Rail Freight Grants (Hansard, 27 January 2003)

Lord Berkeley
My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In doing so, I declare an interest as chairman of the Rail Freight Group.
The Question was as follows:
To ask Her Majesty's Government whether, in cutting new rail freight grants from over £50 million this year to zero for 2003–04, the Strategic Rail Authority is complying with its purposes under 917 Sections 205 and 207(2)(f) of the Transport Act 2000 to promote rail freight and "to enable persons providing railway services to plan the future of their businesses with a reasonable degree of assurance".

§ Lord McIntosh of Haringey
My Lords, the Strategic Rail Authority is acting in a manner entirely consistent with its purposes under the Act.

Lord Berkeley
My Lords, I am grateful to my noble friend for that Answer. Is he aware that, apart from affecting seriously business confidence in the industry, it is estimated that cutting these grants is likely to put 5 million more lorries a year on the roads? How is that in line with the Government's 10-year plan to reduce congestion and transfer more freight from road to rail?

§ Lord McIntosh of Haringey
My Lords, I believe that we should put this issue in context. The budget of £40 million for freight facilities grant and track access grant has become exhausted for this year. The Strategic Rail Authority has said that, until about the end of this year, no more applications which have not been contractually committed will be entertained. The advantage of doing that, and the purpose of doing so in relation to the purposes under the Transport Act 2000, is to avoid wasted effort and expense by bidders and, at the same time, to honour existing contractual commitments. In the context of a £33 billion budget over the 10-year period and virtually a £12 billion budget over the period of the current spending review, that does not seem to me to bring about the kind of conclusions envisaged by my noble friend Lord Berkeley.

§ Lord Bradshaw
My Lords, does the Minister share my concern about conflict of interest where large sums of public money are expended on the railway, mostly in the interests of train services operated by Virgin Trains? Does he agree that the fact that the chairman of the Strategic Rail Authority, his deputy and the rail regulator were all involved in that deal raises questions, and what does that mean for the rest or the railway, which will get virtually nothing?

§ Lord McIntosh of Haringey
My Lords, I believe that if the noble Lord, Lord Bradshaw, is to make accusations of conflict of interest, he had better do so other than with the benefit of parliamentary privilege. This is not a matter for me to comment on. He will know that the balance between expenditure on passenger services, which is what I believe he is referring to, and expenditure on freight services has been greatly affected by the freight charging review introduced by the rail regulator, to whom he referred, in October 2001. That has already halved the access costs to freight operators. The £500 million extra cost has been paid for by the Strategic Rail Authority in its grant to Network Rail.
If the substance behind the noble Lord's question is the balance between passenger and freight expenditure rather than accusations of conflict of interest, then I do not believe that he has any grounds to go on.

§ Lord Lea of Crondall
My Lords, I return to the Minister's reply to the supplementary question of my noble friend Lord Berkeley concerning the relationship of this matter to the 10-year plan. Can we infer from the Minister's reply that the Government are still committed to the 10-year plan? In particular, can we infer that the figure of 80 per cent for growth in rail freight provided for within the 10-year plan is still government policy and that the Government are committed to achieving that?

§ Lord McIntosh of Haringey
My Lords, the Government are, indeed, committed to their 10-year plan. As I have already said to the House, a full review of that will take place within the next 18 months. As to the immediate future, it is a little difficult for me to comment because the Strategic Rail Authority will produce its strategic plan only this week, on Thursday, 30th January.

§ The Lord Bishop of Hereford
My Lords, if certainty and predictability are good arguments for maintaining the Barnett formula, can the Minister tell us why they are not equally good arguments for maintaining rail freight grant where the ability to plan ahead is essential if businesses want to make the transfer? Furthermore, if he is not persuaded that the legal or business arguments are decisive in this case, will he agree that the environmental arguments should be and that the transfer of freight from road to rail is of enormous environmental importance? It is a policy to which the Government are committed. Will they not make an exception in this case to enable the grants to continue? Can he also confirm that, even if the grants are not to be continued in England, they will be continued in Wales and Scotland?

§ Lord McIntosh of Haringey
My Lords, I believe that the thrust of the intellectual argument follows the same course in both Questions. Certainty and ability to plan are good things. That applies to the Barnett formula and to the action of the Strategic Rail Authority. The authority said that it has no money for new applications under the freight facilities grant or the track access grant this year. Therefore, it said that time and money should not be spent in producing anything now but that thought should be given to submitting applications towards the end of this year as money will be available next year.
However, that is against the situation where tonnage of rail freight has increased over the past 20 years or so from 17.6 billion tonne/kilometres in 1980 to 19.4 billion tonne/kilometres in 2003. The commitment to the extension of rail freight—this is the environmental argument—is still as strong as ever.

§ Lord Faulkner of Worcester
My Lords, is it not the case that, when Mr Bowker took over as chairman of the Strategic Rail Authority, the West Coast Main Line modernisation plan was in such disarray that there was no prospect of that line carrying even existing levels of freight in the future? It is only because 919 of the way that Mr Bowker and his team have rescued that project that it is now able to plan for growth in freight in the future.

§ Lord McIntosh of Haringey
My Lords, Mr Bowker and the Strategic Rail Authority inherited from their predecessors and from Railtrack not only a bow wave of renewals, which was inevitably necessary after Hatfield, but, as my noble friend Lord Faulkner said, also a whole series of projects with unclear specifications and poor project management. The West Coast Main Line was a very good example of that. Happily, not all projects are like that. I refer noble Lords, for example, to the Channel Tunnel Rail Link.