Access to ports - Parliament Publications - Parliament UK

House of Commons Transport Committee

Access to ports Eighth Report of Session 2013–14 Volume I: Report, together with formal minutes, oral and written evidence Additional written evidence is contained in Volume II, available on the Committee website at www.parliament.uk/transcom Ordered by the House of Commons to be printed 18 November 2013

HC 266 Published on 26 November 2013 by authority of the House of Commons London: The Stationery Office Limited £14.50

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 Associate Public Bodies.

Current membership Mrs Louise Ellman (Labour/Co-operative, Liverpool Riverside) (Chair) Sarah Champion (Labour, Rotherham) Jim Dobbin (Labour/Co-operative, Heywood and Middleton) Jim Fitzpatrick (labour, Poplar and Limehouse) Karen Lumley (Conservative, Redditch) Jason McCartney (Conservative, Colne Valley) Karl McCartney (Conservative, Lincoln) Mr Adrian Sanders (Liberal Democrat, Torbay) Miss Chloe Smith (Conservative, Norwich North) Graham Stringer (Labour, Blackley and Broughton) Martin Vickers (Conservative, Cleethorpes)

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.

Publication 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 http://www.parliament.uk/transcom. A list of Reports of the Committee in the present Parliament is at the back of this volume. The Reports of the Committee, the formal minutes relating to that report, oral evidence taken and some or all written evidence are available in a printed volume. Additional written evidence may be published on the internet only.

Committee staff The current staff of the Committee are Mark Egan (Clerk), Farrah Bhatti (Second Clerk), Richard Jeremy (Committee Specialist), Adrian Hitchins (Senior Committee Assistant), Stewart McIlvenna (Committee Assistant) and Hannah Pearce (Media Officer)

Contacts All correspondence should be addressed to the Clerk of the Transport Committee, House of Commons, 14 Tothill Street, London SW1N 9NB, The telephone number for general enquiries is 020 7219 6263; the Committee’s email address is [email protected]

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Contents Report

Page

Summary

3

1

Introduction

5

2

Priorities for port access What are the priorities? How are priorities identified and implemented? Local transport schemes Improvement of strategic networks Conclusion Who funds improvements?

8 8 9 9 10 10 11

3

Government strategy on access to ports

14

4

Conclusion

18

Conclusions and recommendations

20

Formal Minutes

22

Witnesses

23

List of printed written evidence

23

List of additional written evidence

24

List of Reports from the Committee during the current Parliament

25

3

Summary Ports are essential to the economic wellbeing of the UK. Some 95% of UK cargo movements by tonnage is waterborne and ports collectively employ some 117,000 people. Ports large and small are affected by the quality of transport links to their hinterlands, whether that be by road, rail, inland waterways or coastal shipping. Constraints on road and rail networks in particular can limit the size of a port and its economic impact. In this report we examine Government policy on improving access to ports. Local bottlenecks are of key concern to many ports. Local government structures and funding arrangements for local major transport projects have changed significantly in recent years and continue to evolve. Ports told us that the new arrangements were complex and might not prioritise projects of strategic importance. We recommend that the Department for Transport (DfT) act as an advocate for ports, helping the sector navigate complex arrangements for getting transport improvement schemes off the ground. The department should also be prepared to challenge decisions by local bodies where they fail to prioritise improvements in port access over other, less strategically important, schemes. Government policy on who should pay for transport infrastructure relating to ports is clear in principle but confused in practice and conceptually flawed. Port operators are expected to pay for measures required to mitigate increased traffic due to port expansion. Guidance exists on when the Government should contribute to traffic measures which have wider benefits, but it has never been used. However, whereas some ports have contributed towards transport schemes to improve access, others have not. The rationale for the differing treatment of different projects is not clear. Moreover, the principle that ports are likely to be the sole beneficiaries of transport schemes which make access easier overlooks the wider economic benefits of expanding trade and reducing logistics costs that are likely to arise from improved access. In our view, there should be a presumption that significant improvements to access to ports - particularly improvements to strategic networks - will be publicly funded, because of the wider economic benefits of doing so. However, this should not preclude ports from contributing to local transport infrastructure improvements, following discussions with relevant local bodies. Simplified, new guidance should be based on these principles. We commend the department for bringing forward a new high-level strategy on ports, which encompasses the issues raised in our report. We would like to see more details of how the strategy will be implemented. In our view, prioritising the removal of constraints to port development caused by inadequate transport infrastructure should be at the heart of Government strategy on ports. We also recommend that DfT: 

give a view on whether or not port master plans have had any impact and point to some good examples of these plans and of how they have influenced decision makers;



devise a more effective successor to the Waterborne Freight Grant, to stimulate coastal shipping; and

4



clarify whether or not it intends to bring forward a National Policy Statement on National Networks and, if so, its timetable for doing so.

Our impression is that the DfT could do more to promote ports’ interests within Government and internationally. We were particularly concerned to hear suggestions that UK ports were put at a competitive disadvantage when compared to foreign ports because the UK Government insists that ports pay for infrastructure that is paid for by national and local governments overseas. If the Government does apply European Commission state aid rules in this area more strictly than other EU countries it should explain why it does so. Finally, we were struck by the concerns raised with us about the complexity of the planning system. We recommend that the DfT tell us what it consider to be the appropriate balance between environmental protection and economic development in relation to ports; in what ways the Government has altered this balance since it came to power in 2010; and what work it is involved in to address complexities or regulatory barriers within the planning system which ports regard as detrimental to their interests.

5

1 Introduction 1. Ports are essential to the economic wellbeing of the UK. Some 95% of UK cargo movements by tonnage is waterborne and ports collectively employ some 117,000 people.1 Ports differ greatly in terms of their size and the cargoes they handle, as the chart below demonstrates. 2. In addition, planning consent has been granted for a number of new developments which are not yet fully operational or which, in some cases, are yet to be built.2 Collectively, these could accommodate an extra 12.5 million containers each year,3 compared to 8 million containers handled by UK ports in 2012.4 The Government has said that additional port capacity is likely to be required to meet demand over the next 20 to 30 years.5 3. Ports large and small are affected by the quality of transport links to their hinterlands, whether that be by road, rail, inland waterways or coastal shipping. Ports cannot function effectively if hauliers and logistics firms struggle to get goods in and out of them, no matter how modern and efficient the infrastructure inside the port gates. Constraints on road and rail networks in particular can limit the size of a port and its economic impact. 4. Less obvious, but equally important, is access to ports from the sea. Many ports depend on the dredging of channels of sufficient depth to accommodate visiting ships. Inadequate seaward access could prevent larger container ships reaching UK ports, leaving the country dependent on overseas ports for container trade and putting up costs for British business and consumers.6 5. Earlier on in this Parliament we expressed disappointment that the Government was not focusing more strongly on the connectivity of the UK’s international gateways, including marine ports.7 Since then, the Department for Transport (DfT) has placed increasing emphasis on transport infrastructure as an “engine for growth”,8 and announced a host of transport projects, some of which relate to ports.9 We decided to take a closer look at Government policy in this area and, in December 2012, asked for responses to the following questions:

1

Ev 38 paragraph 3 and see http://www.maritimeuk.org/wp-content/uploads/2012/01/The-economic-impact-of-theUK-maritime-services-sector.-Ports1.pdf.

2

National Policy Statement for Ports (hereafter NPS for Ports) paragraph 3.4.8.

3

Using the standard “twenty-foot equivalent unit” measure.

4

DfT port statistics PORT0208. However, container traffic represents only a minority of overall shipping movements.

5

NPS for Ports, paragraph 3.4.16.

6

Q66.

7

Transport Committee, Third Report, Session 2010-12, Transport and the Economy, HC 473, paragraph 41.

8

DfT, Ports Strategic Partnership plan, Sep 13, https://www.gov.uk/government/publications/ports-strategicpartnership-plan-a-framework-for-discussion-between-government-industry-and-trade-unions.

9

See Infrastructure Delivery Update, Mar 13, https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/204634/infrastructure_delivery_updat e_200313_1_.pdf.

6

Busiest UK ports by tonnage handled (2012)

Forth For orth h

yde yd e Clyde

Belfast fast

Tees artlepool Tees e & Hartlepool Ha

Liverpool Liverpo ool ool

Grimsby G Gri rimsby & Im.

Fellix ixsto Felixstowe Milford aven lforrd Haven lfo Hav

London o LLo ondon ndon London Southampton uthampt pton ton ton

Dover Dove ve

Most trafficed goods (million tonnes) Total goods handled (million tonnes)

Source: Department for Transport, Port freight statistics 2012, final figures

Coal Crude Oil or Oil Products 40’ Containers Unnacompanied road goods trailers Self-propelled road goods vehicle

Notes: Figures are for all traffic - including imported and exported goods; foreign and domestic traffic Most handled product type - product category totals excluded 'Oil products' includes products refined from crude oil

7



What should be the priorities for improved access to ports, and why?



Is the delay in producing a National Policy Statement for National Road and Rail Networks creating problems for improving access to ports? If so, in what ways and where?



How satisfactory are the current and proposed decision-making structures, including Local Transport Boards?



To what extent can investment in road and rail infrastructure influence the market and regional decision-making on port development?



Are decisions on port development taking sufficient account of the traffic generated by ports and associated development needs?



How realistic are current assumptions about rail’s modal share of ports traffic? Under what circumstances could rail freight or inland shipping play a greater role in reducing port-related road freight?



Are there any regulatory barriers to investment in ports? What could and should be done about them?

We heard oral evidence from ports, freight interest and local authorities on 1 July and from the Shipping Minister on 10 September. We have also visited Felixstowe and the new London Gateway development and had a briefing from Peel Ports on the Atlantic Gateway project. We are grateful to our witnesses and to the people who facilitated our visits and briefing. 6. In this report we look at priorities for improving access to ports, focusing in particular on who should decide on these priorities and fund improvements, and we set out our proposals for a clearer Government strategy on access to ports.

8

2 Priorities for port access What are the priorities? 7. Ports generally raised two issues about access, relating to both the road and rail networks. The first was with connectivity to the principal transport networks. For example, the British Ports Association referred to “long delays in the final two miles to the port”.10 Warren Marshall of Peel Ports spoke of “a bottleneck with the final three miles of the journey from the motorway network to the port [of Liverpool]” and made similar comments about Heysham.11 In relation to rail, GB Railfreight noted that Felixstowe was served only by a single-track branch line.12 Clemence Cheng, chief executive of Hutchison Ports (UK), which operates Felixstowe, told us of the difficulty of balancing passenger and freight needs on that line.13 8. A second issue related to how the UK’s strategic road and rail networks accommodate freight transport. The most prominent road project of relevance to this issue is the package of measures to relieve congestion on the A14 in Cambridgeshire.14 Several witnesses, including UK Major Ports Group and the Freight Transport Association, identified this as a priority for investment.15 This project has been associated with freight traffic heading north from Felixstowe, although Mr Cheng said that only 3% of traffic using the busiest stretch of the A14 was freight from the port.16 9. In relation to rail, we received numerous proposals to enhance the rail network to facilitate freight traffic. These ranged from new inland terminals to handle retail commodities, a route through the Pennines suitable for freight traffic, more electrified lines, including diversionary routes, and enhanced services.17 For example, Transport for London told us about the pressures created on the rail network in north London by strong growth in both passenger and freight demand and called for a rail freight bypass of the capital in the long term.18 An example of the problems caused by the volume of rail freight travelling through north London to reach the West Coast Main Line occurred on 15 October when a freight train derailed overnight, leading to the closure of the line between Gospel Oak and Highbury & Islington, part of the London Overground network, for six days.

10

Ev 49 paragraph vii and Q2.

11

Q4. Also see Q66 and Q2 re Poole.

12

Ev 57 paragraph 2.4.

13

Q7.

14

See https://www.gov.uk/government/consultations/a14-cambridge-to-huntingdon-improvement-scheme.

15

For example, see Q39, Ev 19 paragraph 2.4, Ev 25 paragraph 6.4, Ev 28, Ev 40 paragraph 18, and Ev 60 paragraph 14.

16

Q27.

17

For example see Qq 7, 43, 66, Ev 35-36 paragraphs 8-16, Ev w1-2, and Ev w13-14.

18

Ev 52-53 paragraphs 2.7-2.21 and Q66.

9

How are priorities identified and implemented? Local transport schemes 10. Ports must approach local decision makers to advocate improvements in transport infrastructure “in the final two miles” to the port. However, knowing who to approach is not necessarily straightforward. Local government structures and funding arrangements for local major transport projects have changed significantly in recent years and continue to evolve. 11. Before 2010 the key decision makers were local transport authorities and regional development agencies and there were a multiplicity of funding streams to bid for. The current Government abolished regional development agencies and established Local Economic Partnerships (LEPs), which bring civic and business leaders together. Funding streams for transport projects were reduced from 26 to four. LEPs were encouraged to identify transport priorities in their area and work with local authorities to bid for funding. In December 2012 it was announced that the primary decision-makers on spending on local major transport schemes from 2015 would be new Local Transport Boards, which would bring together local transport authorities, LEPs and possibly others. However, in March 2013, the Government announced that from 2015 transport funding would be subsumed into a new Single Local Growth Fund and that LEPs would decide on how this money should be spent. Transport expenditure will not be ring-fenced.19 12. Witnesses were generally unsure of how the new system would operate and how these changes would affect them.20 The UK Major Ports Group described the new arrangements as “complex and not easy to understand”.21 The Royal Town Planning Institute said that the “very complex geometry of strategic planning for different purposes will be suboptimal”.22 The Freight Transport Association expressed concern about how the new structures will work, how local investment decisions will be co-ordinated with national priorities, co-operation between neighbouring LEPs, and the time required for new structures to bed down.23 Freightliner said it was difficult for a national firm to engage with a large number of local organisations, which were likely to lack experience of rail freight.24 13. From the local authority perspective, Hull City Council said that “the proposed funding to local transport boards is likely to be of a scale too low to seriously address the fundamental problems of poor access to ports”.25 Liverpool City Region said it was important for new investment at national and city region levels to be integrated to “fully

19

Local Transport Governance and Finance in England 2010-, House of Commons Library Standard Note 05735, http://www.parliament.uk/briefing-papers/SN05735/local-transport-governance-and-finance-in-england-2010.

20

See Qq 54-56.

21

Ev 41 paragraph (c).

22


23

Ev 55 paragraph 6.

24

Ev 36 paragraph 20. Also see Qq 54-56.

25

Ev 19 paragraph 3.1. And see Qq 73, 90.

10

address both national and regional requirements for port access whilst also addressing the local implications of port related development”.26 Improvement of strategic networks 14. In relation to larger schemes, the DfT set out the process by which Network Rail established priorities for investment in the strategic freight network.27 Network Rail undertakes a programme of market and demand studies in order to understand the likely pattern of developing demand from the freight sector, including ports. It works closely with its customers, including the ports, to determine the extent to which that demand can be accommodated within existing capacity or may require capacity enhancements. This process informs the prioritisation of Network Rail’s investment in the Strategic Rail Freight Network and its discussions with Government over future funding requirements in the High Level Output Specification. Some questions were raised about this process. Hutchison Ports spoke of a “lack of clarity” in budget setting and Freightliner said that rail’s five-year funding settlement was too short to plan investment in assets with much longer lifespans.28 The Royal Town Planning Institute commended Network Rail’s “very clear plans” for investment in freight but questioned the organisation’s accountability.29 Despite these criticisms, there is a much greater long-term focus on planning for strategic rail projects than currently exists for roads.30 The Government is currently considering changes to the governance and funding arrangements for the strategic road network,31 which we are considering in a separate inquiry.32 Conclusion 15. The new arrangements for funding local major transport schemes are complex and untested. It is unsurprising that ports are unclear as to whom to approach about projects they think should be taken forward. DfT has said that it “will be responsible for ensuring that local decision making processes are robust, but will not be involved in the setting of local priorities or the selection of individual schemes”.33 In our view, the DfT must do more to ensure that LEPs give proper consideration to port schemes and are not overlooked because they might not obviously benefit local people or businesses. DfT

26

Ev 30 paragraph 3.1. Also see Q92.

27

Ev 60 paragraph 17. Also see Transport Committee, Oral Evidence on Maritime Strategy, HC 630-i, 10 Sep 13 (hereafter 10 September oral evidence) Q30.

28

Ev 24 paragraph 5.8 and Ev 38 paragraph 35.

29


30

Qq 3,10.

31

See https://www.gov.uk/government/publications/action-for-roads-a-network-for-the-21st-century and https://www.gov.uk/government/consultations/transforming-the-highways-agency-into-a-government-ownedcompany.

32

http://www.parliament.uk/business/committees/committees-a-z/commons-select/transportcommittee/inquiries/parliament-2010/strategic-road-network/.

33

Ev 60 paragraph 10.

11

should act as an advocate for ports, helping the sector navigate complex arrangements for getting transport improvement schemes off the ground. The Department should also be prepared to challenge decisions by LEPs and other local bodies where they fail to prioritise improvements in port access over other, less strategically important, schemes. 16. The DfT told us that ports should produce port master plans to help local transport bodies and network providers “plan for the long term with greater early awareness of commercial ports’ strategic business plans, infrastructure projects, and traffic expectations”.34 We asked the Department for its assessment of the impact of port master plans on local decision making on transport infrastructure priorities and for any examples it could give of where a port master plan has influenced decision making on transport infrastructure. DfT said it does not “maintain detailed records monitoring the influence of port master plans on local infrastructure priorities and it would be difficult to do so”.35 DfT has promoted the use of port master plans as a means of communicating infrastructure priorities to transport authorities, both local and national. It should be able to give a view on whether or not these documents have had any impact and point to some good examples of these plans and of how they have influenced decision makers. We recommend that the Department do this in reply to this report. 17. We will return to some of the issues raised in this section in our forthcoming inquiry on local authority transport expenditure.36

Who funds improvements? 18. Port operators are expected to pay for measures required to mitigate increased traffic due to port expansion. In the case of major port developments, there is scope for the Government to make a contribution towards transport improvements which also benefit the wider community. Guidance dating back to 2009 provides for DfT to appoint a “Development Contributions Coordinator” to coordinate negotiations between the Department and the developer about who would benefit from a transport improvement and, consequently, who should pay for it.37 The DfT told us that this procedure had never been used and that the guidance would be reviewed by April 2014.38 19. Ports argued strongly that they should not have to contribute towards infrastructure improvements. UK Major Ports Group said “infrastructure links to and from ports should be a matter for public investment ... if ports have to pay for connecting infrastructure this will reduce the viability of the scheme and may result in much needed investment not

34

Ev 60 paragraph 12 and see Ev 44 paragraph 27.

35

Ev 62.

36

http://www.parliament.uk/business/committees/committees-a-z/commons-select/transportcommittee/inquiries/parliament-2010/local-decision-making1/.

37

Ev 60 paragraphs 18-22 and see http://assets.dft.gov.uk/publications/funding-transport-infrastructure-forstrategically-significant-developments/devconguideline.pdf.

38

Ev 62 and 10 September oral evidence Q27.

12

going ahead”.39 A number of witnesses compared the UK unfavourably with some other EU countries where infrastructure outside of the dock gates is publicly funded.40 20. However, looking in detail at how transport infrastructure relating to ports has been funded in recent years reveals a confused picture. When we visited the London Gateway development we took note of numerous motorway and road improvements linked to the opening of the facility which are being funded by the port developers, DP World.41 Yet private sector funding of infrastructure linked to ports would appear to be the exception not the rule. The DfT itself told us about how the Highways Agency “prioritised the acceleration of improvements to the A160/A180 near the port of Immingham,42 and the development of future improvements to the A63 at Castle Street in Hull43 ... given its impacts on access to the Port of Hull”.44 These projects are publicly funded. Improvements to the rail freight network are also being funded as part of the usual rail funding arrangements, without private sector contributions. 21. The Mersey Dock and Harbour Board successfully bid for money from the Regional Growth Fund to dredge the Mersey so that the port of Liverpool could accommodate larger ships.45 This decision has attracted controversy. Haven Gateway Partnership, a group of public and private sector bodies that support the growth of Felixstowe and Harwich ports, said that public funding for this project would distort competition and undermine investors’ confidence in Government policy.46 The DfT said that:47 This was an exceptional case and one that in no way represents a precedent for future container port cases, nor does it mark a change in the Government’s general presumption, because of the potential for distortion of competition within the UK, against subsidy to ports in England and Wales. 22. The Government has identified enhancement of the A14 as a port-related project.48 There are a number of elements to the project, one of which is a new Huntingdon Southern bypass, which will be paid for by tolls,49 a decision which was criticised by Hutchison Ports:50 There is a clear distinction between the strategic planning procedures for road and rail. The system of Control Periods and long term planning for rail is transparent 39

Ev 40 paragraph 16. Also see Q36 and Ev w6 paragraph 18.

40

Ev 44 paragraph 24 and see Qq 21, 70 and 10 September oral evidence Q27.

41

See Highways Agency press notice, 27 Mar 13, http://press.highways.gov.uk/Press-Releases/Improvements-on-theway-for-M25-junction-30-68a24.aspx.

42

http://www.highways.gov.uk/roads/road-projects/a160a180-improvements-immingham/.

43

http://www.highways.gov.uk/roads/road-projects/A63-Castle-Street-Improvement.

44

Ev 59 paragraph 5.

45

The bidder for a grant from round 2 of the Regional Growth Fund was Sefton Council.

46

Ev 28-29.

47

Ev 62-63.

48

Ports strategic partnership, DfT, detailed annex entitled “A Thriving Ports Industry” box 3.5.

49

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/239445/A14-cambridge-tohuntingdon-brochure.pdf.

50

Ev 25, part B, section 2.

