Budget 2024: Little to cheer for Rail freight in budget

There was little for the rail freight industry to cheer for in the latest budget, with a freeze in fuel duty bolstering road haulage ahead of greener modes.

Alongside the fuel duty announcement, which was the 13th year in a row that it had been frozen, infrastructure upgrades which some in the sector had hoped would be given the green light were not announced, including the Ely Junction and rail electrification at terminals across the country, including at the London Gateway.

Chief Executive of GB Railfreight John Smith said that the decisions made in the budget were not compatible with the government’s ambitions.

“One of the unintended consequences of this policy is the continued subsidisation of high-carbon road freight when greener, more sustainable options exist. This is not compatible with the government’s stated aim of advancing the decarbonisation of the UK’s supply chains.” Smith commented.

This view was backed up by Andy Bagnall, Chief Executive at Rail Partners, who said rail freight was ready to invest.

“Rail freight operators want to invest to help decarbonise supply chains, but the government must help create a more favourable environment for growth.

“There needs to be a level playing field between different modes of freight transport so that freight customers aren’t priced out of making the right decision for the environment by rising rail costs compared to road haulage.”

The decision on the fuel duty freeze has meant that the first budget delivered by the new government has keep the cost differential between electric traction and fossil fuels the same. Smith now wants to see further support from the government.

“While we welcome the package of reforms to strengthen UK industry, additional policy support is essential to ensure that the government’s target to increase rail freight volumes by 75% by 2050 is met.”

Away from the fuel duty freeze, the Chancellor did not find room for funding of freight infrastructure upgrades, with many of them having to wait for the spending review in the Spring. Julian Worth, Rail Freight Forum Chair at the Chartered Institute of Logistics and Transport (CILT UK) said that much needed to be answered regarding infrastructure.

“Extending HS2 to Euston, whilst essential and welcome, is only half the story. At least as important for the British economy is sorting out the mess left by the last Government at the interface between HS2 and the West Coast Main Line in Staffordshire.

“If nothing is done, by the end of this parliament the country's main economic artery will be clogged and facing a thrombosis. At the very least, a new link needs to be built to avoid the severe pinch point at Colwich, near Stafford.”

“We look for this and a number of much smaller key freight schemes, which would deliver major economic and growth benefits, to be addressed in the Spending Review next Spring.”