HC Deb 12 February 2001 vol 363 cc130-8

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Sutcliffe.]

10.29 pm
Mr. Kelvin Hopkins (Luton, North)

I compliment the Government, the Under-Secretary of State, Department of the Environment, Transport and the Regions, my hon. Friend the Member for Streatham (Mr. Hill), and his ministerial colleagues on their positive and constructive approach to rail freight. They have shown that they believe that rail has a significant and growing role to play in freight transport in Britain, which is most welcome. For many decades, Governments gave little serious attention to rail freight. It has been the poorest of poor relations in the transport fraternity, while the development of road transport has dominated departmental thinking and grown at an extraordinary rate.

Rail passengers have been the Government's and industry's prime concern, perhaps understandably because they have votes and freight containers do not. As a daily rail commuter, I want a first-rate passenger service, too. Sadly, we have seen in recent weeks that the transportation of people has had its own problems. Those, too, seem set to continue. Our Government have, however, recognised that increasing the amount of freight carried by rail is important for the future and that roads alone cannot take the whole strain of ever-increasing freight volumes. Roads will continue to have the major share of freight traffic and it is unrealistic to imagine that rail will replace road as the primary freight mode. However, the proportion taken by rail should be substantially increased.

I wish to raise three concerns. First, the Government's targets for rail freight are too modest. Secondly, current investment in rail freight is too low, even to achieve the Government's modest targets. Thirdly, Railtrack is not taking rail freight seriously in any case, believing, I suspect, as many have before, that rail freight is inherently uneconomic. Rail freight is commercially profitable elsewhere in the world, even over quite short distances, and can be so in Britain with the right investment.

In their 10-year plan for railways, the Government have established a target of increasing rail freight by 80 per cent. over that decade. That is 8 per cent. per year in simple terms and equivalent to 6 per cent. compound annual growth. That must be set against predicted annual growth in total freight traffic, which would mean that the proportion of freight carried by rail would rise from 7 per cent. to around 10 per cent. A rise of 3 per cent., even if achieved over that 10 years, would still be too small and shows that 80 per cent. of not very much is still not a lot. The Government should therefore raise their sights and set a considerably higher target for rail freight over the next 10 years.

There are a number of reasons for that. The road system will not be able to cope with the likely volumes of freight that we should anticipate for the future. Indeed, the roads have difficulty coping now. If we wish to develop an efficient freight transport network, we must make greater use of rail. The freight transport industry should be developed as a coherent whole, with the full support and co-operation of hauliers and railway operators. Co-operation, not competition, must be the way forward, with rail providing a service to hauliers tailored to hauliers' needs.

Another major reason for increasing rail freight more substantially is that large parts of the economy, and those that are faring less well, will need better freight transport links with the continent of Europe, in particular, if they are to prosper. The north, the midlands, Scotland and Wales must have reliable commercially economic freight links with Europe if they are not to suffer because of their geographical peripherality. Choked roads and unreliable freight links to the ports and channel tunnel will be an increasing disincentive to investors in the English regions and in Scotland and Wales. However, new freight links providing regular and dependable services, especially through the channel tunnel to the continent, could throw an economic lifeline to the industrial heartlands of Britain.

Hauliers tell me that what they really want is a dedicated lorries-on-trains service through the channel tunnel. Indeed, I have been informed this weekend that one haulier could use one whole train each way between Germany and Britain every day.

A less obvious reason for increasing the proportion of freight carried by rail is the enormous cost of road repairs and the congestion that they cause. The Under-Secretary of State will, I am sure, be familiar with the fourth power law linking axle weight to road wear. That states that road wear is proportional to the fourth power of axle weight. Thus, doubling axle weight increases road damage by 16 times and tripling axle weight increases it by 81 times. A lorry axle weight may be several times that of a motor car, causing many times the amount of road wear. Lorries have to travel on roads, but shifting thousands of them on to rail every day will be beneficial in public expenditure terms as well as environmentally.

Road repairs cost the Exchequer many millions every year, as well as causing bottlenecks, congestion and delays on the trunk road network, bringing frustration to hauliers and car drivers alike. EWS, the rail freight company, recently drew attention to a Confederation of British Industry estimate that congestion costs the economy £15 billion a year. Taking a larger proportion of road freight off the roads and putting it on to rail would save considerable sums in roads expenditure and save time, fuel and costs for road hauliers.