13

and inclusive. The system for road investment is less so and can sometimes appear opportunistic and arbitrary. The decision to introduce tolls to upgrade the A14, but to fund upgrades to other routes by more conventional means, is one example. The DfT has confirmed that Hutchison Ports has not been asked to contribute to this scheme, although “port users making use of the road would be expected to contribute through the applicable tolls”.51 The Government is relying on the fact that the existing route will be de-trunked to discourage continued HGV use of that road. 23. Government policy on who should pay for transport infrastructure relating to ports is clear in principle but confused in practice and conceptually flawed. Some ports have contributed towards transport schemes to improve access, while others have not. The rationale for the differing treatment of different projects is not clear. Moreover, the principle that ports are likely to be the sole beneficiaries of transport schemes which make access easier overlooks the wider economic benefits of expanding trade and reducing logistics costs that are likely to arise from improved access. 24. In our view, there should be a presumption that significant improvements to access to ports - particularly improvements to strategic networks - will be publicly funded, because of the wider economic benefits of doing so. However, this should not preclude ports from contributing to local transport infrastructure improvements, following discussions with local transport authorities and LEPs. We recommend that these principles be encapsulated in fresh guidance on this subject from DfT. Such guidance must be less bureaucratic than the current version and provide greater clarity about the different sources of funding for port access schemes and the broad criteria for funding decisions.

51

Ev 62.

14

3 Government strategy on access to ports 25. Ports have primary responsibility for identifying problems with access to their facilities and putting forward schemes for improvement, or for identifying the access issues arising from major new developments. However, for a number of reasons it is essential that the Government take a strategic overview of access to ports: 

As we have noted, local decision makers are not necessarily best placed to take decisions about port access projects which have national significance or which have wider implications for strategic transport networks.



The Government may wish to promote modal shift from road to rail or waterborne freight.



Decisions on port access projects are likely to have employment implications, both in relation to the port itself and the logistics industry.



The Government is best placed to assess likely long-term developments in global trade and help ensure that the UK has appropriate port capacity to take advantage of such trends.52

26. In our view, it is imperative that the UK has at least one container port capable of accommodating the largest container ships. Preferably there would be two or more such facilities, located in different parts of the country. Otherwise, the UK will lose out on container trade to foreign ports, which will slow the movement of goods to and from UK, add to costs and may lead to job losses.53 Ports also have a key role in the transportation of oil, petroleum products, and coal into the UK. These issues should be explicitly addressed in a Government strategy for access to ports, as should issues relating to decision-making about access projects and funding, which we have already discussed, and modal shift, which we will deal with later. 27. There was broad support from witnesses for a more strategic approach by Government to ports. DP World London Gateway said “it is the Government’s role to establish a strategy around which developers can decide on the optimum locations for port developments to assist the country in providing the most economic supply chain”.54 Hull City Council argued that the Government needed to evaluate the wider benefits that major infrastructure schemes could deliver and ensure that the results of such work fed into the planning process.55 Freightliner told is that it would not have invested in new cranes at Southampton if the Government had not invested in better rail access to the port.56

52

For example, research by Lloyd’s Register, Qinetiq and Strathclyde University has predicted that global seaborne trade could increase from 9 billion tonnes per annum today to as much as 24 billion tonnes by 2030 – see Global Marine Trends 2030 at http://www.lr.org/sectors/marine/GTC/gmt2030.aspx.

53

Qq 5-6.

54

Ev w27 paragraph (d). Also see Q4.

55


56

Ev 37 paragraph 25. For a related point see Q69.

15

28. There are already a number of strategic documents relating to ports. Access to ports is briefly mentioned in the DfT’s new transport strategy document, Transport – an engine for growth.57 Guidance about major new port developments can be found in the National Policy Statement for Ports and there is also guidance about funding associated transport infrastructure, which we have already discussed. In September, the DfT published new high-level strategic documents relating to the maritime sector as a whole and specifically to ports. It is not clear how these various strategies fit together. 29. The main elements of the Government’s new ports strategy which relate to access to ports are set out in the box below.58 Primarily for Government To recognise and provide good access to existing and new port facilities 

DfT to work with Network Rail to ensure that ports’ traffic has due priority in network planning



DfT and Highways Agency to deliver Spending Round port-related highway schemes (eg A14)



DfT to ensure new local transport planning structures provide for regionally significant port access schemes



To avoid grants or subsidies distorting competition and investment in the ports industry



DfT to work with other Government departments to monitor and identify potential distortions

For Government, industry and trade unions To understand the drivers of port demand growth 

DfT to review and evidence and available models



DfT to develop new forecasts of port freight demand



Industry to share demand projections when possible

To facilitate the building of port capacity to meet future demand 

Industry to continue to invest in consented developments to meet demand



Government to keep ports National Policy Statement and other planning policy under review to recognise importance of ports’ ability to respond quickly to market changes.

To tackle congestion on port-critical inland access routes including through modal shift. 

Ports, DfT and network providers to work together to identify the most cost-beneficial schemes to improve access.



DfT to maintain grant schemes (Mode Shift Revenue Support and Waterborne Freight Grant) where demonstrably offering clear benefits.



Industry and DfT to ensure coastal shipping can develop to its full potential.

57

https://www.gov.uk/government/publications/transport-an-engine-for-growth-giving-strategic-context-to-the-2013spending-round. See paragraph 5.6.

58

Extracted from DfT’s Ports Strategic Partnership plan.

16

DfT is to be commended for beginning work on a comprehensive strategy for ports, which has the potential to address the concerns we have raised in this report. We recommend that the Department set out how and by when it intends to implement the actions relating to access to ports in its high-level ports’ strategy (as set out in the box above). 30. In the high-level strategy DfT has committed to working with industry to “ensure coastal shipping can develop to its full potential”. Moving cargoes around the UK by sea is an alternative to road and rail travel, but coastal shipping has declined in recent years.59 The Government offers a Waterborne Freight Grant to support new freight movements by sea, for up to three years.60 No grants were made in relation to coastal or short sea shipping projects from 2006 until 2011, the most recent year for which figures have been published.61 31. Hull City Council commented that the grants for moving freight by water were not well publicised and should be targeted on new business.62 However, the British Ports Association was cautious about the extent to which freight could be shifted from road to coastal shipping.63 The DfT said it had made representations to the European Commission about loosening the rules relating to grants to coastal shipping, so that they could be more effective at reducing road freight mileage.64 The Minister said that EU permission to offer the grants would expire in 2015 and that the department was reviewing “the need for those grants, what impact they are having, whether or not they are rightly targeted and whether or not they are achieving their ambitions”.65 It is disappointing that the Waterborne Freight Grant has been so ineffective in encouraging coastal shipping. However, there are environmental and economic benefits in switching freight from road to sea. We recommend that the Government come up with a new scheme for encouraging coastal shipping after 2015 and, if necessary, secure state aid clearance from the European Commission. 32. The Government has committed to publishing a National Policy Statement on national networks, which would set out the Government’s objectives for the development of the strategic road and rail networks. However, no draft statement has yet emerged for consultation, mainly, it seems, because of plans to change the way in which the strategic road network is managed.66 The DfT said that the absence of such a National Policy 59

See UK Port Freight Statistics 2012, https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/245402/port-freight-statistics-2012all-files.ZIP, series PORT0104.

60

Guide to the Waterborne Freight Grant Scheme, DfT, August 2011, https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/3625/guidance-2011.pdf. There is a similar grant – Mode Shift Revenue Support – which supports freight modal shift from road to rail and inland waterways. For example, see Q44.

61

Domestic Waterborne Freight Statistics, series DWF0503, https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/16278/dwf0503.xls. Coastal shipping refers to movements between UK ports. Short sea shipping involves the transportation of goods from the UK to other parts of Europe.

62

Ev 21 paragraph 6.5. For other comments on coastal shipping see Q76.

63

Ev 50 paragraph 6(ii). Also Ev 45 paragraphs 34-38.

64

Ev 61 paragraph 26.

65

10 September oral evidence Q25.

66

HC Deb, 12 Nov 12, c16w.

17

Statement had not created problems in improving access to ports, a view with which the British Ports Association and the Port of Tilbury concurred.67 On the other hand, the UK Major Ports Group said that the absence of the statement had created a “policy vacuum”.68 Freight on Rail said “the delay in producing this National Policy Statement is putting a serious brake on considerable port-related regeneration opportunities because of the lack of planning permission for strategic rail freight interchanges”.69 Liverpool City Region argued that the delay in publishing the statement was denting investors’ confidence.70 We recommend that the Government clarify whether or not it intends to bring forward a National Policy Statement on National Networks and, if so, its timetable for doing so.

67

Ev 49 paragraph 2(i), Ev 59 paragraph 7 and Ev w10 paragraph 10.

68

Ev 39 paragraph 8. Also see Q8.

69

Ev w 24 section 2.

70

Ev 30 paragraph 2.1. Also see Ev 28, Ev w14, paragraphs 14-17, Ev 47 paragraph 2.1, Ev 54-55 paragraph 5, and Ev w20.

18

4 Conclusion 33. Ports are national assets, often out of the limelight, but essential to the economic well being of the nation. Our impression is that the DfT could do more to promote ports’ interests within Government and internationally.71 We were particularly concerned to hear suggestions that UK ports were put at a competitive disadvantage when compared to foreign ports because the UK Government insists that ports pay for infrastructure that is paid for by national and local governments overseas. If the Government does apply European Commission state aid rules in this area more strictly than other EU countries it should explain why it does so. 34. A national strategy for ports is essential but this must build on local and regional initiatives. We welcome the progress the DfT is making in this area, but there is more work to be done. 35. Improving access to ports is not about enabling ports to implement any transport schemes they propose. It is appropriate that local and national decision makers look carefully at the environmental issues involved with transport projects and the impacts on nearby towns and villages and also ensure that improvements are driven by genuine and realistic demand assumptions. However, if the DfT wishes to be an “engine for growth” it must prioritise the removal of constraints to port development caused by inadequate transport infrastructure. This priority should be at the heart of the DfT’s strategy for ports. 36. Finally, when we asked witnesses whether there were any other regulatory barriers to investment in ports which ought to be addressed most raised concerns about the planning system. Hutchison Ports said the system was “extremely complex”.72 Associated British Ports said that planning regulations were sometimes “flawed and unnecessary”.73 Describing the three year process by which the Bathside Bay development at Harwich achieved planning consent, Haven Gateway Partnership said:74 Planning, environment, marine management, Natural England, English Heritage, Highways, State Aid, RSPB, EU Directives (Habitats, Birds), Marine Conservation Zones, all contribute obstacles to investment”. 37. DfT acknowledged that the planning system could be complex and said it was working to improve matters, for example by discussing with the Department for Environment, Food and Rural Affairs how marine conservation zones affect port development.75 We recommend that the DfT tell us what it consider to be the appropriate balance between environmental protection and economic development in relation to ports; in what ways the Government has altered this balance since it came to power in 2010; and what work

71

For example Ev 47 paragraph 1.3 and Ev w26.

72

Ev 24 paragraphs 4.1 and 4.2 Also see Qq 15, 86, 89.

73

Ev w6 paragraph 22.

74

Ev 29.

75

Ev 61 paragraph 28.

19

it is involved in to address complexities or regulatory barriers within the planning system which ports regard as detrimental to their interests.

20

Conclusions and recommendations How are priorities identified and implemented? 1.

In our view, the DfT must do more to ensure that LEPs give proper consideration to port schemes and are not overlooked because they might not obviously benefit local people or businesses. DfT should act as an advocate for ports, helping the sector navigate complex arrangements for getting transport improvement schemes off the ground. The Department should also be prepared to challenge decisions by LEPs and other local bodies where they fail to prioritise improvements in port access over other, less strategically important, schemes. (Paragraph 15)

2.

DfT has promoted the use of port master plans as a means of communicating infrastructure priorities to transport authorities, both local and national. It should be able to give a view on whether or not these documents have had any impact and point to some good examples of these plans and of how they have influenced decision makers. We recommend that the Department do this in reply to this report. (Paragraph 16)

Who funds improvements? 3.

Government policy on who should pay for transport infrastructure relating to ports is clear in principle but confused in practice and conceptually flawed. (Paragraph 23)

4.

In our view, there should be a presumption that significant improvements to access to ports - particularly improvements to strategic networks - will be publicly funded, because of the wider economic benefits of doing so. However, this should not preclude ports from contributing to local transport infrastructure improvements, following discussions with local transport authorities and LEPs. We recommend that these principles be encapsulated in fresh guidance on this subject from DfT. Such guidance must be less bureaucratic than the current version and provide greater clarity about the different sources of funding for port access schemes and the broad criteria for funding decisions. (Paragraph 24)

Government strategy on access to ports 5.

DfT is to be commended for beginning work on a comprehensive strategy for ports, which has the potential to address the concerns we have raised in this report. We recommend that the Department set out how and by when it intends to implement the actions relating to access to ports in its high-level ports’ strategy (as set out in the box above). (Paragraph 29)

6.

It is disappointing that the Waterborne Freight Grant has been so ineffective in encouraging coastal shipping. However, there are environmental and economic benefits in switching freight from road to sea. We recommend that the Government come up with a new scheme for encouraging coastal shipping after 2015 and, if necessary, secure state aid clearance from the European Commission. (Paragraph 31)

21

7.

We recommend that the Government clarify whether or not it intends to bring forward a National Policy Statement on National Networks and, if so, its timetable for doing so. (Paragraph 32)

Conclusion 8.

Ports are national assets, often out of the limelight, but essential to the economic well being of the nation. Our impression is that the DfT could do more to promote ports’ interests within Government and internationally. We were particularly concerned to hear suggestions that UK ports were put at a competitive disadvantage when compared to foreign ports because the UK Government insists that ports pay for infrastructure that is paid for by national and local governments overseas. If the Government does apply European Commission state aid rules in this area more strictly than other EU countries it should explain why it does so. (Paragraph 33)

9.

A national strategy for ports is essential but this must build on local and regional initiatives. We welcome the progress the DfT is making in this area, but there is more work to be done. (Paragraph 34)

10.

Improving access to ports is not about enabling ports to implement any transport schemes they propose. It is appropriate that local and national decision makers look carefully at the environmental issues involved with transport projects and the impacts on nearby towns and villages and also ensure that improvements are driven by genuine and realistic demand assumptions. However, if the DfT wishes to be an “engine for growth” it must prioritise the removal of constraints to port development caused by inadequate transport infrastructure. This priority should be at the heart of the DfT’s strategy for ports. (Paragraph 35)

11.

We recommend that the DfT tell us what it consider to be the appropriate balance between environmental protection and economic development in relation to ports; in what ways the Government has altered this balance since it came to power in 2010; and what work it is involved in to address complexities or regulatory barriers within the planning system which ports regard as detrimental to their interests. (Paragraph 37)

22

Formal Minutes Monday 18 November 2013 Members present: Mrs Louise Ellman, in the Chair Jim Dobbin Jim Fitzpatrick Karen Lumley

Jason McCartney Adrian Sanders Martin Vickers

Draft Report (Access to ports), proposed by the Chair, brought up and read. Ordered, That the draft Report be read a second time, paragraph by paragraph. Paragraphs 1 to 38 read and agreed to. Summary agreed to. Resolved, That the Report be the Eighth Report of the Committee to the House. Ordered, That the Chair make the Report to the House. Ordered, That embargoed copies of the Report be made available, in accordance with the provisions of Standing Order No. 134.

[Adjourned till Monday 25 November at 4.00 pm

23

Witnesses Monday 1 July 2013

Page

Richard Bird, Executive Director, UK Major Ports Group, Jim Stewart, Chairman, British Ports Association, and Chief Executive Officer, Poole Harbour Commissioners, Clemence Cheng, Chief Executive Officer, Hutchison Ports (UK), and Warren Marshall, Group Head of Port Planning, Peel Ports

Ev 1

Chris Welsh, Director of Global and European Policy, Freight Transport Association, Adam Cunliffe, Managing Director, Freightliner, Lindsay Durham, Head of Rail Strategy, Freightliner, and John Smith, Managing Director, GB Railfreight

Ev 7

Richard Blyth, Head of Policy Practice and Research, Royal Town Planning Institute, Mark Basnett, Executive Director, Liverpool City Region Local Enterprise Partnership, Mike Ibbotson, Transport Policy Manager, Hull City Council, Richard Meeks, Network Development Manager, London Rail, Transport for London, and George Kieffer, Chairman, Haven Gateway Partnership

Ev 12

List of printed written evidence 1

Hull City Council

Ev 18

2

Hutchison Ports Ltd

Ev 21

3

Haven Gateway Partnership

Ev 26

4

Liverpool City Region LEP

Ev 30

5

Freightliner

Ev 32

6

UK Major Ports Group

Ev 38

7

Peel Ports

Ev 41

8

Royal Town Planning Institute

Ev 46

9

British Ports Association

Ev 48

10

Transport for London

Ev 51

11

Freight Transport Association

Ev 54

12

GB Railfreight

Ev 56

13

Department for Transport

Ev 59

14

Letter from Louise Ellman MP to Stephen Hammond MP

Ev 62

15

Letter from Stephen Hammond MP to Louise Ellman MP

Ev 62

24

List of additional written evidence (published in Volume II on the Committee’s website www.parliament.uk/transcom) 1

Rail Freight Group

Ev w1

2

RMT

Ev w3

3

Associated British ports

Ev w3

4

Port of Tilbury

Ev w9

5

Harwich Haven Authority

Ev w10

6

Commercial Boat Operators Association

Ev w11

7

DB Schenker

Ev w13

8

Yorkshire and Lincolnshire (APPG)

Ev w16

9

Port of Tyne

Ev w19

10

Freight on Rail

Ev w22

11

Tendring District Council

Ev w25

12

DP World London Gateway

Ev w26

25

List of Reports from the Committee during the current Parliament The reference number of the Government’s response to each Report is printed in brackets after the HC printing number. Session 2013–14 Eighth Report

Access to ports

HC 266

Seventh Report

Local authority parking enforcement

HC 118

Seventh Special Report The new European motorcycle test: Government Response to the Committee’s Sixth Report of 2009–10

HC 656

Sixth Report

Flight Time Limitation: Follow-up

Firth Report

Access to transport for disabled people

Fourth Report

Cost of motor insurance: whiplash

Third Report

The work of the Vehicle and Operator Services Agency (VOSA)

HC 583

Second Report

Future programme: 2013–14

HC 438

Fifth Special Report

The European Commission’s 4th Railway Package: Government Response to the Committee’s Twelfth Report of Session 2012–13

HC 439

Third Special Report

Rail 2020: Rail Delivery Group and Passenger Focus responses to the Committee’s Seventh Report of Session 2012–13

HC 81

Fourth Special Report Land transport security — scope for further EU involvement?: Government Response to the Committee’s Eleventh Report of Session 2012–13 Second Special Report Marine Pilotage: Government Response to the Committee’s Ninth Report of Session 2012–13 First Report

Aviation strategy

First Special Report

Cancellation of the InterCity West Coast franchise competition: Government Response to the Committee’s Eighth Report of Session 2012–13

Session 2012–13 Twelfth Report

The European Commission’s 4th Railway Package

HC 641 (HC 795) HC 116 HC 117 (CM 8738)

HC 177

HC 79 HC 78 (HC 596) HC 80

HC 1001(HC 439)

Eleventh Report

Land transport security — scope for further EU involvement?

Ninth Special Report

Rail 2020: Government and Office of Rail Regulation Responses to the Committee’s Seventh Report of 2012–13

HC 1059

Tenth Report

The Coastguard, Emergency Towing Vessels and the Maritime Incident Response Group: follow up: Government Response to the Committee’s Sixth Report of 2012–13

HC 1018

Ninth Report

Marine Pilotage

HC 840

Eighth Report

Cancellation of the InterCity West Coast franchise competition

HC 537

Eighth Special Report

Plug-in vehicles, plugged in policy?: Government

HC 884

HC 875

26

Response to the Committee's Fourth Report of Session 2012–13 Seventh Report

Rail 2020

HC 329

Sixth Report

The Coastguard, Emergency Towing Vessels and the Maritime Incident Response Group: follow up

HC 647

Fifth Report

Future programme: autumn and winter 2012–13

HC 591

Fourth Report

Plug-in vehicles, plugged in policy?

