House of Commons Transport Committee Freight Transport Eighth Report of Session 2007–08 Report, together with formal minutes, oral and written evidence Ordered by The House of Commons to be printed 9 July 2008 HC 249 Published on 19 July 2008 by authority of the House of Commons London: The Stationery Office Limited £24.50 The Transport Committee The Transport Committee is appointed by the House of Commons to examine the expenditure, administration and policy of the Department for Transport and its associated public bodies. Current membership Mrs Louise Ellman MP (Labour/Co-operative, Liverpool Riverside) (Chairman) Mr David Clelland MP (Labour, Tyne Bridge) Clive Efford MP (Labour, Eltham) Mr Philip Hollobone MP (Conservative, Kettering) Mr John Leech MP (Liberal Democrat, Manchester, Withington) Mr Eric Martlew MP (Labour, Carlisle) Mr Lee Scott MP (Conservative, Ilford North) David Simpson MP (Democratic Unionist, Upper Bann) Mr Graham Stringer MP (Labour, Manchester Blackley) Mr David Wilshire MP (Conservative, Spelthorne) Mrs Gwyneth Dunwoody MP (Labour, Crewe and Nantwich) was also a member of the Committee during the period covered by this report. Powers The Committee is one of the departmental select committees, the powers of which are set out in House of Commons Standing Orders, principally in SO No 152. These are available on the Internet via www.parliament.uk. Publications The Reports and evidence of the Committee are published by The Stationery Office by Order of the House. All publications of the Committee (including press notices) are on the Internet at www.parliament.uk/transcom. Committee staff The current staff of the Committee are Tom Healey (Clerk), Annette Toft (Second Clerk), David Davies (Committee Specialist), Tim Steer (Committee Specialist), Alison Mara (Committee Assistant), Ronnie Jefferson (Secretary), Gaby Henderson (Senior Office Clerk) and Laura Kibby (Media Officer). Contacts All correspondence should be addressed to the Clerk of the Transport Committee, House of Commons, 7 Millbank, London SW1P 3JA. The telephone number for general enquiries is 020 7219 6263; the Committee’s email address is [email protected]. 1 Contents Report Page 1 The Government’s approach to freight transport 3 An integrated freight strategy 5 2 The Government’s contribution to investment in infrastructure 7 Infrastructure requirements 7 The Sustainable Distribution Fund 8 The productivity strand of the Transport Innovation Fund (TIF) 10 International gateways 11 3 Capturing the costs of freight transport and facilitating modal shift 14 Appropriate pricing 14 Road haulage 15 Air freight 17 Rail freight 18 Network Rail 21 Inland waterways and coastal shipping 22 4 Balancing the needs of the freight industry and wishes of the wider public 25 Conflicts between passenger and freight services 25 Out of hours deliveries in urban areas 27 5 Freight transport and the regions 29 6 Freight transport and the European Union 32 European Commission freight initiatives 32 Competition for air freight between European airports 34 The road haulage industry 34 7 Conclusion 38 List of recommendations 39 Formal Minutes 44 Witnesses 45 List of written evidence 46 List of unprinted evidence 47 List of Reports from the Committee during the current Parliament 48 3 1 The Government’s approach to freight transport 1. Freight and logistics—the flow of goods into, out of and around the country—play an important part in meeting all four of the Department for Transport’s strategic objectives— to sustain economic growth through efficient transport networks, to improve transport’s environmental performance, to strengthen the safety and security of transport, and to enhance access to jobs, services and social networks. The Government recognises this but believes that primary responsibility for the provision of freight services rests with the private sector. There are, however, a limited number of circumstances in which the Government says it would normally consider intervening: • where the Government has responsibilities for provision of funding or network infrastructure; • if there is a demonstrable need for a long-term strategic planning framework; or • if the market fails to capture its own externalities—such as adverse impacts on the environment, safety or congestion—and Government action can contribute to the achievement of the Department’s strategic objectives.1 2. The Department sees its role in relation to freight transport as ensuring that goods can be moved freely, reliably and efficiently by the industry, while minimising the negative impacts (including congestion, accidents, emissions and noise) of doing so.2 The five main elements of its freight strategy are • investing in network and IT infrastructure required to