My second concern is that investment in rail freight is inadequate to meet even the Government's own targets. It seems clear now that the existing strategic rail network is going to have its work cut out simply coping with future growth of passenger traffic. I understand that there are significant and worrying problems on the west coast main line with capacity, signalling and investment needs. Passenger traffic will take pride of place and crowd out freight—especially the serious, long-distance, heavy freight, and most notably international freight using the channel tunnel route.

Writing recently in "Rail Freight Group News", my noble Friend Lord Berkeley said that there is already competition between freight and passenger traffic for existing rail capacity. It is time, he says, to face up to the challenge of demand for track space exceeding supply. In any case, high-speed passenger services and much lower-speed freight traffic do not mix. Freight trains have to wait for slots or travel at night. That is not the type of service that will be attractive to hauliers. In Germany, an experiment was tried recently sending freight trains on high-speed passenger lines at night, but it was later abandoned as a failure.

There is also the gauge problem. It is currently not possible to carry full-size lorries on the backs of trains on the British rail network. A lorries-on-trains service would need new, purpose-built lines. That is already happening on the continent of Europe, notably in southern Germany, and a dedicated freight line is being built from Holland to Germany. The specific investment difficulties should be set in the context of our historically low levels of railway investment. The French and Dutch have specifically invested between two and three times as much in railways as we do in Britain each year, and—goodness me—it shows.

I am informed that the amount of track repairs and modernisation currently being undertaken by Railtrack, even in the current crisis, is barely more than the normal amount of track work that was undertaken in the days of British Rail. If we are serious about rail freight, we have to think much bigger and be much bolder. According to the Rail Freight Group, Railtrack cannot even accommodate today's rail freight on the west coast main line, north of Crewe, once the Virgin tilting train timetable comes into force. It might even sell off all the additional 42 paths south of Rugby to passenger train operators.

My third concern, therefore, is that I am unconvinced about Railtrack's commitment to rail freight. There are optimistic noises in public, but an article by Railtrack in this month's "Railfreight Handbook" is significant. It states: Achieving the government's target of 80 per cent. growth over the next 10 years would"— note the conditional— be our greatest success … It can be done! That betrays a lack of confidence that even the Government's modest 10-year target can be achieved. With more time, I could provide more statistical and anecdotal information, and I shall do so later, in writing, to my hon. Friend the Minister.

It is clear that what Britain needs is new, dedicated freight line capacity providing full-scale lorries-on-trains services between strategic centres in Britain and the channel tunnel. Such a scheme has been proposed, and my hon. Friend will not be surprised when I refer him to the proposals made by Central Railway. That scheme will provide a spinal link from the north of England, skirting London and then on to the channel tunnel. Perhaps an aorta might be a more appropriate metaphor.

Mr. Stephen Pound (Ealing, North)

Will my hon. Friend give way?

Mr. Hopkins

I really have very little time, and I have had only one notice of an intervention. I apologise to my hon. Friend.

The line would make use of old Great Central track bed for much of its length and would link Liverpool with Lille in northern France. It would provide a full-scale lorries-on-trains service, and Central Railway proposes an initial four trains an hour in each direction. It is proposed to build major loading facilities on the route in south Yorkshire, the midlands and close to London, and it will make use of the currently closed Woodhead tunnel through the Pennines. Later extensions to other parts of Britain could be developed.

If hauliers could load their lorries, swap bodies and containers in the north and then guarantee a time of arrival in northern France. that would bring new life to our industrial heartlands and integrate them more fully in the wider European economy. The Central Railway service would also provide for double-stacked containers, which is effectively two train loads in one train's length.

The scheme is compelling in its logic and would transform rail freight in Britain. My hon. Friend will understand that, in my own best of all possible worlds, I would like to see such schemes developed in the public sector. However, the modern fashion for private development fits entirely with Central Railway's proposals. It is a wholly commercial and commercially viable scheme that will require no Government funding or underwriting.