HC 239

Third Report

Competition in the local bus market

HC 10 (HC 761) (Incorporating HC 1861–i–iii)

Fifth Special Report

Flight Time Limitations: Government Response To The Committee's First Report Of Session 2012–13

Fourth Special Report Air Travel Organisers' Licensing (Atol) Reform: Government Response To The Committee's Seventeenth Report Of Session 2010–12 Second Report

Road safety

HC 558 HC 557

HC 506 (HC 648) Incorporating HC 1738

First Report

Flight time limitations

HC 164 Incorporating HC 1838


Sulphur emissions by ships: Government Response to the Committee’s Sixteenth Report of Session 2010–12

HC 87

Second Special Report Counting the cost: financial scrutiny of the Department for Transport 2011–12: Government Response to the Committee’s Fifteenth Report of Session 2010–12

HC 15


HC 11

Draft Civil Aviation Bill: Pre-Legislative Scrutiny: Government Response to the Committee’s Thirteenth Report of Session 2010–12

Session 2010–12 Seventeenth Report

Air Travel Organisers’ Licensing (ATOL) reform

HC 1798

Sixteenth Report

Sulphur emissions by ships

HC 1561

Fifteenth Report

Counting the cost: financial scrutiny of the Department for Transport 2011–12

HC 1560

Fourteenth Report

Cable theft on the Railway

Thirteenth Report

Draft Civil Aviation Bill: Pre-Legislative Scrutiny

Twelfth Report

Cost of motor insurance: follow up

HC 1451 (HC 1934)

Eleventh Report

Thameslink rolling stock procurement

HC 1453 (HC 1935)

Tenth Report

High Speed Rail

Ninth Report

Out of the jam: reducing congestion on our roads

HC 872 (HC 1661)

Eighth Report

Bus Services after the Spending Review

HC 750 (HC 1550)

Seventh Report

Taxis and private hire vehicles: the road to reform

HC 720 (HC 1507)

Sixth Report

The Coastguard, Emergency Towing Vessels and the Maritime Incident Response Group

HC 948, incorporating HC 752–i (HC 1482)

Fifth Report

Keeping the UK moving: The impact on transport of the winter weather in December 2010

HC 794 (HC 1467)

HC 1609 (HC 1933) HC 1694

HC 1185–I (HC 1754)

27

Fourth Report

The cost of motor insurance

HC 591 (HC 1466)

Third Report

Transport and the economy

HC 473 (HC 962)

Second Report

Financial Scrutiny of the Department for Transport

First Report

Drink and drug driving law

Tenth Special Report

The proposal for a National Policy Statement on Ports: Government Response to the Committee Fifth Report of Session 2009–10

HC 1598


The performance of the Department for Transport: Government response to the Committee’s Fourth Report of Session 2009–10

HC 549

HC 683 HC 460 (Cm 8050)

Second Special Report Update on the London Underground and the publicprivate (PPP) partnership agreements: Government response to the Committee’s Seventh Report of Session 2009–10

HC 467


HC 421

The major road network: Government response to the Committee’s Eighth Report of Session 2009–10

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Transport Committee: Evidence Ev 1

Oral evidence Taken before the Transport Committee on Monday 1 July 2013 Members present: Mrs Louise Ellman (Chair) Sarah Champion Jim Dobbin Karen Lumley Jason McCartney

Karl McCartney Adrian Sanders Iain Stewart Graham Stringer ________________ Examination of Witnesses

Witnesses: Richard Bird, Executive Director, UK Major Ports Group, Jim Stewart, Chairman, British Ports Association, and Chief Executive Officer, Poole Harbour Commissioners, Clemence Cheng, Chief Executive Officer, Hutchison Ports (UK), and Warren Marshall, Group Head of Port Planning, Peel Ports, gave evidence. Q1 Chair: Good afternoon and welcome to the Transport Select Committee. Would you give your name and the organisation you represent? Richard Bird: I am Richard Bird, Executive Director of the UK Major Ports Group. Jim Stewart: I am Jim Stewart, Chief Executive of Poole Harbour Commissioners and representing British Ports Association. Clemence Cheng: I am Clemence Cheng, the CEO of Hutchison Ports (UK). Warren Marshall: I am Warren Marshall, the Group Head of Port Planning at Peel Ports Group. Q2 Chair: Could each of you give us an example of problems that you know about at the moment that are happening currently in relation to access to ports? Jim Stewart: As I said, I am chief executive of Poole Harbour Commissioners, which manages the port of Poole in Dorset. Certainly we have some port access issues at the moment. Some of those relate to a lack of funding for existing infrastructure. We have two lifting bridges into the port and currently there is a lack of funding to do the maintenance work for one of those bridges. That is something we are working on with the local authorities and the LEP. Additionally, there is a general issue with Poole, which is common to many other ports in the UK, and that is the infrastructure linking smaller ports to the major national infrastructure. The last five miles down to the port is problematic, and, going forward, that is something we would like to see resolved. Q3 Chair: Mr Bird, can you give us any examples you have in mind at the moment of problems of access in relation to ports? Richard Bird: Taking an overview of this—of course I don’t represent a particular port business—the rail connections to ports are an area of success. There has been considerable achievement over the last few years, but, looking ahead, there are also some big challenges. We expect that traffic from ports by container and, for example, biomass, is likely to increase substantially. There are concerns that, unless the investment goes into the rail sector, we will not

get the benefits that rail onward transport can provide for those particular commodities. It is a general point, perhaps particularly underlined in relation to biomass, which is moving into scope very quickly. We don’t yet seem to have structures in place that will enable the investment going in at ports elsewhere to be matched by improvements in the rail system. Q4 Chair: Mr Marshall, could you give us any thoughts on that? Warren Marshall: Our biggest issue is the Port of Liverpool. As Jim has already mentioned, and this is a reflection of most ports, there is a bottleneck with the final three miles of the journey from the motorway network to the port itself. Liverpool is identified as one of the 10 largest ports in the country, along with the seventh largest airports. We are on the map, as it were, on the strategic national corridors, in terms of being one of the largest ports, but we do feel that it is difficult to overcome the bottleneck. We need national solutions to what is effectively a local problem. Clemence Cheng: The ports are there to connect the hinterland to the sea. Not only is there rail and road but marine access is also very important. When you look at the overall access to Felixstowe, which is the biggest container port in the country, we welcomed the announcement last week by the Chief Secretary to the Treasury to improve the A14, which is the most important one. There is also rail, which is important as far as access to the port is concerned. In that respect, we need more joined-up thinking in terms of planning the whole access to a port. On the A14 in particular, although we welcome the announcement, there were some discussions about tolling it. We obviously need to do quite a lot of studies and, going forward, that is something we need to have proper consultation on. Q5 Chair: What is the significance of the problems you have all identified? Does it lead to a loss of trade or is it an increase in costs and logistics? Would anybody like to comment on that? Mr Bird, from where you are sitting, you are looking at a national

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Ev 2 Transport Committee: Evidence

1 July 2013 Richard Bird, Jim Stewart, Clemence Cheng and Warren Marshall

picture. Does this sort of problem result in loss of trade in particular areas or is it added costs? Richard Bird: Imports have to come into the UK, so I think, ultimately, the business will come in. For exports, it is different. If there are poor communications, that can lead to a loss of export business for time-critical markets. As far as imports are concerned, I guess the problem is in relation to lost efficiency and additional cost for the UK economy more widely. Opportunities for growth and development are lost at the same time. The effects are probably in a wider economic sense. Individual ports can lose to other ports if a particular bottleneck is not attended to. Q6 Chair: Would anybody else like to comment on loss of trade or added costs? Clemence Cheng: From my perspective, I also look after European business for Hutchison Ports. The UK ports are not just competing within the UK itself but with the likes of Rotterdam. Over many years, we have seen our transhipment business gradually eroding over to Rotterdam, for example. When you look at our growth in the last few years, it is pretty subdued. We talk about coastal feeding for the UK, but Rotterdam can also feed into Bristol and all the other ports that we have in the UK. In the longer term, it has increased the cost for the exporters as well as for the importers. We have to have a very efficient infrastructure to back up trade. The most important thing is for our country to be able to trade out of the current economic difficulties. Jim Stewart: We have had a recent example of that with a customer that we have been trying to attract to the port. They sent a lorry down to see how long it would take to get to the port. He got a particularly bad day, to be honest, but, on the strength of that, he did not relocate to our port and went to another one that he perceived to have better infrastructure links. It is a critical issue for ports. The geographical position of a port is obviously crucial, but so is the infrastructure. If you don’t have the infrastructure right, then you are going to struggle to win new business, and that has a kick-on to UK plc. Warren Marshall: What is really important is that ports are part of a wider logistics supply chain sector. Journey time reliability is critical to the hauliers and the retailers. They need to keep the supermarket shelves filled. The Port of Heysham in Lancashire is a good example. There is now consent for a link road and funding is allocated, but, to put that into perspective, the journey from the M6 to Heysham, in the absence of a reliable connection, can be anything up to an hour. This is a port that services the Isle of Man, Northern Ireland and the Republic of Ireland. It is all about trade connections, journey time reliability and trying to make sure that goods arrive in time for sailings and don’t miss sailings. That is the best way to put it. With a proper connection, there is a lot more certainty for the port and the supply chain sector. Q7 Jim Dobbin: My constituency is midway between the ports of Hull and Liverpool on that motorway system. I, therefore, have an interest in rail freight. I would be interested in the panel’s view on

that. How much ability is there to increase rail freight from the ports? What would you and the Government need to do to enable that to happen? Richard Bird: As I said, there has been impressive growth of rail freight to and from ports over the last 10 years. For some traffic such as coal, rail is the only viable means of transport. There has been a very substantial increase in the proportion carried by rail in the container sector, which has had strong long-term growth, although not so much recently. Investment in the network is required to secure further improvement there so that containers can be carried easily. It is partly a gauge issue so that they can fit under tunnels, bridges, through stations and so on. It is also a speed and reliability issue. They benefit from electrification schemes. There is a capacity issue in terms of the length of trains. All these are important issues that need to be addressed. There is also the other end of the journey. It is very important to have good receiving facilities to take containers by rail. We would hope that over the next 10 to 15 years there is a sustained improvement in all those areas. It will require money, but this is good remunerative business for the rail operators. I think there is enthusiasm for putting the money in. Clearly, this has to be judged against other competing priorities for the rail system. Clemence Cheng: Speaking from our experience, when you look at the throughput at Felixstowe, about 28% of that goes by rail, 3% by coastal feeder and 69% by road. We only had one rail service from Felixstowe to the midlands 10 years ago, but today we have 10. Over 50% of the containers going out from Felixstowe to the west midlands are going by rail. We have been making a continuous improvement to our facilities. At the same time, working with Network Rail, we have managed to clear quite a lot of the bottlenecks in the system, but there is more work to be done on that. For example, we recently opened a new rail terminal, and that will allow us to increase the length of a train from 24 to 30 wagons. Rail is a business where you need scale. The more you can put on one train, the more economical it is. From that perspective, the infrastructure needs to be able to take these bigger trains. At the moment there is not a sufficient diversionary route for these trains to go on. On that basis, even though we can handle longer trains, the system cannot really cope with that. That is a very important point to note. Q8 Jim Dobbin: On this issue again, are there sufficient interchange facilities around the country to aid change from ports to rail? Clemence Cheng: We have 29 trains going in and 29 trains going out at the moment. To push for the 30th train, we have just allocated one additional train. The problem that we face is that we are fighting with passenger capacity. When it comes to capacity utilisation, precedence is always given to passenger trains. We understand that. We need to find a cleverer way to deal with it. As you say, we need more interchanges. The more resilience we can build into the system, the better it is. For example, one point to note is that the line from Felixstowe out to Ipswich is still not electrified. If we

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electrified that particular portion, it would allow the more efficient use of trains to go down the North London Loop for the West Coast Main Line. Richard Bird: If I could follow that point up specifically on the interchanges, there have been quite significant planning issues for one or two interchanges. This is probably an area where a national policy statement for national networks could be very helpful. The siting of the interchange has to be market-driven, but the Government still have a role, in a sense, in seeing how that fits into a coherent network. That is an area where we would see there being a need for some improvement. The present arrangements are not ideal and planning delays are a significant issue. Q9 Jim Dobbin: My next point is on the issue of the planning process and how that helps or doesn’t help ports and rail freight. As we understand it, it is based on a five-year control period. We wondered whether that was helpful to the ports. Should there be some very similar planning legislation to that which applies for roads for ports and rail freight? Chair: Are the five-year planning periods helpful or not? Warren Marshall: We have touched on this already. Whereas the national policy statement around networks was just going to be about road and rail, I think that it should be more all-encompassing. Instead of being just road and rail—i.e. terrestrial access—it should also cover other forms of transport, such as coastal shipping, inland waterways and strategic rail freight interchanges. At the moment, there is a vacuum where certain types of transport do not get any coverage at all. With other sectors such road and rail, a national policy statement is expected. In terms of your question about planning, most of the major port projects are already consented under the previous planning regime. I don’t think any of the port operators can speak with any great knowledge as to how the new system is shaping up, other than to say that the new system is very much predicated on the localism agenda. Whereas in the past there was an overarching regional policy or more direct guidance to port operators and promoters of schemes, the way forward now is around localism. That brings its own challenges when you are trying to plan for regional and national projects and when you have to deal with things at a very local level. Q10 Chair: The question is about rail. Is the fiveyear planning period helpful? Clemence Cheng: Yes. From the point of view of certainty of funding, it is quite useful. The high level output specification for 2014–19 has set out certain projects. We feel that the most important aspect is Network Rail appointing a freight director, which has allowed a lot of the schemes to go ahead, whereas, before, we could negotiate with the local Network Rail director, but then further down the track it isn’t gauge cleared. Certainly, that appointment itself is probably quite important in that respect. Richard Bird: There is always an argument about the ideal length of period. Ideally, one would want more than five years. On the other hand, the downside is

that the world changes increasingly quickly. There is also a risk that funding arrangements may change during that period and a 10-year plan turns out to be a four or five-year plan. I tend to agree that five years is probably about the best that we can go for at the moment. I should say that rail has some advantages over road in this respect. The planning and financing arrangements are a bit more secure. If we had an equivalent for roads, that would be an improvement. Indeed, the Chief Secretary’s recent statements, moving the funding up to 2020, may be quite helpful in that regard. We would certainly want to see road catching up with rail. Jim Stewart: Two thirds of freight is currently moved by road. Obviously, there are improvements that should be made to the rail structure. However, there are certain types of cargo that will never translate across to rail. From my perspective, road access is much more important than improvements on the rail network. Q11 Iain Stewart: Before I come on to the main question I wanted to ask, I have one supplementary on rail freight. Clearly, there is an issue with rail infrastructure capacity. Where freight trains are competing against passenger services for slots on the main lines, do you feel that rail freight gets a fair bite of the cherry, or are you always the poor relation to passenger services? Clemence Cheng: I think we are poor relations. That is certainly our feeling. Q12 Iain Stewart: Do you have any suggestions about who should regulate the different demands better? Is that for the Department for Transport or Network Rail? Clemence Cheng: I would imagine Network Rail would be a good point of contact first in that respect. Richard Bird: There is a slight danger of the situation getting less satisfactory if there is a closer link between the infrastructure and passenger rail operating companies, which is another direction of travel for the rail sector at the moment. At least we have Network Rail, which does give increasing priority to freight, although when the crunch comes it tends to be passenger services that get priority. If we had a very close tie-up between the infrastructure and rail operating companies, then there is a risk that freight will lose out. Most freight journeys go across two or three different rail operating company domains, if I can put it that way. Therefore, a system that is more divided up on the basis of rail operating companies could be more difficult for the freight sector to manage. We would very much hope that the interests of freight are taken into account in the development of those discussions. Q13 Iain Stewart: My main question was to pick up on a comment Mr Cheng made in his introductory comments. That relates to the danger of the UK losing shipping trade to the continent, and particularly Rotterdam, as international maritime economics change and ships get much larger. Is the UK’s competitive danger a function of the surface access, or is there a capacity issue in how much of that very




large volume freight we can handle, notwithstanding the developments at Felixstowe, London Gateway and Liverpool? Is there a capacity issue at the ports as well as surface access? Clemence Cheng: It is one of economics. When you think about it, the capacity can be put on. The planning regime that we have in this country is pretty difficult and lengthy. When I go to my board and ask for funding for expansion, if I say to them that it is going to be another five or six years before we start to have some certainty in relation to approval and so on, it is quite difficult to get that. If we do not develop our port infrastructure faster, certainly it will go across to the continental ports. They will feed back either through the short sea route or they will use the Eurotunnel to feed some cargo back. The market will always find the cheapest way to bring the cargo back to this country. The consequence of that, going forward, is loss of jobs and expertise. Q14 Iain Stewart: Forgive me if I wasn’t entirely clear in my question. If the surface access was optimal to ports and there were not road or rail issues, will we have sufficient capacity at our main ports to handle the volume of cargo that would be coming in and out? Are we still going to have a capacity constraint? Clemence Cheng: I do not believe that we will have any capacity constraint in the next few years with all the development going on in Felixstowe, Southampton and Thames Gateway. Q15 Iain Stewart: Is that view shared by the rest of the panel? Jim Stewart: I would add to that. There are so many planning hurdles. When you spot an opportunity in the market, you then have to get involved in the planning process right at the beginning. To see it from start to finish can easily take seven years and cost an awful lot of money during that period, when you are dealing with issues such as the Habitats Directive and doing environmental impact assessments. I know these things are important, but the planning hurdles that we have to jump are a significant obstacle to the ports industry. There is a long gap between envisaging a project and completing it. Q16 Graham Stringer: I would like to follow up on some of Iain’s questions. Just before I do, it is not a current interest but I used to be a director of the Manchester Ship Canal Company, which eventually became a wholly owned subsidiary of Peel. The Committee should know that. I am still not clear, in your response to Iain Stewart’s questions, whether the issue of trade going to Rotterdam is, as you say in your written evidence, because ships don’t want to make a detour down the west coast of the United Kingdom, or whether it is the size of the berths and our ports can’t take these new larger ships. Which is it? Clemence Cheng: If I may take this particular question, when you look at the history of how our maritime industry developed and the ports themselves, when we have a lot of transatlantic trade that is where the west coast of the country benefits. When you switch over to the east, the middle east and European

trade, the major shipping lanes coming out are through the English channel and then into northern European ports. They will naturally choose somewhere closer to that particular shipping lane. To give you some numbers, the deviation from that shipping lane to Felixstowe is around 30 miles. If you take that deviation to, say, Liverpool, it is 500 miles, and it costs a lot of money to take one of these very big container vessels up the west coast. On that basis it is, again, coming back to the economics itself. Warren Marshall: On that point, for the avoidance of doubt, with the widened Panama canal, which is due to open by 2015, and what Clemence has articulated in terms of how Liverpool used to prosper, we have suffered over the years because ship size has got bigger and Liverpool can’t accommodate bigger vessels. In answer to your question, I don’t think you got a straight answer, but in terms of the capacity within the UK there are at least six deep-sea container ports either being built or consented. In answer to your question, there is sufficient capacity around the coastline to accommodate the larger deep-sea container vessels. The issue then is which port is closest to where the cargo is coming from. Clemence and I will probably politely agree to disagree. Our business model for Liverpool is predicated on trade coming through the Panama canal into Liverpool. Q17 Graham Stringer: I would like to ask Mr Marshall a question as well. What Mr Cheng is saying is that, whatever surface transport we put into our northern ports, and however good or large the facilities are, ships are not going to bypass Rotterdam because it is a 500-mile journey and you have to put a lot of petrol in the tank to get round the coast. In a sense, it does not matter how good the facilities are for trade—it is going to Rotterdam. Is that a fair representation of what you are saying? Clemence Cheng: That is not quite correct. The deepwater vessels will call at one port in the UK. They will obviously call at Rotterdam. They will make three or four calls in Europe—maybe a couple of ports in continental Europe. But if they have a choice, they will always make one UK call. You want to make sure that they do call in the UK and don’t bring all their cargo to Rotterdam. On that basis, the east coast is closer to the main shipping lane. Q18 Graham Stringer: That brings me to a point that Mr Marshall made in Peel’s written evidence, which was that you believe there is a hidden or artificial subsidy going into the southern coast because they get more investment in the surface transport infrastructure. I think that is what the written evidence says. It is a bold statement in the written evidence, but can you put numbers on it? Warren Marshall: When we previously appeared here under the remit of the Government’s port policy, we made the comment that the Government’s policy is to let the ports sector decide where and when to invest. We fully agree with that approach, but the implication of having better road and rail connections to your port basically gives you a competitive advantage over one of the other ports in the UK. The principle is that you can have all the best port facilities around the




coastline, but if your surface access is non-existent you clearly can’t do much about that. On your question about proportions, I am happy to follow this up separately with the Committee in terms of numbers— Q19 Chair: No; this is where you follow it up. Warren Marshall: Okay. When we previously appeared there was a suggestion of investment in the north-west. There was a project called the Olive Mount Chord into Liverpool. It was circa £5 million worth of rail investment. When we added up all the investment in the control period at that time, it was in the hundreds of millions of pounds into southern ports. It was not even a 50:50 split. It was heavily geared towards greater south-eastern ports. Q20 Graham Stringer: That is helpful. What difference would it make if the motorway system was completed into Liverpool Docks? How would that change your business? How would it change the trade? Warren Marshall: It would make a massive difference. We are investing in the deep-water terminal. We have a motorway network three miles away. We have a bottleneck. This will basically make our business case a lot more robust and will enable us to expand the port with more jobs and investment. It will enable the north-west to compete. Q21 Graham Stringer: We have talked about competition between continental ports and United Kingdom ports. Most of our ports are owned by private businesses and run on a commercial basis. Most of the European ports are owned by the local authorities or the Governments. What changes do you fear, if any, in the proposed European legislation on ports? Richard Bird: We are worried that it will work particularly to our disadvantage. The UK port model is different from the standard continental model. As you have said, the large continental ports tend to be public bodies of some sort or other. In the UK, most of our major ports are privately owned. We have been very successful in acquiring investment, despite the problems to which my colleagues have referred. We are worried that this will be put at risk. For example, if the regulation that has just been published went through as drafted, there would be some involvement, or at worst interference, in commercial pricing negotiations between ports and their customers. I know this is an issue that also worries our shipping colleagues. There would also be a large number of additional procedures to go through when contracts for port services were being tendered. There would be an additional regulatory body established for ports in the UK. For all these reasons we are very concerned about this proposal. We very much hope that it will be withdrawn—this is precedented—or, if not, very substantially amended so that there is no constraint on UK ports. Q22 Jason McCartney: My question is probably more relevant to Mr Marshall and Mr Cheng, but, Mr

Stewart and Mr Bird, please come in at the end. With reference to the specific ports that you are responsible for, what is your top campaigning transport scheme priority? Which scheme is top of your wish list? How are you campaigning and lobbying for that scheme to happen? Which agencies are you engaging with? Are you aware of which agencies you have to engage with? The reason I am asking is because I am a Yorkshire MP from Huddersfield way. A group of cross-party MPs campaigned very effectively to get the Northern Hub Network Rail project to go ahead. It was a £550 million scheme. We worked together cross-party and that was almost shovel ready to go. I think Government are listening at the moment and want shovel-ready schemes ready to go ahead. Mr Marshall first, please. Warren Marshall: Our number one priority is access to the port of Liverpool for the reasons I have mentioned. Q23 Jason McCartney: What do you mean by that? Is it rail or road? Do you have a name for that scheme? Warren Marshall: The scheme is known as Access to the Port of Liverpool. The reason why we don’t have a name— Jason McCartney: You need a catchy name for it. Warren Marshall: We need a catchy name. Jason McCartney: Who is from a marketing company? Warren Marshall: The problem we have is that there is no scheme on the table or the drawing board. Without a scheme, you can’t lobby for funding. Q24 Chair: When is there going to be a scheme? Warren Marshall: There will have to be a scheme. Q25 Chair: But when? Warren Marshall: When will there be a scheme? That is a good question. By 2020, we estimate that the local roads will be at such gridlock— Q26 Chair: But when will there be a scheme? Mr McCartney is asking for a scheme. Jason McCartney: Say I am the Chancellor. What are you actually asking for? Warren Marshall: The second part of your question is more pertinent, which is how we are trying to identify and secure a scheme. We have to deal with the local enterprise partnership, the Highways Agency, Network Rail and the local authority. This is part of the challenge we have in Peel Ports in trying to cajole all these various agencies together to identify a scheme and then campaign for the funding. Q27 Jason McCartney: It sounds very piecemeal. Mr Cheng, can you be more specific? Clemence Cheng: There is a lot of publicity about roads, and the A14 is a big one as far as Felixstowe is concerned. When you consider that only 3% of traffic on that stretch of road is freight coming up from Felixstowe, it is important to us but it is not that important. More important is the rail franchise and the




access. We see that there is a great demand to shift more freight from road on to rail. Q28 Jason McCartney: That is quite general again. What specific scheme do you have in mind and who are you engaging with? Clemence Cheng: We will be engaging with Network Rail first of all for discussions about, for example, building in more loops, so-called. Q29 Jason McCartney: This is all very wishywashy general stuff. What specific scheme do you have? Clemence Cheng: We have the Felixstowe to Nuneaton gauge cleared. Jason McCartney: It is not my part of the world. Clemence Cheng: There is also the East Coast Main Line. There are more diversions that need to be put into place. Q30 Jason McCartney: Which agencies are you engaging with on this? Clemence Cheng: At the moment we are discussing it with Network Rail and the Department for Transport. Q31 Jason McCartney: Mr Stewart, what about you? Jim Stewart: I mentioned earlier on that there is a maintenance issue with a lifting bridge close to the port. In terms of major schemes, what we would like to see is increased dualling on the A31, which effectively links Dorset back up to the M27. We will then engage with the motorway network in the UK. That is the biggest scheme for us. It is going to cost about £150 million. We are engaging with the Highways Agency and local authorities. The LEP is very aware of that as well as local transport bodies. We are engaging on all fronts. There is an issue of lack of funding. It is all very well having these ambitions— Q32 Jason McCartney: But where there’s a will there’s a way. Jim Stewart: We have the ambition. We have to try and find the finance for it now. Q33 Jason McCartney: Finally, Mr Bird, anything from you? Richard Bird: I have nothing to add, no. This is an area we leave to our members. Q34 Karl McCartney: I am following up on my colleague Jason McCartney. I noticed that he referred to himself perhaps as the Chancellor. I will be a step below that and say that, maybe as Secretary of State for Transport, I am aware that recently there has been an announcement by the Department for Transport for funding for particular pinch points. A number of you have mentioned road infrastructure improvements. Were you aware of those? I know we have now delved into the fact that they weren’t actual schemes and they need to be, if you like, shovel ready. My constituency benefited from that. I am sure, if I think about Immingham, that there are various road infrastructure improvements that need to take place there.

