Peer review: John Smith
Managing Director, GB Railfreight
A recent analysis by KPMG found that rail freight moves over £30 billion worth of goods per year, generating more than £1.5bn of economic benefits for UK plc through improved productivity and reduced congestion.
The rail freight industry’s ability to maintain this level of contribution to the UK’s economy clearly needs to be supported and Philippa’s article quite rightly draws attention to what has long been suspected as the ‘hidden’ high levels of subsidy received by HGVs.
It has long been my instinct that road is overly subsidised compared with rail and that this has a damaging impact on our ability to compete. But in order for us to establish what a fair playing field for subsidies would look like, there needs to be more transparency when it comes to financial support for road freight.
It is within the Office of Rail Regulation’s remit to ensure cost transparency for the railways, and in this regard we are leaps and bounds ahead of the rest of Europe.
With the restructuring of the Highways Agency and the ORR’s new role in road network management, there is an opportunity to apply the same principles to road freight to give us a better understanding of what the subsidy gap looks like in order to carve a path forward.
But I would go further. As well as a fair playing field for subsidies, we also need to address the problem of capacity on the rail network.
Rail freight is being marginalised by the dramatic increase in passenger services being put forward by the Department for Transport in its franchise proposals. But the Government must appreciate that writing more and more trains into passenger franchise agreements requires parallel investment in infrastructure, in order to help retain freight capacity. This investment must urgently and strategically address the capacity constraints on the network on a key route basis.
The Midland Main Line electrification is an example where 50 years of planning in the Leicestershire quarries has led to an enormous growth in demand for rail freight, which requires parallel investment in Network Rail infrastructure.
F2N is another example of a critical piece of infrastructure investment for the industry, allowing us to support the growth of intermodal traffic on rail, as against road in and out of the Port of Felixstowe. But it is also a good example of where we need to see a joint road and rail policy, where investment in the A14 and the F2N corridor is joined up.
So, while I recognise the damaging impact of road subsidies on our industry’s ability to grow, we need to urgently see the prioritisation of investment in certain key corridors - such as Birmingham-Nuneaton - in order to relieve the capacity constraints that are putting the brakes on our ability to compete with road.