Mr. Philip Hammond (Runnymede and Weybridge)

Whatever the merits or demerits of the freight-only railway, does the hon. Gentleman agree that the position in which my constituents—and those of my hon. Friend the Member for Beaconsfield (Mr. Grieve), and many others—are placed is wholly unacceptable? Their properties are blighted by a scheme proposed by a company with very little in the way of financial substance, yet the company shows no inclination to bring its proposals forward for any formal scrutiny in the short term. That leaves my constituents in an impossible situation.

Mr. Hopkins

I have reminded the hon. Gentleman in previous debates that Central Railway has proposed a generous property compensation scheme that was praised by the Department of the Environment, Transport and the Regions. Clearly, building any new infrastructure of this kind has effects on the people who live close by. That is inevitable and it would have to be faced by the Government.

The scheme would be linked into the rest of the rail network and would take freight traffic from elsewhere, too. It would make the channel tunnel truly commercially viable and take up the vast amount of spare capacity that the tunnel currently has. Ten years ago, Eurotunnel forecast that there would be 22 million passengers and 11 million tonnes of freight using the tunnel each year. It has actually achieved only 7 million passengers and less than 3 million tonnes of freight less than a third of predicted levels. Boosting passenger numbers will be difficult, so there is a massive capacity for freight growth if only there were an effective delivery system on the British side. A rail freight link to the north of London carrying lorries on trains must be the answer.

Central Railway will take 8,000 to 10,000 lorries off our motorways every day by 2010. The scheme is vital to Britain's future infrastructure needs. If such a scheme had been proposed in France, Germany, Spain or Holland, I am sure it would have been built by now. Central Railway will make a major contribution to Britain's future economic success and it must not be allowed to fail.

There are other important factors in the case for the scheme. European freight is carried on lorries and Central Railway's proposal is the only scheme that meets the needs of hauliers. The existing UK railways cannot take lorries, and there is ample evidence that Central Railway's proposal is workable. I am informed that Central Railway's construction costs are along the lines of the TGV and the channel tunnel rail link phase 1. It has also been endorsed by SNCF's engineering arm, which believes that Central Railway's operating plan is realistic.

Lorries-on-train operations are a daily practicality across the channel. Central Railway is designed to be compatible with continental freight train standards and works at a European level, fitting in with EU operational objectives. Cross-channel freight is doubling every 10 years, growing much faster than the domestic freight market. Without Central Railway, almost all the additional lorry journeys will be by road, many of them on the M1 passing through my constituency of Luton, North.

If we are serious about raising the proportion of freight carried by rail and about regenerating the industrial regions of Britain, we cannot afford to let this opportunity slip and see the road arteries of Britain clogging up as the years go by, causing serious damage to Britain's future economic health and prospects.

Mr. Dominic Grieve (Beaconsfield)

Will the hon. Gentleman give way?

Mr. Hopkins

I am sorry, but I have too little time.

Over a century ago, Sir Edward Watkin had a vision of a channel tunnel linked to the great central railways. Sadly, he became ill and died before he could see his vision come to fruition. I ask my hon. Friend the Under-Secretary to give his most serious attention to the Central Railway scheme and to ponder the thought that if he and our right hon. and hon. Friends lend their support to the Central Railway scheme, they could be credited with having made possible a venture of historic proportions.

10.43 pm
The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Mr. Keith Hill)

I congratulate my hon. Friend the Member for Luton, North (Mr. Hopkins) on securing this debate. I also thank him for his courtesy in giving me notice of the key issues that he wished to raise in his speech. The issues that he raised in respect of the challenge facing the rail freight industry are of great interest to the Government. They are precisely what we are addressing through the implementation of our integrated transport policy.

The Government inherited a railway system that was suffering from years of under-investment. It had been fragmented by privatisation and had no framework for the strategic planning of the industry as a whole. It is clear that mistakes were made in the privatisation process. Since 1997, we have been working to turn the industry round, and there have been tangible results in that time. After many years of decline, the amount of freight moved by rail volume has risen by nearly a quarter, and it continues to grow. Much of that has been due to the considerable investment by freight operators. They have invested in new rolling stock and facilities, they are actively pursuing new markets and new operators are emerging. The Government are matching that commitment, as I shall explain.