Are you all aware of that as an industry, and are you working together cohesively on those particular issues? You talk about 2020, but that is another seven years away. If you are even thinking about getting together to push things through, it is going to be a long while before you see those improvements. Warren Marshall: To differentiate, the 2020 was a long-term proper infrastructure intervention, but we are working with the Highways Agency on a shortterm pinch point programme of about £6 million on the Dunnings Bridge road corridor to the port of Liverpool. We are extremely grateful for the money and the work that the Highways Agency is doing to provide some short-term intervention on this gateway corridor. Q35 Karl McCartney: Mr Cheng, you mentioned that East Coast moves the rail freight. This is particularly appropriate for me and my Lincoln constituency. There is an awful lot of rail freight going through the centre of our city and cutting the high street in half. What proposals have you made to Network Rail regarding the East Coast and the loops or the electrification of different parts of the line that might improve capacity and where rail freight might go rather than the current paths that it takes, because they are trying to differentiate between all the problems or move the constraints of capacity. Clemence Cheng: As the Chinese say, yibu-yibu, you move one step at a time. What we are talking to them about, first, is probably the Felixstowe to Nuneaton stretch. On that basis, there is no specific thing that we are talking to Network Rail about at this stage.1 Coming back to the A14, we talk about a shovel-ready project. The announcement last week was for 2016. That is still a few years away from now. We welcome the news that that will now get attention, but it was a stretch of road that, under the previous Government, was shovel ready to go. Karl McCartney: But had never been done. I thought I would get that little dig in there. Q36 Chair: Very briefly, do you think that the Government’s guidance is clear on who should pay for infrastructure and getting access to ports? I know there are differences of opinion on who should pay, but my question isn’t so much that but who should be paying for it. Richard Bird: The simple answer is no. It is also very out of date and very unfair. We very much hope that it will be reconsidered. It was produced in a different era—in 2008. The world has moved on since then. It is very complex. It has never actually been tried in practice, and one of the reasons is that it would impose huge additional constraints and burdens on ports. The concept is wrong. The idea somehow that ports, as well as financing all their own investment, should finance improvements to the road network seems contrary to common sense. It is certainly out of step with what happens in Europe. It would certainly put our ports at a competitive disadvantage. We are 1

Mr Cheng is specifically referring to the East Coast line. There are other matters regarding the Felixstowe Branch line about which Hutchinson Ports (UK) are in discussion with Network Rail.




very strongly of the view that the DFT needs to reconsider this guidance. Q37 Chair: Does anybody disagree with that or want to add anything new to it? Does that mean you are all basically in agreement with that? Jim Stewart: I would endorse that. This particular route is unprecedented anywhere else in Europe. Ports

are great drivers for the national economy. If you put these contributions into ports, many of these projects won’t come forward because people won’t be able to afford them. Chair: Thank you very much to all of you for answering our questions today.

Examination of Witnesses Witnesses: Chris Welsh, Director of Global and European Policy, Freight Transport Association, Adam Cunliffe, Managing Director, Freightliner, Lindsay Durham, Head of Rail Strategy, Freightliner, and John Smith, Managing Director, GB Railfreight, gave evidence. Q38 Chair: Good afternoon and welcome to the Transport Select Committee. Would you give your name and organisation, please? Chris Welsh: I am Chris Welsh, director of global and European policy for the Freight Transport Association. Adam Cunliffe: I am Adam Cunliffe, managing director, Freightliner Ltd. Lindsay Durham: I am Lindsay Durham, head of rail strategy, Freightliner Group. John Smith: I am John Smith, managing director of GB Railfreight. Q39 Chair: Mr Welsh, could you tell us what the main problems are with road access to UK ports at the moment? Chris Welsh: The main problems are on some key roads and routes into major ports. Some of those have been mentioned already in the previous session. The A14 has been identified by our members as being in need of upgrade to one of our major ports. In addition to that, as has been previously said, increasingly with regional ports it is the last five miles where they are quite local roads, but they are critical in terms of access to the ports and the wider problems that that causes for congestion. I have a very detailed list here that I would be happy to give to the Committee. It gives the national and more regional routes where our members throughout the country have identified specific roads that need investment. Q40 Chair: What are the problems that arise from difficulties in road access specifically? Is trade lost? Is it costs added? Chris Welsh: It is a mix of things. There are problems caused through local congestion. It raises issues of literally getting access to the ports. There are tailbacks of trucks. Local residents have problems and there are air quality issues. Inevitably, the perception is often that the UK infrastructure, particularly to and from ports, is weak. The perception more broadly is that our infrastructure is not up to it. Q41 Chair: Can I ask the other panel members what the implications are for your businesses of problems of access to ports, whether it is road or rail? Lindsay Durham: I can answer specifically on rail because that is what we specialise in. There is a

general point that there is a lack of certainty of capacity on some of the key routes, notably the West Coast Main Line and the East Coast Main Line. There has been a lot of growth in passengers and freight, so there is a lack of future capacity on those routes. On specifics, the branch line between Felixstowe and Ipswich constrains the number of trains that can be moved at the moment out of Felixstowe. There is a different problem at Southampton. There is a lack of a gauge cleared diversionary route, which means that, if there are any engineering works such as the major upgrade at Reading or any problems, we do not have an alternative route. As London Gateway and Tilbury are near each other, we think the big issues there will be capacity, particularly on the West Coast and East Coast Main Line, coming out of that port. Q42 Chair: Mr Smith, what problems have you identified? John Smith: From our perspective, for GB Railfreight it mainly relates into how quickly we grow the business and the efficient access to the ports for rail. There are a number of locations. If you consider the ports as our major stations like King’s Cross, there are a number of places that are served by archaic infrastructure—for example, the Felixstowe to Ipswich stretch of railway. If you look at Immingham, where a lot of bulk commodities come through, there are restrictions from a capacity perspective in terms of the signalling that serves that area. That then drives inefficiency into what we do. Unless we are efficient, we don’t make money out of what we do. Efficiency and getting into and out of the ports is key to our ability to invest in rolling stock and to develop the business more. Q43 Chair: Mr Cunliffe, do you want to add anything? Adam Cunliffe: I can add many things to that, but I can give you a couple more specifics that are relevant to us at the moment. Your previous panel members referred to a major development on the Thames Gateway. At the moment, we could not run electrified services, if that was competing, for example, with Tilbury, which is six miles up the road, because the branch line to there isn’t electrified. It is turning into a wee bit of an issue for a number of our customers. Thames Port is a similar port but on the other side of the Thames. It is entirely not gauge cleared, so the



1 July 2013 Chris Welsh, Adam Cunliffe, Lindsay Durham and John Smith

only way we could operate traffic from that port is through very specialist and very expensive types of wagons and rolling stock to take it into the hinterland. At the moment, we have a number of particularly short-sea type customers rather than on the deep-sea side, who would love to use our services but can only use road and therefore it affects costs because the infrastructure doesn’t exist to allow that to be moved by rail. Q44 Jim Dobbin: I will stick to the line of questioning that I took with our first panel. Mr Smith has already touched on some of this. How easy would it be to increase rail freight from the ports? What really needs to happen to make that possible? John Smith: It is important to understand that there are different commodities that rail carries from the ports. The intermodal market, which is deep-sea containers, is very different from the bulk markets in terms of how we might grow. Therefore, there are different restrictions on each of the commodities. With intermodal, we receive some revenue support from the Department for Transport that encourages the growth of containers on to rail. The whole economic model within which that operates is key for the Department for Transport to understand in order to encourage the growth that we need. We compete very hard between ourselves in what we offer the market, but almost certainly help is needed from the Government in terms of additional support, particularly for the intermodal sector. In the bulk sector, as I have mentioned before, it mainly relates to the efficiency of the infrastructure. Over many years, prior to privatisation, considerable elements of the rail infrastructure were rationalised. Some major interface points such as Doncaster on the East Coast Main Line have been rationalised almost to the point where they can’t cater for the growth of passenger and rail freight that operates through there. It is important to understand those pinch points and for Network Rail to invest in those areas in order that we can then invest to expand our businesses. Lindsay Durham: I would certainly support John on the importance of the mode shift revenue support grant that he mentioned. It expires in March 2015 and we are very concerned about whether it will be continued. It is revenue spend, with a budget currently of only £19 million a year, but it supports over 60% of containers that move by rail. So it is vital. If it was suddenly to be cut off, it would cause quite a large mode shift to road. It would also have knock-on effects because, if you lose 60% of your support, you are unable to run a train any more. That is really vital. There has been investment in the rail network, and quite a lot of the key routes are now gauge cleared, which means that you can run what is now becoming a standard 9 ft 6 in high box on a standard rail wagon, which helps the economics of rail. There is still some further investment needed. Some routes are still not gauge cleared. The new challenge is really capacity and finding efficient paths on the network in among the passenger services. Adam Cunliffe: My two colleagues have said most of what needs to be said. I would add that, in terms of the revenue support grant, it does effectively equalise

what we do against road. We pay a track access charge. That helps to equalise what would be an equivalent road tolling charge, if such a thing existed, to allow rail to run on routes particularly to the sites you mentioned. You talked earlier in this session about the growth in Birmingham from one to 10 trains—and about Felixstowe. One of the reasons for that is that the revenue support scheme allows the shorter distance rail flows to compete with road. That is why that growth has been so strong. The second point is that there is a very broad customer base. I am speaking from a deep-sea and—to an extent—short-sea perspective here. They want to increase what they do by rail. They have an end user. Their own customers want to use rail more and they are looking for us to drive forward the solutions. We have a customer base now that uses rail at a 5% level, which could use a lot more, but does not. There are those who use up to 65% by rail, who overuse rail because they want to sell it, even though it is more expensive than using the road or short-sea alternatives. Chris Welsh: Echoing a lot of what has previously been said, clearly continued support through the mode shift revenue grant is really quite critical. Confidence that investment in the strategic freight network is going to be delivered, delivering the improvements and efficiency that our colleagues on the more operational side of rail freight have indicated, is important. The other thing is customer perceptions in terms of what rail freight will deliver from a shipper point of view. That means creating, for example, the concept and reality of a 24/7 railway. These days supply chains are operating seven days a week. Where freight cannot move at night, where there is a conflict with improvements on the network or at weekends and that kind of thing, it reduces the flexibility that customers are increasingly seeking. The other thing is long-term certainty about the pricing of rail freight in the market. We have gone through a six to nine-month process on the review of track access charges. The way that has been handled has caused quite a lot of uncertainty for customers about what the long-term pricing structure for rail freight is going to be. Q45 Jim Dobbin: Would the strategic creation of more interchanges help the situation as far as rail is concerned? Chris Welsh: Yes, absolutely. We believe in a marketled system rather than designating where particular interchanges should be. As an association, we have identified the specific regions and parts of the country where it would be most propitious to place an interchange. We think this is quite critical, particularly for intermodal rail freight and the development of new types of traffic rather than the traditional traffic. Again, it is so much linked to some of the issues that were raised in the earlier session to do with the planning process to enable that to be speeded up. We need greater certainty that we can actually deliver these interchanges that are so needed. Adam Cunliffe: I personally would not quite agree with that. I think there is more capacity at the interchanges than may sometimes be perceived. A




number of our major customers do not perceive the inland capacity as an issue. There are currently thirdparty terminals that I could offer as examples, such as Birmingham, Manchester and the midlands. Indeed, our own terminal network also has capacity within it and is offered to third parties to allow that to grow. There is a danger that we sit here and say there is a huge shortage of terminal capacity, whereas, because of the current economic crisis, we are in the process of restricting what we do through our terminals for the very reason that the volume that existed in 2007 is not coming through those terminals today, despite a growth in market share. That is a reflection of how we perform. As we discussed, and maybe it is for a separate question, the restrictions are about some of the network issues, getting more volume out of the ports and the ability to run that volume out of the ports, to allow the interchange points to be utilised better and therefore go to the point of investment in the next stage. Q46 Jim Dobbin: It would be interesting to find out what our next two panellists agree with. John Smith: I agree a little bit with both— diplomatically. The congestion points tend to be more port-oriented. We tend to view each of the key ports in terms of their capacity and what they can deliver into the country. If you then look into particular geographic areas, it is a bit of a curate’s egg as to whether there are adequate strategic interchanges. Equally, I would highlight that intermodal is only one portion of rail freight. Bulk commodities are another portion. They do not need interchanges; they are normally delivering either directly to generators or to manufacturers of bulk products. It is important to focus on each individual port to know what it is that they handle—Immingham being coal and moving into biomass—and to make sure that the infrastructure that supports the destination to which they are going is robust. In essence, it is taking a strategic freight corridor from a particular port, because there are not that many, into particular geographic areas for certain commodities and understanding how that infrastructure is being invested in to encourage growth on to rail freight. Q47 Chair: Ms Durham, did you want to add anything? Lindsay Durham: No. Q48 Graham Stringer: Mr Welsh, I was interested in your answer about freight access charges. We had Network Rail before the Committee just before Christmas. We asked them about the consultation and the potential for huge increases in access charges. They pooh-poohed that and said it was just a hypothetical limit. I would like you to expand on whether you believe that there is a realistic chance of very large increases and what impact the consultation process has had on the freight industry. Chris Welsh: The recent draft determination that has been released by Network Rail has, in part, responded to industry’s concerns about the level of charging.

They have reduced those charges quite considerably, and we are still consulting our members at the moment before we respond to the final determination. The nature of track access charging is changing somewhat from previous policy, where it has been Government policy to have a charging regime that encourages freight on to rail mainly through marginal cost pricing, but now specific charges are being placed against particular commodities on what the market will bear. It is targeted at a number of commodities. There is a fear from other commodities that, if this is a long-term shift in policy, which it looks like it is, they are going to have specific freight charges foisted on them. There is that underlying concern that is causing some lack of confidence in the long-term pricing structure. The other issue has been the very long-winded consultation process. It has been going on, as I say, for at least six months or maybe a bit more. It is the process itself and the way that it has been conducted over that period that has caused a lot of concern among prospective customers about what the charging regime is going to be, especially for those customers who have to make long-term decisions about committing to rail freight and the investments that they themselves would have to make. Q49 Mr Sanders: I want to come back to rail. If you started with a blank piece of paper and wanted to draw up a rail freight network of tracks, it would probably look very different from the rail network we have today. Has anybody done any work on that to show where you really would want new rail in order to make the network work better for freight? John Smith: In a small way, yes. There is a strategic fund that Network Rail manages on behalf of the Department for Transport for investment in rail freight issues. That allies itself to the control periods. The first time that took place was within CP4, which we are just coming to the end of. There is another lump of money in CP5, which is circa £200 million to be invested. We all work together with Network Rail to agree with them where that money is best invested in order to create an efficient rail freight system. To be honest, at the level that it is funded you are only ever looking at small construction work that can take place. Indeed, as we debate with Network Rail how that fund will be allocated for the period for CP5, certainly our wish list is a lot longer in terms of cost than the amount of money available. It will be an interesting debate to find out what is prioritised in those circumstances. Q50 Mr Sanders: It would be interesting to see what that wish list is, given that we have this HS2 and HS3 multi-billion pound wish list on the table at the moment. If freight is not coming in and saying, “Actually, we need some investment in our side of the network, which in turn could help the passenger network in terms of capacity,” maybe you should be publishing that and thinking bigger. You may have to accept that you are not going to get everything you want but maybe thinking bigger in terms of what you could be asking for.




John Smith: That is true. Our market is relatively embryonic. We have all only existed in the private sector for 15 years. How we ally ourselves together and have a joint voice has been developing. The problems we have faced over the charging proposals at the rail regulator table has brought us a lot closer together. Freightliner can comment for themselves, but I feel that that has started to create some momentum around what you are describing. Lindsay Durham: We certainly lobby the DFT and put our case to them about more investment. We are pleased that investment has been made. A good example of drawing a new line is the one that is being developed from Felixstowe to Nuneaton. That goes cross- country via Ely, Peterborough and Leicester, to give you some idea, instead of all the trains being routed via London, though some of them will still have to come via London. That route, because it was quite rural, needs a lot of major upgrade, which is being done in parts. It has commenced the work, but there is more investment to come. We are not absolutely clear what investment is being made over the next five-year control period. There are various parts like the flyover at Leicester, which we believe to be part of the Midland Main Line electrification scheme, but the details are still to be worked through. Ely is part of another scheme. So all the bits need to be joined together. Q51 Mr Sanders: You mentioned earlier problems with Reading. Is that because freight has to go through Reading in order to go to the north of England? Lindsay Durham: Yes. Q52 Mr Sanders: How could you resolve that with new infrastructure? Lindsay Durham: If you drew a completely new map, you would just draw straight lines from the ports over the shortest possible route, but that is probably not realistic. The trains from Southampton are routed via Reading and Didcot and then northwards towards Birmingham, which is about the fastest or the shortest rail route from Southampton. You mentioned HS2 and HS3. Once HS2 is developed, one of the keys going forward is capacity on the West Coast Main Line, which is a key artery for freight. Over 90% of the intermodal trains, which are the fastest growing type of train, go over the West Coast Main Line at some point in their journey. What happens to the West Coast Main Line post-HS2, how that capacity is used and what happens during the interim between HS2 and HS3, when the fast trains will be joining just north of Birmingham, are going to be key issues for capacity for freight. Because HS2 is still over 10 years away, there is potentially a problem in the interim that will prevent growth. Adam Cunliffe: I do not think I have anything to add to that. There are some easy wins that we have described, such as Felixstowe to Nuneaton, Southampton electrification and the gauge clearance to the north-east and maybe south of the river. Those are going to be your real network advantages as we go forward. On top of that gauge clearance, there is the investment that has already happened.

Q53 Sarah Champion: Ms Durham, in Freightliner’s submission to the Committee it is said that the five-year funding periods for Network Rail are too short to plan investments with assets that have a 30-plus year lifespan. Could you give us some specifics about what the issues are around that? Lindsay Durham: Yes. There is a good and bad thing about having five years. The bad thing is that, as Chris alluded to, the track access charges that we pay to Network Rail—in lieu of fuel duty for road—are set every five years. There has been quite a traumatic process this time. There was a proposal that they were going to increase by well over 100%. We had to lobby the Office of Rail Regulation, who set the charges, quite hard. They have now made their draft decision and, on average, the increase is about 20% by the end of the five-year period. That five-year period does create a lot of uncertainty, both for ourselves who are investing in locomotives, wagons and terminals, which all last 30-plus years, and also for other investors in the chain. You don’t really get the same uncertainty on road at the moment in terms of setting the charges. That is a big problem. Ideally, we would like a longer term and a stable framework so that we could predict a bit more what our charges were going to be, even if they were not absolutely set. The railway benefits in terms of investment from having a five-year control period because that is not the case for road at the moment. It creates a bit more certainty in terms of investment. It means it is less vulnerable to short-term cuts. Even so, the infrastructure that Network Rail is investing in lasts 35, 50 or 60 years. Therefore, in an ideal world, you would have a longer control period. I recognise that it is difficult when you have different parties involved at different stages. John Smith: I would just add to that. We are probably lucky to have a five-year funding programme—just to reach the five years. I think that is a good thing. We do take risks on assets. Most of our asset lives are for 30 years and you have to borrow money to support those assets. Five years clearly does not dovetail into that. I would seek more certainty and stability in what takes place at each of the control period reviews. It took us somewhat by surprise this time round that our track access charges were deemed to change so much after we had been operating for 15 years, when you would have thought the cost of what we do in terms of damage to track would be clear. What we would seek is stability so that, even if it is reviewed every five years, it is not varying from the norm by much more than 2% or 3%, because that then allows us to have the trust to plan and invest. Q54 Sarah Champion: I have a general question for the whole panel. Given that you are all working nationally, what has your impression been so far of working with the LEPs and local transport? Specifically, are you clear who has responsibility for decisions? Chair: Could anybody briefly give us general impressions? I know it is early days for a lot of these organisations.




