport and Works Order for the Nuneaton North Chord was signed.
And I’d also like to pay tribute to Network Rail for completing the vital gauge enhancement work to Southampton tunnel with minimum disruption to passenger and freight services.
And in taking forward reforms to the planning system we will bear in mind the impact on delivering important rail freight projects.
Although we are committed to abolishing the Infrastructure Planning Commission, we’ll replace it with an efficient and democratically accountable alternative.
We’ll set up a new ‘Major Infrastructure Unit’ as part of the existing planning inspectorate.
That way, we retain the benefits of a fast-track process for major projects, including strategic rail freight interchanges of 60 hectares or more.
You’ll appreciate that great care needs to be taken on this issue.
I understand the importance of these interchanges to a successful rail freight sector and for modal switch.
However, it is absolutely vital that the locations of these interchanges are selected with great care and that careful consideration is given to the impact on the local environment and the concerns of local communities.
Moving on to my fifth theme, I believe it’s important to make progress with the liberalisation of European rail freight markets.
As a former MEP, I well recall the difficult task for seeking to prise open markets to European-wide competition.
Although there is still a long way to go, I welcome progress towards a more commercial and liberalised Channel Tunnel regime.
This year for example we have seen an increase in the number of through freight trains from Italy to the Midlands which I’m told are around 24 hours faster than equivalent road deliveries.
And I welcome the progress Network Rail is making on the work needed to allow European gauge wagons from the Channel Tunnel to access the Barking and Dagenham freight terminals and provide an attractive alternative to road haulage on this strategically vital route.
Sixthly and lastly, I can confirm that super-lorries will not be authorised to travel on UK roads by the new government.
Like our predecessors, we reject the proposal to pilot Longer Heavier vehicles exceeding 18.75 metres in length.
Quite apart from the concerns of the rail freight industry, we simply do not believe the nation’s roads are designed to deal with such vehicles and are not persuaded by the arguments for their introduction.
In concluding my remarks this morning, I’d like to return to the wider economic picture.
Of course, these are still early days for the new coalition government.
But we are under no illusions about the gravity or the urgency of the task we face.
We have to tackle the largest fiscal deficit in British peacetime history and kick-start our damaged economy.
On top of this, we have to find a way to put Britain on a trajectory towards a low carbon economy to honour our environmental commitments and avert catastrophic climate change.
Certainly, the transport sector will need to take its share of the pain in terms of tackling the deficit.
I’m afraid there is no escaping that.
But it is self-evident that transport has a crucial role to play in getting Britain out of the mess we’re in by helping to generate the jobs and economic growth we need to secure the recovery and enhance our competitiveness in the globalised world economy.
And we have made clear our determination to put rail at the heart of our transport strategy and to reform the way the railways are run so they work better both for freight customers and passengers.
Now I know the job of rail minister isn’t easy at the best of times, certainly not during the age of austerity
But I look forward to working with you here today and the rail freight industry as a whole, as together we seek ways to address the many difficult and demanding challenges we will face in the months and years to come.
I am sure your industry will be equal to the challenge.