support effective freight services where it is affordable and good value for money; • regulating proportionately, to minimise administrative and other burdens on industry; • increasing compliance with regulations; • ensuring a long-term planning framework that recognises the needs and aspirations of both industry and the overall public interest; and • promoting, incentivising and/or funding behavioural change where it is affordable and good value for money.3 3. An increasing amount of freight is transported within the UK and to and from the UK internationally: • Domestic freight moved increased overall by 44% between 1980 and 2006, from 175 to 252 billion tonne kilometres. The majority of the increase is due to goods 1 Ev 73 2 DfT, Department for Transport Annual Report 2007, 2007, para 9.1 3 Ev 73 4 moved by road, which increased by 79% and in 2006 accounted for 66% of all goods moved. The average length of haul for road freight has increased since 1980, by 29% to 86 km in 2006. • Goods moved by rail declined from 1988 to 1994 but has since risen to reach 22 billion tonne kilometres. Between 1994 and 2006 goods moved by rail increased by 70% and in 2006 accounted for 9% of all goods moved. Since the early 1990s the length of haul by rail has risen from around 120 km to over 200 km at present. • Domestic waterborne freight includes non-seagoing as well as seagoing traffic, although the non-seagoing traffic is a very small proportion of the total. As more freight has been moved by road, water’s share has reduced, from 31% to 21% between 1980 and 2006. Goods moved by water have the longest average length of haul—410 km in 2006. • A relatively small amount of domestic freight is moved by air but it is of a disproportionately high value. • Since 1980 UK international freight tonnage has increased by over 80%, from 251 million tonnes to 458 million tonnes in 2006. Waterborne freight dominates UK international trade and in 2006 96% of tonnage lifted was by sea, 4% by the Channel Tunnel and less than 0.5% by air.4 Figure 1: Domestic freight moved by mode: 1980 to 2006 300 250 200 Pipeline Water 150 Rail 100 Road 50 Billion tonne kilometres 0 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 Source: Department for Transport 4. The Government has established that there should be greater coherence to its freight strategy and logistics as one of its “key cross-cutting themes”.5 The Minister described the Department’s ongoing work to develop “a much clearer recognition of freight’s role — across modes—in transport strategy.”6 4 DfT, Transport Trends: 2007 edition, 6 December 2007, pp. 66, 68 and 75 5 Ev 74 6 Q 478 5 5. Others argue that the Government should take a more interventionist approach to freight transport. Professor McKinnon, Director of the Logistics Research Centre at Heriot-Watt University, told us: There is no doubt in my mind that we should not be adopting a laissez-faire approach to freight. I think that there is a strong need for strong government intervention.7 6. He argued that public intervention in the freight sector was essential—to invest in infrastructure and to incentivise best practice and the use of more sustainable modes—and that the Government has available a number of “policy levers”. It is, he says, pulling most of them, “some more effectively than others.”8 An integrated freight strategy 7. The Department published Sustainable Distribution: a strategy in 1999 and described it as “a comprehensive, integrated strategy for the sustainable distribution of goods and services in the UK”.9 The overall policy context in which the Department operates has changed significantly since then: congestion on the roads and railways has worsened, climate change has become a much more pressing concern, Railtrack and the Strategic Rail Authority have been replaced, there has been an Aviation White Paper, a Ports Policy Review and a Rail White Paper. The Eddington Study (on transport’s role in sustaining the UK’s productivity and competitiveness) and the Stern Review (on the economics of climate change) have had a fundamental effect on how we think about transport policy. Our Report on The Ports Industry in England and Wales, published in January 2007, recommended that the Government publish an updated, integrated freight plan: The Government has a fundamental responsibility to the transport infrastructure of the UK: its major roads, railways and rivers and canals. Its responsibility lies not only in the renewal and, where required, the expansion of this infrastructure, but also in ensuring that the freight that moves on it can do so easily, quickly and sustainably. To this end, the Government should develop an integrated freight plan as a matter of urgency.10 8. Our witnesses were generally supportive