Lindsay Durham: We have not had a lot of contact with the LEPs. It is quite a difficult relationship between the national companies that are relatively thinly spread and LEPs. I am sure it is difficult for them to have expertise in areas such as rail freight or even freight. It is quite a specialist subject. We have had contact with a couple, but it has been fairly superficial. I think it is difficult. Q55 Chair: Mr Smith, do you agree with that? John Smith: I would agree with that. We have not had a great deal of contact. Q56 Chair: I see that Mr Cunliffe is nodding, so there is general agreement on that. Chris Welsh: It is very much an emerging situation at the moment. Chair: It is a new situation; we just wanted to have an impression. Q57 Iain Stewart: I would like to ask about the likely changes in the UK’s energy generation mix and the sourcing of raw materials in the medium to long term. As far as we can predict, there is going to be a decline in carbon fuels and an increase in renewables and nuclear. Is that likely to be a game changer for rail freight and what you transport round the country? John Smith: Yes, very much so. In the energy mix for many years—if not hundreds—rail freight has carried coal, which is a considerable part of our portfolio. Its imminent demise is of great concern. When you are carrying a bulk commodity such as coal, you have one single customer who is contracting you with numerous trains over a lengthy period of three to five years. You have a degree of certainty around the assets in which you are investing. That allows you to take more risk in other areas, such as the intermodal market, which tends to be riskier because you are filling trains with a number of customers’ commodities. In consequence, we are the only carrier of biomass in the country at the moment on behalf of Drax and E.ON. The migration towards biomass, certainly in terms of energy generation, is very important for rail freight. It gives us a commodity that could replace coal as coal-fired power stations diminish or some of them convert to biomass. Consequently, the efficiency of the infrastructure that supports that is hugely important. If you look at understanding how rail freight is part of the wider economic debate that we have, it is important that Government is joined up from the point of view of energy policy, port policy and rail policy in terms of encouraging how materials such as biomass might be carried, if that is deemed to be the greenest and best way to go. For me, running a rail freight business, coal is a diminishing market. It is absolutely vital for our survival that biomass replaces it over a period of time in order that we have a volume of work that can support other commodities that we also work with. Q58 Iain Stewart: What percentage of coal comes through the ports as imports?

John Smith: It is likely to have increased recently because of the demise of Scottish Coal. I don’t know the actual figure. Adam Cunliffe: It is very high. Lindsay Durham: It was about 80%, but now it is probably slightly higher. It is probably nearer 90% now with the demise of Scottish Coal. John Smith: Yes; it is 80% to 85% I would think, at the moment. Q59 Iain Stewart: If there is going to be a decline in coal that you are transporting from the ports and you might not be able to replace all that with biomass, does that not give you additional capacity for container transportation by rail freight? Does a decline in one give you space to do more of the other? John Smith: Not really, no. Adam Cunliffe: It depends where coal runs from, where biomass might or might not run from and where the containers run from. The broad corridors for containers are from the southern ports. It is the London ports such as Tilbury and the Gateways, then Felixstowe on the east coast, and Southampton on the south coast. They are the main throughputs for containers and there is not a great deal of coal demand coming from those ports into power stations, which are typically based in the Yorkshire corridor. John Smith: Most of the bulk markets are on the east coast north of Hull. They are a different selection of ports. Immingham is one of the biggest bulk ports in the UK, whereas Felixstowe is one of the biggest intermodal ports. They serve different corridors and different markets from a rail perspective. So, no, it is not easily replaced. Lindsay Durham: Government policy looks as though it is going to encourage biomass at existing coal power stations for the next 10 to 15 years. That is an opportunity for us, but we don’t actually know which ports and power stations exactly will operate. We may have a challenge in working out new routes, but they won’t be the same routes as the intermodal services. John Smith: From a perspective of efficient capital load, the one good thing about biomass replacing coal is the fact that it uses existing rail freight infrastructure and goes into existing power stations that deal with existing connections to the grid. You would think that the overall economics of that— Adam Cunliffe: It may mean slightly converting existing rolling stock. Q60 Iain Stewart: I would like to raise a separate issue to pick up on a comment made by our previous panel of witnesses. It concerns where rail freight has to compete with passenger operators for slots on often congested rail lines. A concern was raised that the development of alliances between Network Rail and the passenger train operating companies might disadvantage rail freight companies. Is that a concern that you share? Lindsay Durham: It is. There has only been one real alliance at the moment in Wessex. To be fair to them, they have made a real effort to work with rail freight companies in that area. I think that is because they are the first and trying to show that they are willing to work with us.




The bigger risk is around generic demand on the railway. It is good news. It is a good problem to have—that passenger demand and freight demand are growing. When you plan passenger trains, you plan to start a new service on x date and you announce your new timetable. Everything starts on that date, whether the trains are full or not. With a freight train, you work with a customer or customers trying to develop a new service. You will only start running that service when you have sufficient demand for it, so the trains start at ad hoc times of the year. It makes it much harder to get capacity on the timetable graph for freight. We have been working with the rest of the industry, with Network Rail, with the Department for Transport and with the Office of Rail Regulation about developing a concept called strategic freight capacity, which we hope will identify and reserve some capacity for freight on key corridors. That concept has not yet turned into reality, but it will be important for planning growth in the future so that we can give certainty to our customers that we can grow. Q61 Chair: Could you conclude your thoughts on that because we need to move on? Lindsay Durham: It is also important for Government because they are investing, so they will want to make sure that they get the benefits from their investment. Q62 Jason McCartney: I go back to HS2. The Secretary of State for Transport introduced a hybrid Bill last week, particularly emphasising the capacity as opposed to the actual speed. Overall, bearing in mind that we have already talked about lack of

capacity on the network, do your organisations and companies see HS2 as a positive thing or money being spent in the wrong area? Chair: Could I ask you to give answers as briefly as you can? Chris Welsh: We think it is a positive thing. Through efficiency, it should free up more capacity for rail freight, but there are some dangers that were previously mentioned in ensuring that we can conserve a strategic rail freight network. Adam Cunliffe: If you are going to spend £43 million, a portion of that would be much better spent helping to develop what was opened at Felixstowe a couple of weeks ago, with the new north rail terminal where most operators, though not all operators, can run 30wagon trains— Q63 Chair: Mr Cunliffe, the question is, if HS2 goes ahead, what benefits do you see? Have you been involved in any discussions about how there might be more freight access to existing lines? Jason McCartney: Would there be any benefits? Adam Cunliffe: For capacity, yes, but there are other ways of achieving those benefits. Q64 Chair: But the question is, do you think there will be any benefits? Adam Cunliffe: Yes. Lindsay Durham: If we can get the capacity on the West Coast Main Line for freight, yes. John Smith: Yes. We have lobbied in favour of HS2. Chair: Thank you all very much for coming and answering our questions.

Examination of Witnesses Witnesses: Richard Blyth, Head of Policy Practice and Research, Royal Town Planning Institute, Mark Basnett, Executive Director, Liverpool City Region Local Enterprise Partnership, Mike Ibbotson, Transport Policy Manager, Hull City Council, Richard Meeks, Network Development Manager, London Rail, Transport for London, and George Kieffer, Chairman, Haven Gateway Partnership, gave evidence. Q65 Chair: Good afternoon and welcome to the Transport Select Committee. Would you give your name and organisation, please? George Kieffer: I am George Kieffer. I am the chairman of the Haven Gateway Partnership. I should also say that I am deputy chair of the Harwich Haven Authority and vice-chair of the South-East Local Enterprise Partnership. Richard Meeks: I am Richard Meeks from Transport for London. Mike Ibbotson: I am Mike Ibbotson from Hull city council. Mark Basnett: I am Mark Basnett, executive director of the Liverpool City Region LEP. Richard Blyth: I am Richard Blyth from the Royal Town Planning Institute. Q66 Chair: We are expecting a vote to take place at 6 o’clock. If that happens, that will conclude the meeting, so I would ask you to give your answers as concisely as you can.

Could you each tell me the main problems you see in relation to access to ports, with reference to your own areas, where that is appropriate? Mark Basnett: If you look at the city region’s principal access point to the port, it is a three-mile stretch of trunk road that leads from the motorway to the port. That stretch of road is also the primary commuter route for a large part of the city region. Whilst local and commuter traffic takes up 90% of that road, 10% is port-related. As the port expands, we are concerned that that will significantly cause inconvenience to local residents and commuters. Currently, the impact on business and commuters is slower journey times and some of the issues referenced earlier of pollution and so on. There is some congestion that delays freight traffic, which has a negative impact on business competitiveness in the natural hinterland of the port, which is typically about two hours’ drive away. At the moment, that is not excessive. Our concern is more about the future—that



1 July 2013 Richard Blyth, Mark Basnett, Mike Ibbotson, Richard Meeks and George Kieffer

it becomes excessive as investment in deep-water facilities bring a significant increase in freight. Richard Meeks: Our biggest priority is ensuring sufficient capacity in the rail network, in north London in particular, for both passenger and freight services. Mayoral policy supports both rail freight and passenger, and both are subject to fairly enormous growth at the moment. Rail freight services come down from the Haven and Thames ports and have to wind their way through very congested parts of the rail network, with the North London Line and the Gospel Oak to Barking Line. This is primarily intermodal traffic—the container traffic from the ports. That has been forecast to grow at 2.5% for the next 30 years in a recent study by Network Rail. With London Gateway port in particular, the London, Tilbury and Southend Line is looking at an increase from 20 trains a day in both directions up to 110. It is an enormous increase in potential traffic from London Gateway. There are similar increases from the Haven ports, from Felixstowe, though some of that traffic can go cross-country on the Felixstowe to Nuneaton route that has been described. There is still a lot of growth. At the same time, passenger demand on the London overground network has more than doubled since TFL took it over in 2007. It has nearly trebled. London’s population is growing, and those lines serve regeneration areas. Passenger and freight demand can only increase. Our big priority in the long term is how to provide sufficient capacity to satisfy both markets. Mike Ibbotson: In relation to the port of Hull, the problem in terms of rail is the poor line speed, reliability and the opening hours on the railway line, which is closed for long periods overnight. We see electrification as being the main solution to that problem. It is something that is being addressed at the moment. Hull Trains are trying to put forward a package of private funding to supplement the Network Rail money, which has not yet been forthcoming. In terms of the road network, we welcome the Treasury’s announcement last week on the A63 Castle Street—which this Committee heard about two years ago—but we are still anxiously looking at making sure that that does not stall again. It has stalled three times over the last 20 years and we don’t want it to happen again. We heard the announcement that Danny Alexander was looking at a mechanism to make sure that there was certainty of delivery. We look forward to seeing what that is. We also want to make sure that that is the correct scheme for the area. There are other objectives as well as access to the port in terms of the city centre, connectivity and severance to development sites, which are very important for jobs in the city. There are issues about the quality of the trunk road, the landscaping and poor maintenance, which gives a very bad impression for new investors and the million visitors we get through Hull each year. George Kieffer: I share quite a few of the problems that my colleagues announced, but, specifically around the Haven ports, I would not want to lose sight of the seaward access to ports—channel deepening in particular. We heard that larger vessels are coming on

stream. We need to be ready. There is a channeldeepening exercise around the Harwich area. It is going to cost in the order of £70 million. That is a significant investment for the private sector to make. The other aspect I would focus on is the resilience routes. The A14 has already been mentioned. The A120 is a resilience route for the A14 if an accident blocks the A14 around Cambridge. There are private sector contributions of some significant magnitude available for that of the order of £100 million plus. Clearly, there has to be a mechanism to drive some of these initiatives forward. I would hasten to add that that contribution is not from the port; it is from other developers. Q67 Chair: Mr Blyth, from your perspective, how do you think that support for access to ports in the UK compares with what happens in other parts of Europe in relation to European competitors? Are there any general issues that members of the panel have not raised that you want to draw to our attention? Richard Blyth: In our evidence we refer to the difficulty of the national ports policy statement— Chair: The Committee is suspended and we will come back as soon as we can. Sitting suspended for a Division in the House. On resuming— Q68 Chair: Mr Blyth, could you tell us how you see what is happening in the UK in relation to ports access compared with what is happening with European competitor ports? Richard Blyth: The point we made in evidence really related to the issues of the national ports planning statement and this notion that you can step away from planning these issues and let the free market function entirely on its own. The difficulty there is that in fact the performance of ports, as we have been hearing, is very much dependent on what is spent on its infrastructure. One issue that does not seem to have been catered for is the question of whether UK ports could function as a way of taking business from the continent, in a fighting back kind of manner. If you are an exporter in Germany, could you not put your goods on a train and export them out of a UK port rather than using a continental port? This idea that somehow we can all function with the Government standing back completely may not be the reality. There may be a big role to play in terms of influencing the way the markets function. Q69 Chair: Do any of you have views on the current rules on the funding of access to ports and whether port operators should have to pay a contribution to that or the whole of it? Mark Basnett: Liverpool, which is a privately-owned port, has gone to great lengths to secure the private capital necessary to secure a £350 million investment in new deep-water facilities. That could have a significant advantage and benefit, not just for our city region but in a broad hinterland of two or three hours’ distance as the nearest port for large manufacturers and retailers. Our concern would be that, if you then added the burden of funding road and rail infrastructure on top of that, the private sector would




not have invested in that situation if they had that additional burden to bear. That would be our concern, but my experience relates purely to our experience in the city region. Q70 Chair: Does anybody else want to comment on this issue? George Kieffer: If one looks at the UK as a competitor to the continental European countries, we have to be aware that, in continental Europe, by and large harbours are publicly owned and the infrastructure is financed by the taxpayer. It is a little bit of a fallacious argument because, ultimately, we all pay as either consumers or taxpayers for the additional costs of the infrastructure. I look specifically at the free port at Riga, which is publicly owned. It brings together municipal and national Government. They plan and deliver the infrastructure there themselves. Let us take the example of Hutchison Ports, one of our core partners. They own a container terminal in Rotterdam. They themselves have investment decisions to make. Do they invest in Felixstowe or Thamesport in the UK, or do they invest in Rotterdam? It could damage UK competitiveness. It is not a question of Felixstowe competing with Liverpool or anything of that nature. Q71 Jim Dobbin: Have the panel any concerns about the level of funding that is available to the local transport boards? Have you spoken about or discussed this with the Government? George Kieffer: The south-east local transport board is coterminous with the south-east local enterprise partnership. We have been allocated funding of £98 million plus or minus 30%, which means the envelope is from about £66 million to £122 million. That is quite a wide envelope. Interestingly enough, we have gone through the first prioritisation and there are a number of freight-related projects in there, including secure lorry parking facilities in Kent. The board is taking that on. However, the local transport board does not have responsibility for the Highways Agency for national trunk roads, for instance. At the moment, there is a lack of integration between the Highways Agency and the local transport boards. Q72 Chair: Mr Ibbotson, I think you raised an issue on this in your written evidence. Can you tell us more? Mike Ibbotson: Did I? In the Humber, things have probably moved on a little bit now. We are in a position where we are due, like yourselves, to get an allocation through the local transport board of about £22 million plus or minus 30%. Q73 Chair: When you said “like yourselves,” who are you referring to? Our records don’t show people pointing. Who are you referring to? Mike Ibbotson: Mr Kieffer—the Haven ports. That allocation is allocated on the basis of population. In common with Mr Kieffer and the Haven ports, the issue then is that it is not enough money to address the major infrastructure blockages. We would still expect the Highways Agency and Network Rail to pick up those.

Richard Meeks: I think we should recognise that the Government have invested really rather heavily in the strategic freight network, both through the control periods—the five-year funding process—and the highlevel output specifications, but also separately through the spending reviews, the Budgets and the autumn statements. Last week they announced the electrification of the Gospel Oak to Barking Line, which is of huge strategic importance to rail freight. Of course we would like more funding, but I think we should recognise the amount that the Government are providing. Q74 Jim Dobbin: Have you discussed any of this with the Government? Richard Meeks: We discuss funding continuously with the Government; a day never goes by. Q75 Chair: With what result? Richard Meeks: Partly things like the electrification of the Gospel Oak to Barking Line. That is something for which we have been lobbying for years and years. TFL is making a contribution of £25 million towards that, and it got announced last week. We think it is a direct consequence of our efforts. Q76 Iain Stewart: I would like to ask about the scope for expanding coastal shipping as a way of increasing the onward distribution of cargo into the UK. How big an opportunity do you see there is for coastal shipping, particularly given the changing demand of the logistics network, with online shopping requiring a much faster turn-round of goods? Do you see it as a huge prospect for coastal shipping? Mark Basnett: We see a big opportunity for coastal shipping. It provides a very carbon-efficient way of moving goods to and from centres of population. If you imagine a coastal network of ports serving populations, certainly a move to internet retailing, as you have referenced, means that goods need to be close to consumers to service that need. We have seen a significant increase in the last year or two in additional coastal feeders coming from the main hub ports of Southampton and Felixstowe into Liverpool directly to serve the large population that Liverpool is closest to. It saves significant journey time by road. It takes longer, but it is more cost-efficient and a lot more carbon-efficient to move goods in that way. George Kieffer: I would agree with that. In the east of England region we are operating a low-carbon freight dividend, which is a European regional development funded programme. It is worth about £3.8 million. In effect, it gives grants to SMEs to make the modal shift from road to either rail or short-sea shipping. There is a feeder service coming out of Felixstowe operated by Unifeeder. The key criteria of success of those are the certainty of the service operating and the certainty of delivery. Richard Blyth: I would comment about the way in which the seas are being planned. There is a new body called the Maritime Management Organisation that is rolling out a series of marine plans. One of the questions in relation to coastal shipping is to make sure that the right balance is struck between, for example, areas of sea preservation and species, and




also sea access to ports, which has been raised once or twice this afternoon. Q77 Iain Stewart: Very broadly, the figures I have show that about 10% of cargo is distributed by coastal shipping. On a general scale, how do you see that changing? Could it double or triple? Mark Basnett: I am probably not equipped to say. Our experience is that it is increasing, but the port of Liverpool in particular has relied on coastal or transhipments because it has not had deep-water facilities. We have seen an increase in coastal shipping. Given the trends in the industry, I think we are going to continue to see that coastal shipping increase as well as, for Liverpool, securing deep-water vessels in addition to that. We don’t see it completely replacing coastal shipping. Quite the contrary—we see it creating an opportunity to do coastal shipping from Liverpool and feeding outwards into other ports in the vicinity. Mike Ibbotson: I would like to register that, in terms of the port of Hull, most of our cargoes are bulk cargoes, which come in and go straight to an individual definite end point within the country, like a power station or some such ultimate destination. We do not see much scope there for any double handling or moving stuff around the coast. It is something we would welcome for other ports. From a sustainability point of view, it would seem like a good idea. Q78 Iain Stewart: Other than the scheme that Mr Kieffer referred to, is there anything specific that you think the Department for Transport could do to encourage it? George Kieffer: The Department for Transport has the mode shift revenue support scheme, which operates for both rail and coastal shipping but tends to be available only to the larger companies. Ours is specifically restricted to SMEs. Q79 Jason McCartney: Just before I ask my question, I would point out that I went to the National Coal Mining Museum in Wakefield last week, which is my adjoining constituency. They have just opened an exhibition on the transfer 200 years ago of coal from the north-east down the Thames into London. It used to take three weeks, by the way, so, hopefully, it will be a little bit quicker than that these days. Our session started this afternoon with a number of representatives from companies. I asked them about the one transport scheme that they are campaigning for that will increase the access and competitiveness of their ports. There is a bit of overlap in terms of areas with some of you gentlemen. I would like to start off with Mr Kieffer and go along the line. What is the one transport scheme that you think would massively increase connectivity access to a port? I know some of you have specific areas and some of you cover the whole country. What is that scheme, what is it called and what are you doing to campaign on that? George Kieffer: It is easy to answer. If I am only allowed to choose one, it would be the rail scheme, but in two parts. It is the Felixstowe to Nuneaton line, fully electrified, gauge cleared and crossing over at

Leicester, and the North London Loop Line, which will be key not just for the port of Felixstowe but also for London Gateway. Q80 Jason McCartney: I have got to snap on the first bit of that. George Kieffer: We are working closely with the local transport board, Network Rail and others on promoting those schemes. As Mr Meeks has said, we have had some success on at least the Gospel Oak to Barking Line. Q81 Jason McCartney: Mr Meeks, would you please re-emphasise what you said. You have mentioned a couple of schemes, but what would be your top priority, if you could have one? Richard Meeks: Our biggest concern at the moment is the link between High Speed 2 and High Speed 1. It happens in the Camden Road area where the North London Line turns right and freight services carry on over Camden Road Viaduct to reach the West Coast Main Line. Q82 Jason McCartney: Does that scheme have a name? Richard Meeks: It is called the HS2-HS1 Link. What is being proposed at the moment by HS2 Ltd is not fit for purpose in TFL’s view. We are very concerned that it will actually take away freight and passenger capacity from the current situation, and most certainly not allow for growth. This is in the context of enormous forecast growth in both passenger and freight services. We very strongly believe that the opportunity should be taken to put the brakes on the link at the moment and do it properly at some point in the future rather than the currently proposed scheme. We are actively campaigning on this point and joining forces with Network Rail. Mike Ibbotson: If you had asked me a week ago, I would have said the A63 Castle Street, but I will leave that one for the moment. It is electrification between the East Coast Main Line and the port of Hull. This is a scheme on which Network Rail has already done a cost-benefit analysis and a business case. It gave a healthy business case, but, unfortunately, the Government did not see fit to announce it when they announced the rest of the TransPennine route between Manchester, York and Selby. It is a relatively modest scheme at about £77 million. We have a private company now, First Hull Trains, which is an openaccess operator and wants to put in a significant amount of money, although it has not told us exactly how much. We also have Network Rail, which is due to spend money on signalling and line speed in CP5. We have a very modest cost of about £3 million to get full gauge clearance. There are a couple of bridge schemes in there. If you throw them all in together, you should get a very healthy business case, and that is something we are progressing. We have already lobbied the Secretary of State. He came to Hull a couple of weeks ago, and we are reasonably confident that discussions are ongoing. We hope to put a combined business case together later this summer.




