Rail Freight Group

Railways Bill issues

January 2005

This paper summarises the issues of concern for freight in the Railways Bill, currently proceeding through the Chouse of Commons.

Purpose of Bill

The main purpose of the Bill is to enable the Government to keep a closer hold on expenditure on the railways, to abolish the Strategic Rail Authority and to transfer the responsibility for railways safety from the HSE to the Office of Rail Regulation.   Network Rail will take on more responsibility for the infrastructure.

The Bill follows the Rail White Paper published in July 2004 in which the Government recognised the inherent private sector status of rail freight and committed to providing the necessary environment and comfort to the rail freight industry for long term investment:

‘Rail freight plays an important part in the nation’s logistics. To compete effectively with road haulage, freight operators need certainty about their long-term access rights and what they will cost. The Government will therefore ensure that long-term access agreements are put in place to provide the stability needed to secure commercial contracts and the ORR will facilitate this. In addition, a group of key routes will be identified on which freight operators will have more assured rights of access, for which an appropriate price will be set by the ORR.â€�

Thus, we have an infrastructure manager and passenger operators increasingly controlled, directly and indirectly, by Government, alongside which a private sector freight operations must co-exist.

What rail freight needs in the new structure

Some of the issues under this section do not require legislation and are being dealt with through a number of working groups under DfT or ORR chairmanship.  These include:

- rail freight needs certainty of access to the network to support long-term investment.  The train operators have existing contractual rights to train paths; we are seeking to ensure through the ORR that capacity for freight growth is also ‘ring fenced’ against the incursions of passenger demand;

- secondly, investment in the industry must be made as simple as possible, with Network Rail being supportive and taking on a reasonable amount of risk;

- finally, track access charges for freight, although not currently at risk, are of concern in the future, largely because of the variable element of charges being required to be allocated to specific passenger routes.    Freight, although it pays the marginal element of the variable cost, maybe affected by such changes

The Railways Bill

Some of the changes proposed in the Bill are of concern to freight, and many are consequential to the abolition of the SRA, and consideration of who will do what the SRA currently does.

However, because this Bill is so much focused on passenger performance and specification of passenger services by the Secretary of State, freight is hardly mentioned, and some of the duties and obligations on the S of S, and latterly the SRA, to encourage freight as well as passenger traffic may be lost in the new wording. 

We continue to believe that, in the present state of the industry, the Government needs to continue the role undertaken by the SRA in setting strategies that reflect the needs of freight, to promote the use of rail freight and ensure that it is able to invest and operate with long term confidence, as set out in the Rail White Paper.

Clause 1. Abolition of the SRA. 

Some SRA responsibilities will transfer to the DfT, some to Network Rail, and some will cease altogether.   Clarification is required as to where functions such as strategic planning, land use planning issues, ownership and sale procedures for BRB land, will reside.

The duty on the S of S and SRA to promote freight (and passenger) traffic

The duty on the Government (S 4 of 1994 Railways Act) to promote the use of the railways for the carriage of passengers and goods appears to remain in place.   This duty was hard fought and won by the Rail Freight Group in debates in the Commons at that time and its retention remains fundamental to the ongoing use of the network to rail freight.

This duty was expanded upon in the Transport Act 2000 which sets out the purposes of the SRA:

‘to promote the use of the railway network for the carriage of passengers and goods, to secure the development of the network, and to contribute to the development of an integrated system of transport of passengers and goods’ (S 205)

These parts of the 2000 Act are repealed in the present Railways Bill.  We argue that, it they were necessary in 2000, they are necessary now, and should be reinstated but by putting duties on the S of S instead of the SRA.

In the present Bill, the only duty of the S of S is to ‘promote improvements in railway service performance’ and ‘otherwise to protect the interests of users of railway services’. This is useful to ensure that the passenger trains run on time, but we would wish to see confirmation that it applies to both passenger and freight, as in:

‘promote improvements in railway service performance for both passenger and freight customers’,
‘otherwise to protect the interests of users of railway services, both passenger and freight.’

