The Minister of State, Department for Transport (Lord Hendy of Richmond Hill) (Lab)
My Lords, the Government are committed to supporting rail freight growth, recognising its significant economic and environmental potential and its critical role in the UK’s resilience. In the last year, rail freight volumes have increased by 5%. We will support further growth through a statutory duty on Great British Railways to promote the use of rail freight, and the Secretary of State will set a rail freight growth target. My officials are working through the details of the design of that target.
Lord Snape (Lab)
My Lords, I am grateful to the Minister for that response, but, while welcoming the 5% increase in rail freight over the past year, we are still a long way from the 70% which was promised in the Labour Party’s last election manifesto and which is still, as far as I am aware, party policy. Does he think the move towards that happy situation will be enhanced by the current financial regime, which means that rail freight pays every year in access charges a basic rate plus RPI, while the road haulage industry has benefited enormously from the near 14-year freeze on the fuel tax regulator? If we are subsidising any mode of transport, have we not got it the wrong way round?
Lord Hendy of Richmond Hill (Lab)
Taxation, as my noble friend well knows, is a matter for His Majesty’s Treasury, so I will not comment further on that. Access charges paid by freight for utilising the network do not currently cover the full fixed cost of operations, maintenance and renewal required. The capping arrangements which will be in place until March 2029 will save freight operators an estimated £33 million over this five-year control period. There are already schemes to discount access charges for new traffic, such as the mode shift revenue support scheme and Network Rail’s access charge discount policy. In the future, GBR will have greater flexibility to offer discounted charges.
Baroness Pidgeon (LD)
My Lords, as part of the Government’s work, will they assess the role that lorry trailers on rail between key points in the UK and Europe could play in increasing rail freight and reducing the wear and tear on our major highways from heavy axle weights?
Lord Hendy of Richmond Hill (Lab)
The noble Baroness may know that, actually, that is not a new scheme. In respect of rail freight to Europe, the Government clearly have an interest in promoting it. The Channel Tunnel has plenty of spare capacity, as does HS1. In respect of carrying lorries by rail in the UK, that has been tried before. I think it is up to the private sector freight market to develop its own flows, but the Government are there to help with access and access charges in order to get that traffic on the railway.
Lord Grayling (Con)
My Lords, I refer to my entry in the register as an adviser to Hutchison Ports. I looked carefully through last week’s announcement. I could not see anything in the Government’s plans that would deal with the bottlenecks in the system that prevent rail freight growth. Can the Minister enlighten us as to when those might be addressed?
Lord Hendy of Richmond Hill (Lab)
The noble Lord has, of course, some background in this subject, but the Government in his time were unable to invest significantly in increased access for freight, and the fiscal position has not allowed as much investment in that area as the Government would clearly like in unconstrained circumstances. Nevertheless, there are investments to be made now in the network which have been announced, such as the investments in the TransPennine upgrade and in East West Rail, which will facilitate more rail freight.
Baroness Jones of Moulsecoomb (GP)
My Lords, could we not repurpose other railways to carry more freight, because getting freight off the roads is absolutely urgent, especially in view of the climate crisis? What about repurposing HS2, when it is finished, for only freight?
Lord Hendy of Richmond Hill (Lab)
I think the first thing we need to do with HS2 is to finish it so it is a railway. This Government are working very hard to do that, as was set out in the recent announcement. When HS2 is finished, it will release capacity on the west coast main line, at least south of Birmingham, and that capacity can be used for two purposes. One is for additional passenger trains, which will enable significant growth in services, and therefore more housing development, in places such as Milton Keynes and Bletchley, and the other is to use it for more freight traffic. That is what will happen when HS2 opens.
Lord Moylan (Con)
My Lords, the Minister says that there is going to be a new use and access statement from Great British Railways, when it is established, in relation to freight, getting access to the tracks and how much people will have to pay to use them, but when is that going to be? The whole of Great British Railways is still a long way off. The Bill is nowhere. The whole process seems to be stalled. In the meantime, how can he expect the freight industry to invest and plan when it has no idea what access it is going to have to the tracks in this new regime or what it is going to have to pay for them?
Lord Hendy of Richmond Hill (Lab)
I have met the freight operators, both individually and collectively—indeed, I have met most of their shareholders—in the last six months. My current belief is that they have a very clear understanding of how the access and use policy will develop from the present policy. In the meantime, as I mentioned, the Government have at least two schemes to promote freight now. It is quite clear that, if we set an increased rail freight target, freight will be an integral part of the railway. The freight community has nothing to worry about in terms of developing its market, although it is quite difficult to fit those trains on to a constrained network, which is why we need an access and use policy to be developed from the present one in order to allow it.
Lord Krebs (CB)
My Lords, could the Minister tell us about the Government’s plans for decarbonising the rail freight sector, in line with the recommendations of the Climate Change Committee?
Lord Hendy of Richmond Hill (Lab)
The rail freight sector is, of course, a commercial sector, with commercial organisations providing power to freight trains. This Thursday, I am going to launch one of several new tri-mode freight locomotives from one of the operators, and a number of aspects of the Government’s investment plans for road and rail will allow decarbonisation of freight trains more easily than at the moment. I will be very happy to write to the noble Lord with some detail about that, so that he can understand what we are going to do.
Lord Anderson of Swansea (Lab)
Is my noble friend satisfied that there are enough incentives to encourage industry to install or improve access for freight?
Lord Hendy of Richmond Hill (Lab)
There are clearly incentives, which I have described, and, in fact, access for freight is continuing. Recently, a new rail link was built into Horton Quarry, which is in Yorkshire off the Settle and Carlisle line, and a new freight terminal at Thorney Mill, which is near West Drayton. So it is clear that developments can be made in that direction, and the discounts that I have described and the encouragement for new freight ought to be testimony to the fact that the Government are keen on that happening.
Lord Harper (Con)
My Lords, I am grateful that the Minister confirmed the 75% increase in rail freight—the target that I set in December 2023. I listened carefully to his Answer, in which he talked about the Secretary of State setting a target for GBR. Can I confirm that he is intending that Great British Railways will have that 75% rail freight increase—or more—target and will not set a lower one?
Lord Hendy of Richmond Hill (Lab)
It is a pleasure to hear from one of the many former Secretaries of State for Transport on the other side of the House. I confirm that the 75% will remain. There is no intention of setting a lower target. Of course, it has to be achieved over time, which he will know all about since he had a hand in the previous target.
Lord Spellar (Lab)
My Lords, as a mere previous Minister of State for Transport, might I put it to the Minister that 75% extremely challenging, given the very compact nature of England and the relatively short journeys that are entailed compared with many of our competitors?
Lord Hendy of Richmond Hill (Lab)
I agree that 75% is quite challenging for the island of Great Britain. The economics of rail freight work much better over thousands of miles than over hundreds of miles. However, rail freight growing by 5% last year is evidence that it can be done. The market is segmented into a number of areas such as containers, aggregates and so forth, where progress can be made. This Government are determined to allow that to happen.