Q83 Jason McCartney: It is good news on the Humber Bridge tolls. Mr Basnett? Mark Basnett: We have identified four key areas that need to be addressed. I know you asked for one. The priority among those four has to be the highway access. I referred to the trunk road earlier as being the key point of connectivity. Q84 Jason McCartney: Does that scheme have a name? Mark Basnett: It doesn’t have a name. Jason McCartney: We were discussing this an hourand-a-half ago. Q85 Chair: Do you think you could find a name for it so that we know what you are talking about? Jason McCartney: Access to Liverpool is what I wrote down. Mark Basnett: Access to Liverpool is as good as any to the port of Liverpool. What have we done about it? We have made that a priority. We have scoped a TENT bid for European funding, which all partners have bought into. It is a strategic priority for the whole of the city region; everyone acknowledges that. That bid is awaiting approval from the EU. That will fund the detailed technical and financial appraisal of the options for that scheme. There are a number of local sensitivities, as there are obviously with major road schemes. It is of absolute immediate strategic importance. The longer-term issues are around better use of rail and the canal, but the first thing that comes into view in our area is this road access. It is primarily that main road, but there are also some adjoining roads to the port. Richard Blyth: I am not in a position to favour a particular place. My plea is that, in any of the evaluations of these schemes and when the bids are considered, the whole range of holistic benefits are thought about. We know as a country that it is really important to get access to housing and employment land. In fact, parts of the country are crying out for access to housing land. Housing developers can’t afford to pay for it largely themselves, so I would simply ask that, in the evaluation of access to ports schemes, the full range of benefits that may accrue from those schemes to a wide range of issues within that area are added on when the evaluations are made. Q86 Chair: The ports and logistics companies have told us that the current planning process is unduly long and complex. Do you think that can be changed in any way without trampling on the rights of local home owners? Does anybody have any views on that? Richard Blyth: We have a new process for the largest ports developments. I checked on the planning inspectorate website today, and two port-related proposals have tried to use it. One has been withdrawn, and the other one, which is in the Hull area, is awaiting a decision. Somewhat worryingly, the Secretary of State has asked for longer to make the decision than he is officially supposed to have, but I would expect that, even so, a decision will be fairly quick. The situation was amended in 2008 in relation to major infrastructure, but it is still a bit untried. The other risk to promoters of proposals that way is that,

although your rear-end process is very specifically set out in time scales, albeit that the Secretary of State can extend them, the onus on a promoter to get a scheme to the position where it can be accepted is very great in terms of pre-application and discussion with a community. It is a big process. That is quite an imposition that any promoter will have to take on board and consider seriously. Q87 Chair: Are you saying that you don’t think it can be changed? Richard Blyth: It was changed in 2008. Q88 Chair: Yes, but I am talking about the current situation. Richard Blyth: What—further changed again? Chair: Yes. Richard Blyth: That is not something I have evaluated recently. One of the things that worries us in planning generally as a profession is that too many changes to the systems have transactional and frictional costs down the line, which may sometimes be underestimated when they seem a good idea at the time. Q89 Chair: Are there any other views on this issue? George Kieffer: The planning system is still expensive and overlong. I looked at the most recent planning applications by the port of Felixstowe, which took 20 months for the Secretary of State to determine. He remitted them to public inquiry, whereupon that particular planning application was withdrawn. It clearly represents constraints. Q90 Chair: Do any of you have views on how the current arrangements are now working with local authorities, local enterprise partnerships and transport boards with regard to strategic decision making in relation to ports? It is early days and you all represent relatively new organisations, apart from Mr Basnett, who represents a local enterprise partnership—in fact in a slightly different category. I will still ask him for his view. Does anybody else want to make any comment on how those structures are working in relation to strategic planning, but not referring to very localised decision making? It is strategic planning, access to finance and developing a strategy for port development. George Kieffer: Having been a board member and deputy chairman of the East of England Development Agency and now on the local enterprise partnership for the south-east, I must confess that the local enterprise partnerships do not have quite the same resources that the regional development agencies had. While EEDA had developed a very good understanding of the ports and logistics sector, that is not as yet the case with the local enterprise partnerships certainly around our area. Q91 Chair: Does anybody else want to comment on this issue? Richard Blyth: It is a speculation, but the announcements on 27 June in relation to national infrastructure investment were that, the more an area demonstrated strategic co-operation, the more money




it was likely to get. Sometimes nothing concentrates the mind more than the prospect of funding, so I am optimistic that that will work. Q92 Chair: Mr Basnett, do you wish to comment on this? Mark Basnett: Yes, but I would preface what I say by pointing out that I do represent a local enterprise partnership so I perhaps have a particular view. We have established a local transport body with the Mayor of Liverpool, five city region cabinet leaders and the chair of the LEP representing the private sector. That has gone through a rigorous process of

prioritising the spend of the funding to which we have access, which is £35 million in this first wave. The DFT has been very pleased with the prioritisation process that we have put in place for the use of that money, and we are confident that that puts us in a good position for future rounds. That said, the situation across the UK is very varied. We are quite unusual as a LEP in being as well constituted as we are. Chair: Thank you very much for coming and answering our questions. I am sorry you were kept so late.

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Written evidence Written evidence from Hull City Council (PA 02) The following written evidence is presented on behalf of Hull City Council. 1.1 It is worth emphasising that the economic impact of UK ports is substantial. A recent study on this has pointed out that the ports sector directly employs 117,000 workers; contributes £7.9 billion to UK GDP, generates £2.0 billion in tax receipts to the UK Exchequer and generates large multiplier impacts. (The economic impact of the UK Maritime Services Sector: Ports, a report for Maritime UK, December 2012, Oxford Economics). 1. 2 The Humber Ports—Context The Humber Ports (Grimsby & Immingham, Hull, Rivers Hull & Humber, Goole and River Trent) form the UK’s largest ports complex measured by tonnes lifted, handling 16% of England’s sea freight. The Port of Hull plays an important pan regional role providing access for general cargo to the Northern Continent, Scandinavia and the Baltic. Hull is a key port on the E20 Trans-European road/rail corridor which runs from St Petersburg in Russia to Limerick in Ireland. The hinterland of the Humber Ports extends into the Midlands, Scotland and into the South East for some traffic. 1.3 The Humber Ports are in a prime position to become the English hub for the manufacturing, installation and servicing of offshore wind turbines. Indeed, the Humber Ports have been designated by the UK Government as one of five “Centres for Offshore Renewable Engineering”. Having “CORE” status means that the Humber Ports, local partners and the Government work jointly to develop the “offshore wind “opportunity and unlock barriers to investment. (Centre for Offshore Renewable Engineering, UK Government, 2011). Thus whereas the key growth driver for the Humber Ports was (as recently as 2007) related to coal importation (Freight, Route Utilisation Strategy, Network Rail, 2007), the key economic growth driver for the Humber Ports for the next generation and longer, will be the development of the offshore wind industry, with the Humber Ports constituting England’s—and possibly the UK’s—largest cluster. 1.4 Thus, in addition to the “traditional” role of ports for the import and export of goods, some ports, particularly those within short journey times to the Round 3 Offshore wind zones in the North Sea will become major centres for the manufacturing and servicing of a major industry—and major centres of new employment growth. As the Government acknowledges, “provision of sufficient sea port capacity will remain an essential element in ensuring sustainable growth in the UK economy” (National Policy Statement for Ports , DfT, January 2012) and, of course, access to these ports will be critical in ensuring that offshore wind farm development contributes to the provision of much-needed employment and the nation’s low carbon energy needs. 2.1 Enhancing connectivity leading to economic growth was the subject of the Eddington Transport Study (2006), as summarised by the House of Commons Transport Committee in 2011, the seven main linkages by which transport improvements had an impact on economic growth are: — Improved business efficiency, notably be travel time savings, improving journey time reliability and travel quality. — Stimulating business investment and innovation by supporting economies of scale and new ways of working. — Agglomeration economies which bring firms closer (in space or time) to other firms or workers in the same sector. — Improved labour market efficiency, enabling firms to access a larger labour supply, and wider employment opportunities for workers and those seeking work. — Increasing competition by opening access to new markets, principally by integration of world markets’. — Increasing domestic and international trade by reducing trading costs. — Attracting globally mobile activity to the UK, by providing an attractive business environment and good quality of life. (House of Commons Transport Select Committee, Transport and the Economy, Vol 1, March 2011) 2.2 The importance of National Policy Statements in providing strategic direction for the use of scarce (public) resources in the field of transport is highlighted by the Government’s National Policy Guidance on “Strategic Freight Policy” (DFT, November 2011). This policy guidance has provided the framework for the recognition of the Humber Ports being part of the Strategic Freight Network initiative. Work is being undertaken in the Humber Ports to try to ensure that rail routes will be available so that the latest generation of 9’6” Deep Sea intermodal containers can be carried on standard wagons (“W10/W12 gauge clearance”). Early indications are that Gauge Clearance from the Humber Ports to the East Coast Main Line can be achieved for as little as £1 million on the North Humber Route and £6 million on the South Humber Route. However, the absence of

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a gauge cleared route across the Pennines remains a constraint and a serious constraint on this section of the core Trans-European Rail Network. 2.3 The German engineering conglomerate Siemens has selected the ABP owned Port of Hull to build what ABP has described as “possibly the UK’s largest transformational port project”—an offshore wind turbine manufacturing and assembly facility to be built at the Port of Hull. If this project goes ahead it is likely that work will begin on this major investment in 2013. As the National Policy Statements need to address (amongst other things), specific locations (where appropriate) in order to provide a clear framework for investment and planning decisions, Hull City Council would wish to see improvements to the A63 (in Castle Street, Hull) addressed in the National Road Policy Statement. This scheme was previously in the Government’s Roads Programme in the 1990’s and is still awaiting funding having been prioritised by the now defunct Regional Assembly, Yorkshire Forward and Regional Transport Board. It is now under preparation but has not been named as a “fast-track” scheme for early delivery. The current earliest likely scheme completion date is 2017/ 18. Certainty of early completion of this scheme would give important confidence to potential major international investors in the wider Port of Hull area 2.4 Hull City Council would wish to see the full electrification of the Trans-Pennine rail route from Hull to the East Coast Main Line and on to join the already confirmed Cross Pennine electrification west of Selby. Electrification would provide crucial improvements to journey times and reliability necessary to address the remoteness perceived by many potential inward investors. Potential major foreign investors investigating sites for new developments in the renewable energy off-shore wind sector have recently expressed concern about the general poor quality rail service (frequency, running speeds and reliability) between Hull and international airports in London and Manchester. Opportunities are available to make savings and speed up delivery by addressing out of date signalling, gauge clearance and electrification west of Hull as one scheme rather than three separate schemes. Network Rail are currently conducting a feasibility study into this and Hull City Council would expect the National Rail Policy Statement to be informed by this work. 3. How satisfactory are the current and proposed decision-making structures, including Local Transport Boards? 3.1 Arrangements for the creation of a Humber Local Transport Board are underway and following the timetable laid down by the DfT. Most of the major transport links to Ports are either part of the Strategic Trunk Road Network (responsibility of the Highways Agency) or part of the National Rail Network (responsibility of Network Rail) and as such fall outside the remit of any Local Transport Board. However, the Hull and Humber City Deal Expression of Interest which was submitted to Government on 15 January 2013 proposes a “Humber Spatial Plan”, such a plan will inevitably encompass strategic transport issues. Proposed funding to Local Transport Boards is likely to be of a scale too low to seriously address the fundamental problems of poor access to ports. For example the Humber Local Transport Board is expecting to have only about £20 million to spend in total across four local authority areas in a four year period (2015–19). The scale of the rail investment outlined above for the north Humber area is around £100 million and the A63 Castle Street Road Improvement is expected to cost around £160 million. Even if funding to Local Transport Boards were significantly increased it is unlikely that non-metropolitan groups of Local Authorities would have the resources or expertise to deliver schemes on this scale. For these reasons it would seem prudent for improvements to the major strategic transport network to continue to be the responsibility of National Agencies such as the Highways Agency and Network Rail. 3.2 Non-metropolitan areas of England are to some extent disadvantaged in the arrangements being developed in response to the Government’s rail decentralisation/devolution agenda. Current proposals being promoted by South Yorkshire, West Yorkshire and Greater Manchester to take over control of a combined Northern and Trans-Pennine Franchise to cover the North of England (“Rail in the North”) will inevitably be focussed on the core interests of the metropolitan PTE areas which have historically been around commuter passenger flows. Non-metropolitan areas within the North (such as the Humber) are at risk of being marginalised and important investment in port related freight and passenger flows could be disadvantaged. It is difficult for smaller “non metropolitan” authorities/groups of local authorities to find the necessary resources and expertise to generate proposals which might better safeguard the interests of Port traffic. 4. To what extent can investment in road and rail infrastructure influence the market and regional decisionmaking on port development? 4.1 There is a clear correlation between road and rail improvements and the ability and necessity of ports to develop. Apart from the transport improvements/economic growth linkages mentioned earlier, the capacity of transport infrastructure to cope with the further development of ports is governed by a regulatory regime. Evidence provided by the UK logistics industry and its users, supported by evidence from international statistical, academic and industry sources, demonstrates that one of the core areas in which Government could play a significant part in increasing the productivity of UK industry and strengthening its role in the UK economy was for the Government to “improve the longer term capacity, performance and resilience of our congested road and rail networks and in doing so, also improving connectivity to ports”“ (The Logistics Growth Review—Connecting People with Goods, DfT, November 2011)

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4.2 Lack of major investment in road capacity in Hull has meant that innovative and bespoke alternative methods of managing traffic demand/capacity have had to be developed to allow important new developments to come forward on what is already classified as a “highly stressed” part of the Highways Agency’s network. Effectively peak hour capacities have been reached at key junctions on the A63/A1033 in Hull, leading to delays, congestion, air pollution and peak traffic spreading. This approach has been agreed in a Memorandum of Understanding between the City Council and the Highways Agency and includes close monitoring, travel planning and planning restrictions on peak hour traffic generation. This approach has so far been successful in ensuring the granting of planning permissions for major renewable energy manufacturing facilities in the Port of Hull and associated supply chain facilities in the wider East Hull Enterprise Zone areas in advance of the delivery of the planned A63 Castle Street Improvement Scheme. Whilst we welcome the close co-operation of the Highways Agency to avoid the “blocking” of new development, this approach can only ever be a short term fix and is no long term substitute for major new investment in the road network. Hull’s current JSA claimant rate is 8.2%, there are thus compelling social and economic reasons why barriers to the creation of new employment opportunities arising from transport constraints should be tackled. Certainty of accelerated delivery of these infrastructure improvements is essential to maximise external investment and to create new jobs. 5. Are decisions on port development taking sufficient account of the traffic generated by ports and associated development needs? 5.1 Within the Port of Hull the recent move towards the development of value-added manufacturing within the port estate rather than simple import/export operations, has by necessity led to the need for planning applications with associated assessments (including assessments of transport implications). The process for avoiding or mitigating adverse transport implications through the development control/planning process is well established. Where issues arise is around inconsistencies between this approach and where the transport implications (beyond the port boundary) of traditional port activities (permitted development) do not require any assessment or mitigation. It is the intention that this matter will be addressed through a Port Master Plan. Progress on the completion of a master plan for the Port of Hull is in abeyance pending a final investment decision on whether or not the port is to become the site for England’s largest wind turbine manufacturing facility. 5.2 Work is underway to ensure that all relevant plans affecting/influencing the Humber Ports are in line with each other and give a consistent view on the priorities for transport improvements. These plans include the relevant Port Master Plans, Local Development Plan Core Strategies (Local Development Frameworks), Local Transport Plans, and the LEP “Plan for the Humber”. The Hull and Humber City Deal submission to Government, proposes the development of a Humber Spatial Plan in order to manage the strategic planning process and prioritise economic growth throughout the Humber sub region. 5.3 The Port Master Planning Process and the development planning process can in theory address local transport issues/impacts. There is, however, a missing “wider dimension” relating to the National Transport Network. One example of this is the potential for the Humber Ports to offer a shorter, faster, more direct and convenient link from North to much of northern Europe and Scandinavia than the congested route via the Channel Ports. This could be achieved with relatively modest investment in rail gauge/electrification and improved Trunk Road links to the National Motorway Network. Investment in links to northern ports could negate the need for further more expensive infrastructure investments in the South East and could provide overall national economic and environmental benefits by reducing transport costs and vehicle emissions. It is currently unclear who, if anyone, has the responsibility for evaluating these wider benefits, how they might be evaluated in the absence of a viable national traffic model and how the results of any evaluation might subsequently feed into the Port Planning Process or the infrastructure planning process. 6. How realistic are current assumptions about rail’s modal share of ports traffic? Under what circumstances could rail freight or inland shipping play a greater role in reducing port-related road freight? 6.1 In order to achieve the potential for growth in rail freight to/from the Humber Ports gauge enhancements are needed to allow the carriage of 9’6” deep sea containers on standard wagons. Although this W10/W12 Gauge Clearance can be achieved at relatively modest cost (£1 million on the North Humber Routes to the East Coast main Line and £6 million on the South Humber Route) this is proving difficult to deliver. Network Rail appears to constrain their business case when considering gauge enhancements to existing or guaranteed new users. This introduces a circular argument which is difficult to resolve. Some degree of speculative investment based on a more strategic approach to completing a “gauge clear network” would appear prudent. If routes were gauge cleared new investors/rail users could be attracted. A more flexible approach to investment based on “Port Potential” and “Geographic Optimisation” rather than the current approach which favours further investment in often over used routes (often a result of historic market patterns rather than current demands) is needed. 6.2 The Humber Ports are in a unique position to take advantage of an extensive network of inland waterways (Rivers Hull, Ouse, Trent, South Yorkshire and Aire and Calder Navigations). These were all historically important for the movement of bulky, non time dependant cargoes but over recent years usage has generally declined due to competition from other modes and changes to market patterns. However with the more recent




policy shift towards reduction in transport carbon emissions and the emergence of new markets such as movement of bio-fuel to inland power stations the use of water transport is once again growing in relevance. 6.3 Opportunities for coastal shipping (Port to Port movements) in the UK would appear to be vast with the relatively large number of Ports but this is currently not heavily exploited, often restricted to feeder services from major container ports and left to market forces rather than dealt with through any strategic planning system. 6.4 Taking freight off congested roads and moving it by rail or water can sometimes be more expensive than road transportation. Freight grants are designed to facilitate the purchase of the environmental and social benefits that result from using rail or water transport. The Department of Transport runs two schemes that encourage the use of rail or water transport instead of road transport: The Mode Shift Revenue Support scheme and the Waterborne Freight Grant scheme. Budgets for the operating grants for future years are £20 million for 2011–12, £19 million for 2012–13, with a further indicative £19 million for both 2013–14 and 2014–15. — Mode Shift Revenue Support (MSRS) Scheme. Mode Shift Revenue Support (MSRS) scheme (formerly the Rail Environmental Benefit Procurement Scheme) assists companies with the operating costs associated with running rail freight transport instead of road (where rail is more expensive than road). It is designed to facilitate and support modal shift, generating environmental and wider social benefits from reduced lorry journeys on Britain’s roads. Since September 2009 this scheme has also been open to inland waterway traffic. — Waterborne Freight Grant (WFG) scheme. The Waterborne Freight Grant (WFG) scheme assists companies with the operating costs, for up to three years, associated with running water freight transport instead of road (where water is more expensive than road). 6.5 Both of these grants rely on detailed specific proposals/bids being put forward by business who are considering using waterborne transport. Grants are generally allocated on the basis of the number of lorry journeys to be transferred to water transport. Several areas of concern exist in relation to these funding incentives: 1. They appear to be primarily aimed at converting existing businesses who will in many cases have already picked locations and have established operating regimes based on road networks. A shift towards an incentive scheme targeted more closely at the “location decision” stage for new business would be welcomed. 2. Information and awareness of these grants/incentives is often lacking in both the public and private sectors and available funding levels do not appear generous. It is unclear who should take the lead for actively ensuring maximum take up of these incentive schemes. 7. Are there any regulatory barriers to investment in ports? What could and should be done about them? 7.1 Regulatory barriers to investment in ports include: — The time delays involved in major planning applications with an impact on the Humber estuary. We welcome the Government’s creation of the “Major Infrastructure and Environment Unit” (DEFRA) which has a remit to facilitate swift, proportionate resolution for nationally significant infrastructure projects in England at pre-application. As part of the Hull and Humber City Deal, together with partners in the Humber LEP, we intend to develop a Humber Spatial Plan which will significantly reduce the protracted timescales potential developers face with regard to economic development of the Humber Estuary. — The implementation by BIS of a “trade single window” at UK ports to reduce bureaucratic processes which can result in delayed delivery of food and drink stuffs to supermarkets should be accelerated. (cf. Trade and Investment for Growth, BIS, February 2011) January 2013

Written evidence from Hutchison Ports Ltd (PA 03) Summary Hutchison Ports (UK) (“HPUK”) welcomes the Committee’s Inquiry and the acknowledgment of the importance of access to ports. HPUK agrees with Government forecasts that future growth in the ports will be focused mainly on the container sector. Due to the economics of operating large container ships, the ports that will continue to be the main focus for growth will continue to be those in the South and East. Capacity at Felixstowe/Harwich will grow to 8 million TEU per annum and it will continue to be the largest port for container traffic. The connections to and from Felixstowe are also a major route to market for exporters in the Midlands and North and are important to Government’s strategy to encourage an export led recovery and to grow exports to markets outside Europe. HPUK believes that the Government will get the best return on investment in access to ports by prioritizing investment in the A14 corridor to remove bottlenecks on routes serving the UK’s most important port complex.




Part A—General Comments 1. Introduction 1.1 Hutchison Ports (UK) (“HPUK”) welcomes the Committee’s Inquiry and the acknowledgment of the importance of access to ports. The provision of efficient access to ports is vital if the UK is to remain a strong player in the global market, delivering jobs and growth and an export-led recovery. Government action needs to be driven by this overall objective, and take account of the specific nature of the UK Ports market, including the need to promote a level playing-field. 1.2 HPUK is a member of the Hutchison Port Holdings (“HPH”) Group, a subsidiary of the multinational conglomerate Hutchison Whampoa Limited (“HWL”). HPUK owns and operates the Port of Felixstowe, London Thamesport and Harwich International Port and, with over 3,000 employees, is the largest employer in the UK port industry. —

Port of Felixstowe is the largest container port in the UK. All the major container lines have a presence in Felixstowe and the port has over 90 services per week to every part of the world. It has a total of nine deep-water container berths, including the new Berths 8&9, opened in September 2011. The port handles over 3.5 million TEU of container traffic each year which represents more than 40% of all the UK’s container trade. In addition to containers, Felixstowe handles roll-on/roll-off (Ro/Ro) ferry services to North West Europe. Felixstowe is also the UK’s largest container rail terminal handling 58 freight train movements per day, connecting the port with 16 inland destinations. Felixstowe has two rail terminals and HPUK is investing £40 million (including a €5 million contribution from the EU TEN-T budget) in a third terminal. The new North Rail Terminal will open in mid-2013. It will be capable of accommodating longer trains and permit 35-wagon freight trains to use the port. Eventually, the new terminal will double rail freight capacity at Felixstowe.