We are committed to more freight on rail as part of an integrated sustainable freight transport distribution system. We have set out in our 10-year plan for transport an unprecedented investment programme to enhance the capacity and capability of the network. Through the Transport Act 2000, we have established the Strategic Rail Authority with a remit to promote rail freight. We have also revitalised the freight grant regime to encourage companies to transfer more freight off the roads. We have made it clear that we wish to see greater investment in the railways to cater for growth in both passenger and freight traffic over the next decade. We have asked the SRA to take forward the detailed plans for applying that investment. As a first step, it will shortly produce its strategic agenda.

The Transport Act 2000 marks a major step forward in delivering the Government's vision for transport in this country, and provides for the development of an integrated approach to the transport of passengers and freight. The shadow Strategic Rail Authority had already started discussions with the industry about its plans for rail freight.

As well as setting up the SRA proper, the Transport Act provides a framework for influencing the behaviour of key industry players, such as Railtrack, in the public interest. For example, it will allow the SRA to apply to the Rail Regulator for directions in respect of railway facility enhancements. This new power will create the right to compel Railtrack, and other rail facility owners, to carry out investment and enhancement schemes on terms determined by the regulator and not by Railtrack or the other owners.

The SRA has also taken over from my Department the responsibility for freight grants. Indeed, the Government have made more than 130 grant offers since 1997, including a record 47 grants during the last financial year. Grant payments will soon reach £100 million, diverting close to 40 million tonnes of freight from Britain's roads.

We want to make even more use of the money available to get freight on rail and inland waterways, where that is justified by the environmental benefits. The money is there to be used if the industry comes forward with the right projects. We have established the Strategic Rail Authority to ensure that development of rail freight becomes part of the strategic management of the network. The SRA is already undertaking work to improve the grant regime and to develop its strategic plan.

The SRA's freight strategy will include modernisation and increased capacity on key routes such as the west coast and east coast main lines, upgrading of freight routes to major ports such as Felixstowe and to the channel tunnel, the elimination of strategic bottlenecks on the rail network, better integration with other modes through investment in new freight interchanges and investment in rolling stock.

My hon. Friend mentioned Central Railway's proposals as a possible solution. Of course, I am aware that he has supported the scheme over many years. I confirm that the company has informed my Department of its wish to abandon its proposed Transport and Works Act 1992 application to gain approval for its scheme and has instead requested the Government's support for a Bill.

It must be for the company to decide whether it wishes to allow its proposals to be examined openly under the TWA procedure. That is the normal means of considering infrastructure projects falling within the scope of the 1992 Act. It would not preclude the possibility of the Government promoting a hybrid Bill if we considered that to be an appropriate means of authorising a scheme. However, it remains the case that Central Railway has not submitted its proposals. Bearing that in mind, I cannot give any assurance now that the Government would wish to sponsor a Bill to support the project. It is, of course, open to any hon. Member to propose a Bill in support of a private scheme.

Mr. Hammond

Will the hon. Gentleman give way?

Mr. Hill

Very briefly.

Mr. Hammond

The Minister's right hon. and hon. Friends have said in the past that they cannot pass comment on the Central Railway scheme because of the possibility of having to judge it in a quasi-judicial role if it were the subject of a TWA application. The company has made it clear that there will be no TWA application and that it is seeking the Government's political support for the scheme. When and how will the Government make their view known to the House of Commons and to the wider public?

Mr. Hill

I was coming to that. We have asked the SRA to review the Central Railway proposals, and it goes without saying that, until we have seen that, it would be both inappropriate and impossible for the Government to take a view.

I am aware that Central Railway maintains that its project is to be an entirely privately funded scheme and that it is economically viable, but my hon. Friend the Member for Luton, North will appreciate that it is vital that all the technical and commercial aspects are examined carefully for a proposal of this scale and complexity. That is why the SRA is initiating a review of Central Railway's proposals.

My hon. Friend is aware that the scheme has, albeit in a different form, been put to the House before, when it was overwhelmingly rejected. If the Government are to consider supporting a Bill, it is right that the SRA should seek to learn more about the proposals before taking a view. I have outlined the basis of the Government's commitment to rail freight and the SRA's role in helping to achieve the industry's objectives. Any review that the SRA undertakes should be carried out in the context of our 10-year plan and the authority's own strategy for freight. I shall follow the SRA's review of Central Railway's proposals with interest.