Finally, since Network Rail’s role is set to increase, and its current attitude to freight is not always positive, it will be essential for the agreement between the S of S and NR to include the above duties in respect of freight.

Clauses 3(8) (d) and 5 - Strategies

There is reference to strategies being prepared by the Welsh Assembly and Scottish executive, but no reference to strategies for railways in England. 
This is surprising; if strategies for the railway were necessary in 2000, and the SRA subsequently produced some good ones, why are they no longer required in England now?   We suggest that the S of S should have the same duty to prepare strategies for the railways in England, modelled on S 206 of the 2000 Act which states that ‘the SRA should formulate strategies in furtherance of its purposes and, in particular, one relating to services in various parts of Great Britain for the carriage of passengers and goods by rail by way of the Channel Tunnel.’   Substitute S of S for SRA!

We believe that these words, suitably amended, should be included in this new Bill as putting an obligation on the S of S to formulate strategies.  The same reason applies as above - as it is, the Scottish Executive and the Welsh Assembly may produce strategies but there is nothing about rail strategies for England (or the whole of the UK)

Who will do what the SRA currently does for freight?

Below is a summary of current SRA activities for freight.  Even though it is in the private sector, it needs support or sponsorship inside the Government box, otherwise it will get totally submerged under a weight of government controlled passenger issues. 

Getting the Bill changed

The Bill will complete its Commons stages by the end of January.  It will then move to the Lords, where every amendment is discussed.   So the important thing is to lobby ministers, as well as individual peers to put down amendments, providing as many quotes and arguments as possible to be used in support of the arguments.

Tony Berkeley

Current SRA Freight activities
1.  To propose to Government the contribution rail freight can and should make to overall transport policy, economic, environmental and public policy objectives. This process led to the 80% target and the £3.4 billion budget set in the 10-year plan.
2.  To devise a strategy to facilitate delivery of Government’s objectives for rail freight. Clearly a statutory function for the SRA and one on which it delivered
3.  To develop incentives, revenue and capital support programmes which both represent vfm for Government and ensure the market delivers optimal modal split given that currently relative prices do not reflect external costs and benefits.
4.  To develop a programme of vfm infrastructure investment to maintain existing rail freight, support the growth of rail freight and improve its competitiveness. SRA programme included a fund for small schemes to improve performance and operational effectiveness, gauge enhancement on a core network and capacity enhancements at bottlenecks and a fund to make opportunistic enhancements alongside other projects.
5.  To provide definitive information about the potential for rail to move freight associated with specific development such as ports and inland distribution / warehousing complexes taking into account market, economic factors and network constraints. This kind of information essential to Planning Inquiries. Requires a body of expertise encompassing both technical and economics and experience of the sector.
6.  To ensure that sites of unique strategic value in BRB and Network Rail ownership are not disposed of for non-rail uses
7.  To ensure that rail freight - both existing and potential - is taken into account in the planning of the network and the passenger timetable. This took up a great deal of time, energy and expertise within the SRA as the knowledge required is specialist and those responsible for passenger franchising and network development are often ill-informed and un-interested in rail freight which is regarded as different and a nuisance. West Coast Main Line strategy is a case in point. SRA staff together with FOCs had to be fully engaged in the process to identify a balanced outcome.
8.  To maintain an expert dialogue with FOCs to engender confidence, ensure needs of private sector operators and investors are understood and to encourage FOCs to deliver Government as well as commercial objectives.
9.  To provide expert advice to the Regulator to assist in the determination of access charges, allocation of capacity, regulatory matters such as network code, access agreements etc… so he can carry out his job in accordance with his statutory duties. This became very important after the ORR disbanded its own freight department. SRA role was essential to provide an objective view (as opposed to partisan view put forward by the FOCs themselves)
10.  To promote rail freight to the wider transport industry via eg Freight Quarterly, railfreightonline, seminars etc…
11  To manage Government obligations with respect to Channel Tunnel and develop an international strategy