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Harwich International Port is one of the UK’s leading multi-purpose freight and passenger ports, with road and rail links to the Midlands, London and the South East. It is ideally located for North Sea freight and passenger traffic to and from Scandinavia and the Benelux countries, offering first class roll-on/roll-off, ferry, container and bulk operations. Harwich is also a leading port for the shipment and transfer of wind turbines to offshore wind farms. Consent was received in March 2006 for Harwich International Port to develop a new deepwater container terminal at Bathside Bay, adjoining the existing facility. The new container port will offer 1,400 metres of deep-water quayside, 11 ship-to-shore gantry cranes, and a total capacity of 2.1 million TEU per annum.

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London Thamesport is located on the River Medway. The Port, which includes container and warehouse operations, covers a total area of 85 hectares. It offers automated secure container yards and modern warehousing. The quay is equipped with two deep-water container berths, dredged to a depth of 15 metres alongside.

2. The UK Ports Market 2.1 The port sector in the UK has two main characteristics that set it aside from similar industries in most other countries; it is, predominantly a private sector industry, relying on private investors to identify the need for, and fund, additional capacity, and, secondly, it is characterized by competition between a large number of generally quite small ports, as opposed to competition between two or more operators within often much larger ports as is often the norm elsewhere. Both of these characteristics have implications for the provision of inland infrastructure. 2.2 Ports handle a wide range of cargo types and modes, each of which has separate implications for inland transport. Bulk cargoes, for instance, typically have relatively low unit values and cannot bear the cost of lengthy transport legs to or from the port. Ports that handle these cargoes therefore tend to have a relatively local hinterland. 2.3 Unitised ports, namely Ro/Ro and containers, serve larger hinterlands. The Ro/Ro market can be subdivided into a number of largely distinct markets such as the Irish Sea, Western Channel, Dover Straits and North Sea that have, to varying extents, regional characteristics. 2.4 Container ports, and particularly deep-sea container ports, serve national hinterlands. There are relatively few deep-sea container ports in the UK. Felixstowe is, by some margin, the largest, handling over twice as many containers annually as Southampton, the second largest. Smaller quantities are handled at London Thamesport, Tilbury, Liverpool and Bristol. The provision of facilities for the very largest ships is costly and entails lengthy and inevitably expensive planning requirements. Only Felixstowe, London Thamesport and Southampton are capable of handling the largest container ships. Dredging costs to accommodate the largest ships are usually commercially funded in the UK but often publicly funded on the continent. The costs of the publicly funded dredging may not always be recovered in charges to port users.




2.5 HPUK’s ports are all common-user facilities, ie they serve any shipping line wishing to call at them. Other ports or facilities, including a number that handle bulk, semi-bulk and some ferry terminals are dedicated to one single user. 2.6 Government forecasts predict the strongest future growth in the container port market with lesser growth in Ro/Ro traffic and negligible growth in other sectors in the period to 2030.1 HPUK concurs with this forecast pattern of growth and believes the areas of greatest growth should be the focus of the current inquiry. 2.7 HPUK operates predominantly unitised ports and, unless stated otherwise, the comments in this submission refer to unitized traffic only and, within that sector, predominantly to the deep-sea container market. 2.8 Unitised traffic generates the greatest demand on inland infrastructure. It is also the mode that supports much of the export traffic manufactured in the UK. Where funds for investment are scarce it makes sense to concentrate on the provision of infrastructure to the sector that is growing fastest, deep-sea containers, and, within that market, the ports that are handling the greatest volume. 3. The Deep-Sea Container market 3.1 The size of ships serving the deep-sea container trades has grown significantly in recent years. The delivery of the 15,550 TEU E-class Maersk vessels in 2006 heralded the latest step change in the industry. Since then there has been a rapid increase in the number of ultra-large container ships (ULCSs) in service. All the largest vessels calling in North West Europe, including the UK, are on the Europe-Asia trade. 3.2 The number of ULCSs is set to increase further and the next generation of mega ships, Maersk Line’s 18,000 TEU Triple-E class vessels, are due to enter service in late 2013. 3.3 The deep-sea container shipping industry is very volatile and highly competitive. Tight control of costs and the preservation of sailing schedules—arriving on schedule or maximizing the opportunity to regain schedule when delayed—are of paramount importance to ship operators. 3.4 Container ships on all the major trade routes call in North Europe as well as the UK. The greater size of the European markets dictates that something of the order of 75% of ship capacity will be for continental Europe with only about 25% for the UK. 3.5 The main ports of call in Europe are all centred in the Hamburg—Le Havre range with the greatest concentration in Rotterdam. The charter costs of operating ULCSs are approximately $50,000 per day.2 Any deviation from this route adds significant cost and delay. The UK ports that minimize deviation from the core axis are those in the South and East of the country between Southampton and Felixstowe. 3.6 Large container ships are reluctant to deviate to ports on the west coast of the UK or significantly further north than Felixstowe on the east coast. 3.7 The deployment of larger vessels and the continuous increase in bunker costs has resulted in lines “slow steaming” to save costs. This requires more vessels in each string of service (11 vessels now compared to 8 a few years ago), reducing the number of port calls and sharing more slots on each other’s vessels. As a result, port operators are seeing a reduced number of calls but the size of each call increased. This puts additional strain on resources: equipment, labour and yard. Dwell time of boxes in ports have also reduced. This peak and trough situation creates additional pressure on landside activities, both for the road and rail transportation linking the port to the national distribution centres. 3.8 Congested road and rail networks around urban centres is not something unique to the UK but is a phenomenon visible worldwide. Together with the need to speed-up maritime access by locating terminals nearer to main shipping routes, it has been the major factor behind a global trend for ports to be developed away from urban centres. Examples can be found in locations on all continents including Maasvlakte 2 in Rotterdam, Shanghai, Wilhelmshaven and Sydney/Botany Bay. 3.9 With greater potential for expansion through consented projects at Bathside Bay and Felixstowe, a location closer to the main ports of north Europe, the absence of a lengthy river access, and the ability to avoid congested urban inland networks, there is no threat to Felixstowe’s current position as the UK’s largest container port. Future growth is forecast to be greatest in the container sector and, within that sector, will be greatest in Felixstowe/Harwich area. 3.10 Government policy supports the rebalancing of the economy by boosting exports and narrowing the North-South divide. A significant proportion of export manufacturing is in the Midlands and the North. With the slowdown in the Eurozone, there is also a need to increase exports to new markets outside Europe. The main shipping routes to all these markets go through Felixstowe and there should, therefore, be a clear priority to invest in the A14 corridor as the main artery serving the UK’s most important port complex and the principal route to market for exporters throughout the whole country. 1 2

National Policy Statement for Ports, Department for Transport, 2012 Yang Ming lands record low charter rate for 14,000 teu boxships, Lloyds List, 17 January 2013




4. Port Planning 4.1 The port planning system in the UK is extremely complex. Securing consent for port developments can take many years and involves the assessment of numerous impacts. 4.2 The system, and legal requirements, are so complicated that they are understood be very few people even within the industry or amongst regulators. Some developments have required Town and Country Planning Act (TCPA) consents as well as approval under the Harbours Act. Other, very similar, applications have been approved only under the Harbours Act. 4.3 There has been little consistency or clarity in the approach taken in recent port planning decisions towards the provision of inland infrastructure. Inconsistencies in the planning system distort the port market and can result in the sub-optimal provision of port capacity. It is unclear to what extent the revisions to planning procedures for nationally significant infrastructure projects will remove these inconsistencies going forwards but a transparent and consistent system is required to encourage investment in ports. 4.4 It still seems remarkably easy within the planning system for vexatious objectors to impose potentially expensive delay upon the developers of strategically important projects. The correct balance between the rights of the individual and the ability of developers to deliver nationally important projects in a timely and cost effective manner is still to be found. 5. Rail Freight 5.1 The majority of freight trains (38 per day currently, 19 in each direction) from Felixstowe travel down the Great Eastern Man Line (GEML) around the North London Line (NLL), then up the West Coast Main Line (WCML) to destinations in the Midlands and North West. As developments improve the Felixstowe to Nuneaton (F2N) line, more services use this route to access the East Coast Main Line at Peterborough or the WCML at Nuneaton. 5.2 Scale is critical in developing a wide range of intermodal options. The large volumes passing through Felixstowe create a virtuous circle. To be attractive to shippers, rail must be competitively priced, serve the destinations they need, and offer sufficiently frequency of service to represent a viable option to road freight. Without sufficient volume, and in the absence of large levels of grant, these are not possible. 5.3 In addition to providing the critical mass to support frequent services, the concentration of volume at one or two large ports allows the utilization of individual trains to be maximized. Without high levels of utilization, cost and carbon efficiencies cannot be achieved. The utilization of rail wagons at Felixstowe is high at 81%. 5.4 If a policy was contemplated to support the use of smaller regional ports one consequence would be the loss of economies of scale necessary for a viable rail freight industry and a reverse shift from rail to road with a commensurate increase in congestion and carbon emissions. 5.5 The recent High Level Output Statement (HLOS) published by Government included £200 million for the Strategic Freight Network in Control Period 5 (2014–2019) as well as other specific measures that will improve the F2N route. HPUK believes that these measures, and the implicit priority given to the route, are appropriate given the most likely pattern of future container trade growth. 5.6 Longer term plans should be progressed as a priority to electrify F2N. Provisional work should be undertaken in CP5 to allow upgrades to take place early in CP6. 5.7 It is critical to the future performance in both operational and environmental terms that F2N is electrified as the switch to electric locomotives over the next 10 years will make this a necessity. 5.8 There is a lack of clarity in the way Network Rail allocates elements of its budget such as that earmarked for the Strategic Freight Network. Whilst a degree of discretion may be necessary, there should be greater transparency regarding the criteria used and the decisions made. 5.9 The opportunities to encourage third party investment in the rail network are not being maximized. Any discussions about investment in the railway focusses on risk-sharing. A greater emphasis on reward-sharing might encourage other companies to invest in the network. 6. Road Freight 6.1 The relatively short distances over which much freight moves will mean that road is likely to remain the dominant mode for the carriage of goods to and from ports for the foreseeable future. 6.2 Felixstowe and Harwich have the advantage of being located away from congested urban centres but are strategically placed between, but close to, the main shipping lanes and the major areas of consumption/ production. Traffic to/from the Haven ports does not significantly exacerbate congestion at the most crowded parts of the UK road network. 6.3 HPUK has introduced a number of systems to help manage road freight. Most notably, the Vehicle Booking System (VBS) through which hauliers pre-book hourly slots to call at the port has helped reduce




peaks in demand and the strain they can place on both port and local road infrastructure. The Paris optimization software also provided by HPUK allows customers that use it to match inbound and outbound loads by road and rail to optimize equipment use, lower cost, and reduce the impact upon port-connected infrastructure. 6.4 HPUK supports early action to address the bottleneck on the A14 between Cambridge and Huntingdon although heavy goods vehicles from the Haven Ports account for less than 4% of vehicles on this section.3 The route also serves port traffic from the south, including Thames and Channel ports, using the M11 and A1 to destinations in the North. Government should not wait until 2018 as suggested to take action. 6.5 HPUK opposes the proposal to charge tolls on the improved section of the A14. The proposal is arbitrary and discriminatory. It will impinge upon all businesses for which the road is the route to market, including exporters in other regions, increasing cost and reducing competitiveness. Any proposal to introduce tolls should only be made as part of a strategic and comprehensive national scheme. 6.6 If tolling to fund the new infrastructure cannot be avoided, it must be complemented by an efficient non tolled route to give businesses and motorists an alternative. 7. Maritime Access 7.1 As well as ensuring adequate access by road and rail, it is important that modern deep-sea ports have appropriate maritime access for the ultra-large container vessels that call at major European ports. 7.2 The importance of maintaining advertised shipping schedules—and the imperative to recover schedules when time is lost due to unforeseen events—is of great importance to container shipping lines. This dictates that ports with short navigation channels, dredged to a sufficient depth to allow access at all states of the tide have a significant advantage. 7.3 The trend to larger vessels, and the costs of dredging and delays, has led to a trend, visible worldwide, of ports moving downriver, away from city centres, and towards the open sea. Examples of this can be seen in many places around the world including Wilhelmshaven, Rotterdam and Shanghai as well as in the UK where Felixstowe has replaced London’s once dominant position. Moving away from city centres has the additional benefit of frequently taking port traffic away from the more congested elements of inland infrastructure. 7.4 Unlike certain/many other countries in the EU and around the world, the funding of maritime access channels in the UK has been the responsibility of port authorities who make investments on a commercial basis. Although this practice has put UK ports at a competitive disadvantage to many mainland European ports, it has worked well and ensured a level competitive playing-field within the UK. 7.5 The practice of commercially funding maritime access channels has also had the benefit of ensuring only investments backed by a sound business case proceed and has avoided the inefficient use of public funds. The recent decision to fund maritime access to the Port of Liverpool through a Regional Growth Fund grant to Sefton Borough Council, undermines this principle and, due to the competitive nature of the UK port market, threatens the viability of commercially funded investments elsewhere. Part B—Committee’s Questions 1. What should be the priorities for improved access to ports, and why? Greatest growth in future will be in the deep-sea container market. Deep-sea containers vessels will continue to call predominantly in the South East but serve a national hinterland. Priority for port access should, therefore, be connecting other regions with the hub ports in the South East and particularly Felixstowe which handles the greatest volume of container traffic and where the pound-for-pound return on infrastructure investment will be greatest. From a port access perspective, traffic—both road and rail—to/from Felixstowe avoids the already most congested parts of the UK transport network around London. Investment in the A14 and the Felixstowe to Nuneaton rail link should be afforded the highest priority. 2. Is the delay in producing a National Policy Statement for National Road and Rail Networks creating problems for improving access to ports? If so, in what ways and where? There is a clear distinction between the strategic planning procedures for road and rail. The system of Control Periods and long term planning for rail is transparent and inclusive. The system for road investment is less so and can sometimes appear opportunistic and arbitrary. The decision to introduce tolls to upgrade the A14, but to fund upgrades to other routes by more conventional means, is one example. We are not sure that National Policy Statements are the answer but to introduce a long term planning regime for roads based on similar principles to those which exist for the railway would appear to have considerable merit. 3. How satisfactory are the current and proposed decision-making structures, including Local Transport Boards? The UK’s major ports are mostly, and need to be, connected to the strategic road and rail networks. The answer above applies also to decision-making on these routes. Local Transport Boards may have greater 3

A14 Challenge Output Report 1, Atkins/Department for Transport




importance for smaller ports but, as far as we are aware, most Boards are still being formed and it is too early to say how effectively they will work. 4. To what extent can investment in road and rail infrastructure influence the market and regional decisionmaking on port development? The provision of adequate road and rail infrastructure is an important element for shipping lines and shippers in choosing which port to use. However, the location of the port relative to the optimum shipping routes and inland origin/destination of the cargo is probably more important. Public investment in infrastructure to regional ports that are not best located to service the ships that carry the goods will be inefficient and represent a poor use of scarce funds. Any attempt by Government to influence port development through selective investment of road and rail is likely to discourage private port investment where it is really needed and undermine the system of market-led port investment that has served the UK very well for many years. 5. Are decisions on port development taking sufficient account of the traffic generated by ports and associated development needs? Some applications for port development have been accompanied by extensive Transport Assessments which take full account of both road and rail impacts. This has not been the case at all locations and for all developments, and there is a clear need for a consistent approach. 6. How realistic are current assumptions about rail’s modal share of ports traffic? Under what circumstances could rail freight or inland shipping play a greater role in reducing port-related road freight? UK is fully committed to growing rail traffic through its ports and is backing this commitment with significant private investment. High utilisation of rail services and frequent departures are necessary to keep down the costs of rail services and to offer a quality of service that makes them attractive. These are only possible at large ports. The continued development of hubs such as Felixstowe, supported by investment in appropriate elements of the Strategic Freight Network, is the best way to maximise rail’s modal share. The geography of the UK and lack of navigable inland waterways means that inland shipping will not play a significant role in the distribution of unitised traffic throughout the UK. There is however a greater potential for increased use of coastal shipping. At the moment this represents only a very small proportion of domestic freight movements. The same cost and service frequency/quality factors that apply to rail transport apply equally to coastal shipping. The prospect for increasing the use of coastal shipping is therefore also greatest, and maybe only possible, at those ports with the largest volume of traffic. 7. Are there any regulatory barriers to investment in ports? What could and should be done about them? The cost, complexity and uncertainty of the planning system can represent a significant barrier to port investment. It is too early to say whether revisions to the planning system have done much to improve the situation. January 2013

Written evidence from The Haven Gateway partnership (PA 04) The Haven Gateway Partnership 1. The Haven Gateway Partnership (HGP) is an informal private/public sector grouping that brings together Essex and Suffolk County Councils, Colchester and Ipswich Borough Councils, Babergh, Braintree, Maldon, Mid-Suffolk, Suffolk Coastal and Tendring District Councils with the businesses of the area in North Essex and South Suffolk. 2. Originally created over ten years ago to link with the largest ports cluster in the UK, the Partnership includes the Harwich Haven Authority, Hutchison Ports UK (owners of Felixstowe and Harwich) and ABP (owners of Ipswich Port) as members. Among others represented on the Board are BT, the Chambers of Commerce, the University of Essex, the construction industry and the SME sector. The larger employers all contribute to the funding of the HGP. 3. The HGP is also actively engaged with the two Local Enterprise Partnerships that cover the sub regional geography—the South East LEP (East Sussex/Essex/Kent/Medway/Southend & Thurrock) and the New Anglia LEP (Suffolk and Norfolk). The Haven Ports 4. The Haven Ports represent the most important ports cluster in the United Kingdom and are supported by the conservancy and pilotage authority, the Harwich Haven Authority. The ports include: — Port of Felixstowe, owned by Hutchison Whampoa—the UK’s largest container port, accounting for close to 40% all containerised trade.




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Harwich International Port, owned by Hutchison Whampoa—the UK’s third largest cruise port with ferry services to Holland and Denmark which receives calls from the Stena Hollandica and Stena Britannica, the world’s largest ferries; increasingly it also provides lay-down and assembly facilities for offshore wind-development; coincidentally it is also the only UK port with direct rail connection to the Olympic site at Stratford. Ipswich, owned by ABP—the UK’s largest grain-exporting port, with other bulk trades, including agricultural commodities and timber. Harwich Navyard—bulk trades and car exports to the Baltic States and elsewhere; operations and maintenance support for offshore wind. Mistley—bulk trades and construction materials.

5. In addition the Partnership also covers the Port of Brightlingsea which also provides O & M support for offshore wind (Dong Energy) and has some fishing activities. 6. The Haven Gateway Partnership published an Economic Impact Study of the Ports and Logistics sector in the area. This shows that the industry employs some 32,200 people (or one in 10 jobs) with average salaries in excess of County and regional levels. The sector has a turnover of over £3 billion and the salary bill alone tops £1 billion with local purchases of services estimated in excess of £100 million. We enclose a copy of the summary of the report, Driving the Haven Gateway Forward, the full version of which is accessible on our website www.haven-gateway.org. 7. In many ways, the underpinning economic drivers of the ports cluster means the Haven Gateway has a real economic identity (not dissimilar to say Teeside, the Humber or perhaps Bremerhaven and its hinterland). For that reason, the HGP has always regarded the support and promotion of the Ports and Logistics Sector as its core business. 8. The historic existence and continuing importance of ports means that road access to them is also of vital importance to a wider business community. Fast effective routes to market are therefore good for Ports but also good for non-port related businesses which are nevertheless clustered around ports (on land previously used in support of port activity). So for example in the Haven Gateway, the A120 not only serves Harwich Port but is also a vital artery serving Tendring’s fragile economy. 9. Apart from the ports, the Haven Gateway is also home to BT’s global research and development headquarters at Martlesham, employing over 4,800 staff, and the nuclear power stations at Sizewell and a growing creative sector with cultural assets such as Aldeburgh Music at Snape, Dance East in Ipswich and First Site in Colchester all linked closely to the University of Essex and University Campus Suffolk, Above all we live and work in a sub-region of the most exceptional environmental quality which we are all keen to see preserved. 10. In order to respond most pragmatically, we have provided direct responses to the questions you raise. This submission should not undermine any separate specific responses from any HGP public or private sector partners. Due to the importance of the issue, we would of course be willing to provide further information at Committee if that would be helpful. Q. What should be the priorities for improved access to ports, and why? A. Releasing development potential, relieving road and rail congestion, facilitating growth ie enabling increased economic activity and the creation of new jobs where the market requires them. Our view is that since the Eddington review, the importance of our International Gateways has been undervalued. Felixstowe for example handles around 40% of the UK’s container throughput and hence provides a hugely important export and import route for all UK business but particularly to/from the North and Midlands and therefore improving access is vital to UK PLC. We think this should be considered in three ways: — Road access—This should also include resilience routes. In the Haven Gateway area, the A14 is the key route to the Midlands but major problems arise in the event that it is closed due to incidents around Cambridge as it was for many hours on 17 January. A resilience route needs to be designated as an alternative and this exists in the form of the A120, which incidentally links Haven Ports cluster to Stansted Airport and we feel should be regarded as part of the National Strategic Road network. We understand that all other major ports are connected to the National Strategic Road Network. These routes are clearly recognised as critical in getting goods to market and in supporting the supply chain/added value potential available through port activity. We therefore cannot understand why the link to Stansted is not part of this national network. Significantly, there has been no overall strategy for the A120 since the project to continue dualling the A120 from Braintree to the A12 at Colchester was abandoned in 2008. We are mounting a campaign to address this issue and have already made a presentation to the Minister responsible. — Rail access—with greater certainty over the passenger rail franchise question (Great East Main Line) the implications for rail freight need to be considered




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Navigational access—We have particular concerns that seaward access is often overlooked and relies in the UK primarily on private sector funding. With bigger ships at increasing drafts, ease of access to UK ports from Channel shipping lanes will be crucial if the UK is going to maintain hub status and often first port of call for services from Asia and North America. The alternative is that UK ports become the destination for cargo transhipped in continental Europe, undermining the viability of the UK ports industry and losing the opportunity to add value through delayed manufacture and finishing products. A strong UK ports sector will also enable the UK to develop a stronger short sea shipping offer. We would highlight here that the dredged approaches to ports are a form of “tolled” infrastructure in so far as users (shipping lines) pay conservancy charges which are determined by tonnage.