New facilities require land and the support of the local community. That is why, we published guidance last March for local transport plans, which looks to local authorities to take account of opportunities for a greater use of rail freight in their areas. In their land use planning, we will expect authorities to protect sites and routes that could be important in the development of new infrastructure, to promote opportunities for rail connections through industrial sites and to ensure that disused transport routes with the potential for reuse are not unnecessarily severed.

In December, we announced details of the local transport capital settlement in response to the transport plans submitted by local authorities in July. We are allocating £8.4 billion of public investment over the next five years to be spent locally on projects identified at local level. A good proportion of that funding will be spent on public and integrated transport and smaller schemes, which may include developing facilities for rail freight.

I am encouraged by the enthusiasm that local authorities have shown in considering the role of rail freight in their local transport plans. Underpinning all that is the 10-year plan. We are planning for private and public expenditure of £60 billion on the railway over the 10-year period. During that time, we envisage a further 50 per cent. growth in passenger journeys by rail, an 80 per cent. increase in freight volumes and a further significant increase in rail's share of the freight market to around 10 per cent.

The £60 billion includes capital investments of £38 billion for renewal and expansion of passenger infrastructure, £7 billion for the replacement and expansion of the passenger rolling stock fleet—around 6,000 new vehicles—and £4 billion for investment in additional freight capacity. I seriously question my hon. Friend's claim that our rail freight targets are modest. The Government are committing huge sums of investment to that development.

Mr. Grieve

Does the Minister agree that any successful freight scheme must be compatible with the expansion of passenger use, which the Government are greatly promoting? For instance, if the Central Railway scheme resulted in an inability to use the Chiltern line in my constituency for passenger commuter services, which have expanded and doubled over the past few years, that would be a strange environmental benefit as it would put thousands of people into their cars and on to the roads who currently use the train.

Mr. Hill

As I am wont to say, I have some hinterland on this matter. If the hon. Gentleman took the trouble to consult Hansard for the debates Central Railway in 1995—the previous Parliament—he would find evidence of that. Under the TWA proposal or the hybrid Bill proposal now being considered by the SRA, it is incumbent on the Government to adopt an entirely neutral stance at this stage.

Nearly half the £60 billion that I mentioned will be Government funding. We would have provided some of that money in any case: for example, £5 billion for the channel tunnel rail link; between £5 billion and £10 billion for continuing franchise support; and £1 billion for expenditure on such items as the residuary liabilities of the British Railways Board and contributions to railway industry pensions.

However, a great deal of the Government funding is new money—to halt the decline in passenger operating subsidies and to promote the biggest rail expansion programme for more than a century. We launched the new £7 billion rail modernisation fund, which will lever in substantial amounts of private capital and will provide support for both passenger and freight enhancements.

The new fund will allow the SRA and the industry together to formulate a long-term investment programme for rail—we estimate nearly £50 billion over 10 years—encompassing a range of funding mechanisms, including capital grant and debt finance. The passenger-freight split will depend on franchise replacement and on the conclusions of the SRA's rail freight strategy.

More generally, the 10-year plan provides much greater certainty as a basis for long-term investment. The stop-go attitude to investment followed by previous Administrations created a climate of uncertainty in the supply industry. Time scales for supply and payback are long, both for rolling stock and infrastructure, that stop-go approach clearly discouraged many suppliers from investing as they otherwise might have done. Clearly, that has to change.

Of course, Hatfield dented the progress that the industry had been making. Although there are lessons to be learned from the disruption over recent months, it is vital that everyone involved in the industry continues to act together to ensure that the interests of all customers are paramount. My right hon. and noble Friend the Minister for Transport is leading the rail recovery action group to maintain regular contact with the industry and to ensure that it is wholly focused on getting the railroad running normally as soon as possible. The group includes a freight representative and is scrutinising carefully the impact of the recovery plan on freight services.

I want to reassure my hon. Friend the Member for Luton, North that whatever their immediate impact, the recent difficulties on the railways will not deflect us from our long-term goal. The Government have confidence in rail freight and high expectations of it. So far, the rail freight industry has returned that confidence with investment on a scale not seen for decades—in vehicles, terminals, staff and new business, with real growth in freight volume, and with the arrival of new operators who are giving the established players a run for their money. They, too, can see that rail freight has a real future.

Question put and agreed to.

Adjourned accordingly at three minutes to Eleven o'clock.