Most importantly, we wish to highlight the fact that the best return on investment in infrastructure must be where there is greatest volume of trade and, given Felixstowe’s pre-eminence as the UK’s top container port, this must mean investment in the A14, A120 and the Felixstowe to Nuneaton rail route for freight. Q. Is the delay in producing a National Policy Statement for National Road and Rail Networks creating problems for improving access to ports? If so, in what ways and where? A. The lack of strategic response to the network is creating problems through interim policy making and not providing a level playing field. Where the Highways Agency is piloting Strategic Route Management schemes, such as the A12 and A120 in Essex, this only includes the A120 from the A12 to Harwich and not west from the A12 to Stansted. This lack of clarity and logic militates against significant private sector contributions to the improvement of the A120. There is a National Policy Statement on Ports and this is very clear on the future scale of port capacity needed by UK plc but is also clear that is expects future provision to be market led on the general principle that the developer pays, although we note that Government is reserving the right to “co-fund” infrastructure for major new port developments. This market led approach is at risk of being undermined if there is uncertainty over the necessary transport investment needed to support port expansion where the market needs it. Freight movement is a hugely competitive business and the lack of strategic policy means locally for example that the A14 has a modified policy on proposing a toll in advance of other UK ports and providing little actual ROI; not recognising the importance of Haven ports to UK PLC and their full value to the UK economy. Any such National Policy must not just be land-focused but must recognise the real need for investment in channels and channel deepening, shipping lanes and safety of navigation. The absence of a Policy can only be detrimental to the interests of the Haven Ports and ultimately UK PLC. Q. How satisfactory are the current and proposed decision-making structures, including Local Transport Boards? A. It is too early for us to tell. Although Local Transport Boards have now been created, they are not due to submit Assurance Frameworks until February 2013 and then have until July 2013 to submit their priorities. At this stage the DfT is unable to indicate the level of resources likely to be available to each LTB as they still appeared (as at 23 November 2012) to be awaiting confirmation from Ministers as to “LTB geographies”, but early indications are that the resources will not be of sufficient magnitude to be strategically significant. That said, we are supportive of the intention that LTBs should create a greater level of joint working between public and private sector but are concerned that they will have sufficient powers and resources to implement their priorities. There is also the potential for a gap between national priorities and decisions made about the national strategic road network and how these relate to and link with local priorities. The needs of rail freight is often overlooked at a local level in favour of passengers; adequate stacking (in the event of temporary yard closures at ports) and secure lorry parking facilities are also often inadequate and the provision of freight railheads and freight consolidation often gives rise to local residents’ objection because of local concerns about 24/7 use. Q. To what extent can investment in road and rail infrastructure influence the market and regional decisionmaking on port development? A. Investment in road and rail connections as well as in navigational channel access provides investor and market confidence, and encourages investment in existing assets and in new commercial development, directly or indirectly related to the trades of the ports. It should be noted that the choice of port of call is made by the shipping line and ultimately its customer rather than the port operator. Port development will therefore occur where there is market demand. Investment in road and rail infrastructure should therefore be determined by market demand. The time (and the cost) of getting goods to market influences the route to market (choice of UK port Vs supporting road/rail infrastructure) with sustained reliability a major factor. Public sector funding of the scale being considered by BIS at the Mersey would be acceptable only if all such dredging throughout the UK was given the same degree of public funding support, but we note that the private sector is expected to provide such funding in other UK regions. This selective subsidy distorts competition and undermines investor confidence through a lack of policy certainty. More importantly, however, the Mersey is unlikely to attract the Asian trades as it is remote from the other major European ports of call for the lines, unlike Southampton—Le Havre or Felixstowe—Rotterdam/Bremerhaven. In some ways the same point applies to road infrastructure—in this region we are being told the developer will have to pay, both directly and through road tolls, even where the congestion so alleviated is not due to




freight traffic from ports to any significant extent. Elsewhere in the UK it seems probable that public sector investment will be made available even where it can be demonstrated that port developments such as Mersey/ Liverpool are a major contributor to road congestion. A lack of level playing field in this respect is and further risks distorting the market significantly. This is not a straight-forward North v South issue. There is no alternative in northern ports to the deep-sea container ships that call in Felixstowe and serve the growing markets of Asia. The road and rail routes of the A14 corridor are therefore an essential route to market for many businesses in the Midlands and North. The removal of bottlenecks on these routes and the provision of resilience routes are essential if the UK is to achieve an export-led recovery and narrow the gap in economic performance between North and South. Q. Are decisions on port development taking sufficient account of the traffic generated by ports and associated development needs? A. By virtue of the planning system and the extensive modelling that developers have to provide as part of the process, we suspect the answer is yes. However, other financial burdens are placed upon port operators through via Sect 106 agreements; CIL is significant as is the timing of delivery. Often there is a requirement for infrastructure improvements to be in place in advance of any new development becoming operational. This is not a realistic expectation in the current downturn in global markets and risks making port developments unviable and therefore undeliverable, eg HPUK’s request to de-couple improvements to the A120 from their original Bathside Bay consent, allowing the contribution to upgrading the A120 to be made before the container terminal starts operating rather than before work starts on site. Q. How realistic are current assumptions about rail’s modal share of ports traffic? Under what circumstances could rail freight or inland shipping play a greater role in reducing port-related road freight? A. Neither Harwich nor Felixstowe have access to a dedicated freight network. Freight traffic shares rail capacity with the domestic main line passenger network on one of the most heavily-used and congested networks in the UK. Much of the UK’s rail freight is dispatched to marshalling yards in West London before its onward dispatch across the country and uses the heavily used Great East Main Line to access the North London loop at Stratford. However, due to increases in fuel prices, for distances over perhaps 100 miles rail is now more cost effective than road transport alternatives and therefore assumptions as to the share of rail’s modal share in the Haven Ports are considered realistic. There is some useful evidence emerging from the Haven Gateway ERDF-funded Low Carbon Freight initiative (http://www.haven-gateway.org/themes/low_carbon_freight_dividend) that SMEs are willing to consider switching to rail if assisted to gain access to rail freight routes. Q. Are there any regulatory barriers to investment in ports? What could and should be done about them? A. Planning, Environment, Marine Management, Natural England, English Heritage, Highways, State Aid, RSPB, EU Directives (Habitats, Birds), Marine Conservation Zones all constitute obstacles to investment in port capacity to a greater or lesser extent and often require the developer to provide remedial measures at considerable cost (habitat replacement). The planning process and the regulatory conditions could be streamlined to reduce the time it takes for applications to be determined (inc. call-in and public inquiry) (reference recent changes to the planning system—also see Q3). We have a very good example of the delays inherent in the Planning System in relation to the Bathside Bay development (a new container port proposed for Harwich by HPUK). The original application for this development was submitted in 2003 and granted planning permission on 29 March 2006 following concurrent Public Inquiries held between 20 April 2004 and 21 October 2004. In 2010 HPUK submitted four further planning applications. Three referred to the extension of time of the 2006 permission for the container terminal; small boat harbour and the listed train gantry to 2021. The fourth application sought to vary the planning conditions that would allow the construction of the terminal platform in advance of some of the highway improvements. The company applied to Tendring District Council to vary the conditions attached to this consent. The Council’s Planning Committee determined to support HPUK’s applications in January 2011 and the application was subsequently referred the Secretary of State for Communities and Local Government to decide whether it should be called-in for examination at Public Inquiry. It was not until the very end of October 2012, some 20 months after reference by the local planning authority that the Secretary of State decided to call in the fourth application to be considered at Public Inquiry. This led to HPUK immediately withdrawing their application and in our view effectively deferring any investment in the new port for many years. We feel this was hardly the best message to send to the biggest container port operator in the world and the largest Asian foreign direct investor in the UK. January 2013




Written evidence from Liverpool City Region (PA 05) 1. Priorities for Improved Access to Ports 1.1 Access to ports should offer multimodal options which encourage users to use carbon efficient methods (sea, canal and rail) to move freight. 1.2 Ports, and therefore access to ports, are of great importance to a wider community. Efficient access to ports increases the competitiveness of port users and therefore benefits the national economy. Consideration must therefore be given to the many users of ports such as freight forwarders and third party logistics firms to whom ports offer vital connectivity for their businesses. 1.3 Access to ports must therefore be seen in the wider context of national infrastructure and the development of the national planning strategy and at the local level the Community Infrastructure Levy. 1.4 In Liverpool City Region the port and wider maritime industry is of significant importance to the local economy and as such it has been identified as a key growth sector: SUPERPORT. 1.5 SUPERPORT comprises the City Region’s logistics assets including the port and its expansion scheme, a 36 mile inland waterway, international airports, ten motorways, an extensive rail network linking to the West Coast Mainline and easily accessible warehousing and prime development sites located next to the biggest population centre outside of London. 1.6 SUPERPORT is a transformational growth sector for the City Region which is being driven forward by the Local Enterprise Partnership in partnership with public and private sector stakeholders from the rail freight and short sea and international shipping industry. 1.7 We understand and support the imperative to offer subsidies for moving goods by train to reduce road freight; however the unintended consequence this produces is that, in some circumstances, short sea shipping (to the same destination) can be disadvantaged where it is not offered an equivalent subsidy. We would welcome an equalisation of subsidy between rail and short sea shipping to help reduce unnecessary road freight. 2. The Delay in Producing a National Policy Statement for National Road and Rail Networks 2.1 The delay in producing a National Policy Statement has a negative effect on improving access to ports as it dents market confidence. Before investing in major infrastructure, an investor requires supporting evidence, which Government strategy contributes to by clearly outlining the direction of travel for policy. 2.2 Without a National Policy Statement, the risk profile including planning risk for potential investment which our economy needs could be deemed too great. 3. Decision Making Including Local Transport Boards 3.1 The Liverpool City Region has established a Local Transport Body that will take strategic decisions on transport policy and major infrastructure investment. It will be important that the Liverpool City Region Local Transport Body works closely with the Department for Transport and its agencies to ensure that investment at a national level, eg on the strategic highway network, and at a City Region level can be integrated and fully address both national and regional requirements for port access whilst also addressing the local implications of port related development. 3.2 The new Local Transport Body will have due regard and focus on how transport investment can enable and support economic growth, job creation, and development. The Chair of the Local Enterprise Partnership will sit on the new Body. The City Region collectively supports the SUPERPORT Action Plan as a route to economic growth and job creation with the support of both public and private sector partners. Improved port access is essential to achieving these economic ambitions. 4. The Influence of Investment in Road and Rail Infrastructure on the Market and Regional Decision-Making on Port Development 4.1 Investment in road and rail infrastructure has a significant impact on the confidence of the market to invest in both port development and in activities that rely on that infrastructure. 4.2 Shippers, retailers and manufacturers all rely heavily on the provision of appropriate road and rail infrastructure to enable them to move their goods to market quickly with a high level of resilience. Heavy congestion and frequent bottlenecks are the enemy of business and erode productivity and business performance. 4.3 In this environment, investment in appropriate road and rail infrastructure to provide suitable access is a key tool in supporting the growth of regional port economies and providing the conditions to enable a greater rebalancing of the UK economy. 4.4 It is particularly critical to align this investment with port investment. Where an uplift in port capacity can stimulate significant economic growth, the improvement of port access can play an even greater role in an area’s regeneration, such as in Liverpool.




4.5 Road and rail infrastructure investment is imperative to enable Liverpool City Region to maximise the potential of the £1 billion investment in SUPERPORT. 5. Are Decisions on Port Development Taking Sufficient Account of the Traffic Generated by Ports and Associated Development Needs 5.1 In Liverpool City Region this is certainly the case. Extensive study work has been undertaken to understand the potential volume, location and direction of additional traffic flows generated by port development and their geographic reach. 5.2 Various options to address these impacts have been evaluated through a Port Access Study and a high level Port Access Steering Group has been established to take this work forward through a collaborative approach with the Department for Transport, Highways Agency, Network Rail, local authorities, the Port operator and LEP; of such importance is this issue that the City Region included the need for action as part of our City Deal discussions with Government. 5.3 This joint effort will ensure we assess the options, identify actions for infrastructure investment and promote efforts to encourage modal shift to sea and rail to support a carbon efficient freight route. 5.4 The Port Access Steering Group is moving forward by submitting a proposal to access Trans-European Transport Network funding which will provide 50% towards a study to identify the preferred actions to be taken to future proof port access infrastructure. 5.5 We do however require match funding to take our proposal forward. We are working with stakeholders including the Department for Transport, the Highways Agency, Network Rail, Peel Ports and the Local Transport Advisory Group to identify available funding for this study. 5.6 Once complete we will require central Government support to ensure delivery of the necessary infrastructure to maximise the positive economic impact of the port investment and creation of jobs. 5.7 We believe Government should prioritise infrastructure investment which will enhance private sector led port development such as Liverpool2 where it will create greater efficiencies in logistics and with it improvements in productivity and competitiveness of UK businesses. This is certainly the case in Liverpool City Region. 6. How realistic are current assumptions about rail’s modal share of ports traffic? Under what circumstances could rail freight or inland shipping play a greater role in reducing port-related road freight? 6.1 With the continued rise in the cost of fuel and the need to reduce UK carbon emissions, it is realistic to predict rail traffic will continue to increase in line with expectations, provided adequate investment in capacity and multimodal facilities are actively encouraged. 6.2 In Liverpool City Region the planned electrification and upgrading of the Northern Hub are critical to this. This can be further enhanced through a holistic approach to SUPERPORT infrastructure, through increased port rail terminal capacity, upgrading connectivity to rail linked distribution sites in the City Region and signalling improvements. 6.3 We support the availability of route development funds and suggest that this mechanism is considered to support regional ports in realising their ambition to successfully maximise the potential for moving freight while avoiding increased and avoidable pressure on the road network. 6.4 We support the promotion of rail freight and increases in the capacity of the network to enable and encourage this. However, we similarly support the promotion of short sea shipping to deliver similar benefits with equivalent subsidy. The sea around the coast of the UK has huge unrealised capacity and as such offers a viable and efficient solution which should be exploited for the benefit of the UK. We believe that a consistent approach to supporting both rail and short sea shipping offers great potential in reducing road freight and relieving pressure on the national highway network. 6.5 This will assist the UK as a whole through distributing investment and economic benefit, promoting regional economic development and easing capacity issues. 6.6 Inland shipping offers a significant opportunity to reduce road based freight. Already the Manchester Ship Canal is carrying increasing freight volumes and this is set to increase as investment is made to develop 5 million square foot of warehousing along the inland waterway. This potential and benefit should be actively encouraged by Government wherever possible to include road investment to access the sites along the canal. 7. Are there any regulatory barriers to investment in ports? What could and should be done about them 7.1 Predictions for rail freight show continued growth in the coming years. However we must ensure this confidence in modal shift is not stifled by increased regulation. 7.2 The decision by the Office of Rail Regulation (ORR) to increase the variable usage charge and introduce a new charge for the haulage of coal, iron ore and spent nuclear fuel must be carefully considered economically.




7.3 We advocate a continued focus on supporting modal shift to rail and sea. Reducing operating costs through a modal shift rail subsidy appears at odds with increasing usage charges at the same time. In summary Liverpool City Region LEP believes that investment in port access infrastructure is of significant economic importance to the UK. However, we believe Government intervention should be prioritised into those schemes that can deliver the greatest economic benefit to the UK, and help to beneficially rebalance the UK economy in line with Government economic policy. Working transport and economic policy in tandem in this way, will have the greatest return on investment for the UK taxpayer, through delivering greater economic impact from improved productivity and competitiveness of UK businesses. January 2013

Written evidence from Freightliner (PA 07) 1. We are writing in response to your request for evidence for your inquiry into Access to Ports. This is the formal response of Freightliner Group (Freightliner)—representing Freightliner Limited (FLL) and Freightliner Heavy Haul Limited (FLHH). Freightliner is a logistics operator specialising in rail, currently moving 79% of all deep sea containers that are moved by rail in the UK, as well as over 20 million tonnes of bulk goods by rail each year. 2. Rail freight plays a vital role in the supply chain to serve the UK ports that are connected to the rail network. 1 in every 4 deep-sea containers arriving or departing from the UK ports is transported by rail and approximately 25% of all electricity produced in this country is generated by coal delivered on rail (up to 40% in winter). Approximately 75% of this coal is imported from ports. 3. Movement of freight by rail offers considerable environmental and economic benefits over the transport of freight via the road network. Freight trains can move a considerable volume of freight, with each freight train replacing between 40 and 70 lorries (depending on the commodity) in each direction. Rail freight saves: —

£772 million per annum in congestion costs1

—

£133 million per annum in road infrastructure costs2

—

£68 million per annum in CO2 costs3

—

Pro-rata 42 road deaths at a value of £78.8 million4

What should be the priorities for improved access to ports, and why? 4. The development of the railway infrastructure through Strategic Freight Network (SFN) as a dedicated funding vehicle for specific freight improvements has been extremely effective to date and is already helping to support growth in use of freight on rail despite the recession. Deep sea container modal share has increased from 17 to 30% in the last 15 years:




5. Furthermore in the last 10 years, intermodal rail freight growth has increased by 87% despite the recent impact of the recession, this is predominantly the movement of deep-sea containers from and to ports. This growth can at least partly be attributed to the investment delivered through SFN in the current Network Rail (NR) Control Period 4. For example, following the gauge clearance between the port of Southampton and the West Coast Mainline, the modal share to rail increased from 29–36% within 12 months.




6. UK government is investing £380 million in the Strategic Freight Network 2009–14 in England and Wales and a further commitment of £200 million Strategic Freight Network funding in England and Wales and £30 million in Scotland has been announced as part of the High Level Output Specifications for 2014–19, as well as freight benefits being incorporated into named projects such as grade separation at Leicester and capacity enhancements at Ely. This investment is welcomed by the rail freight industry but it should also be considered in the context of the total investments in the railway network, predominantly to benefit passenger capacity of £10.8 billion in England and Wales (£12.2 billion including Scotland). Therefore the investment in the SFN constitutes 1.9% of the total investment in England and Wales in Control Period 5 (2014–19). 7. SFN investment to date has so far been primarily focused on providing the capability on the core intermodal routes between the ports and inland terminals, in the form of gauge clearance to allow 9’6” containers to be hauled on standard wagons. This programme continues until the end of the current Control Period in 2014:

Gauge clearance as at May 2011




Gauge clearance planned for March 2014 8. One lesson that must be learnt for future investments is the need to incorporate suitable diversionary routes in the business case for investments. For example the core route from Southampton to the West Midlands has been successfully gauge cleared but there is no gauge cleared diversionary route from Basingstoke to the West Midlands and it is proving difficult to make a business case for the diversionary route alone. This diversionary route is urgently required as there is a £6 billion investment scheme to upgrade the Reading area and the Great Western Main Line route and without the ability to divert it is inevitable that traffic movements will be lost to road and/or Network Rail will be unable to plan their engineering blockades so efficiently. 9. The SFN funding is also being used to start to invest in network capability to provide the ability to run longer trains. Working hand in hand with gauge clearance projects, these upgrades are important in improving train utilisation and allowing rail to compete more effectively with road. Currently one intermodal train can remove the equivalent of 50 HGV journeys but the ability to operate longer trains only improves this statistic further. Longer trains also make better use of precious capacity on the rail network; both passenger and freight traffic have considerably increased over the last 10 years, and many parts of the rail network are now operating at near capacity as a result. 10. To increase rail modal share out of the ports further, the next phase of SFN investment should concentrate on providing the capacity that is required to accommodate the forecasted growth on these corridors and enable rail to continue to grow its modal share of the market. Whilst the provision of this capacity is essential to allow rail growth to continue, the development of such business cases is not always straightforward, particularly when the measurable economic outputs cannot be guaranteed and at the same time there are often competing objectives to increase passenger services on the same routes. 11. It is important that the planned outputs from investment are actually delivered and therefore that the capacity delivered by SFN schemes is protected until the forecast future freight traffic comes on stream and is not immediately absorbed by additional passenger services. For example, whilst the development of the Felixstowe to Nuneaton route will divert some intermodal services away from the North London line in the short term, these trains are likely to be replaced by services originating from London Gateway once it is fully operational. 12. In addition to capacity, Government investment through the SFN is also required to provide reliable 6/7 day rail access into the ports so that rail freight can offer the same reliable daily service offering to its customers as road can, this is a pre-requisite for many customers wishing to use rail. In practice, this means the development of suitable diversionary gauge cleared routes that will not only make it easier to maintain the service during times of disruption, but also allow Network Rail to maintain the network more effectively and offer operators alternative routes during these periods. 13. The High Level Output Specification (HLOS) announcement made in July 2012 included funding for the electric spine that will provide an electrified route between the Port of Southampton and the Midland Main Line Mainline. There is a need to develop a long term electrification strategy for rail freight which takes account of the commercial tipping point for freight operators, the asset life of freight operators rolling stock (noting that the purchase of new freight electric locomotives will be a decision for the private sector) and




includes a strategy of diversions routes and connections to inland rail terminals as well as core routes to connect the major ports and conurbations. 14. Government support both financially and in terms of planning policy could also be important to support the growth of certain bulk traffics, imported via the ports. The biomass market is in an embryonic stage and is an option as a viable alternative fuel to coal, which would make a large contribution to meeting the UK’s legally binding carbon reduction targets set under the Climate Change Act 2008 (a reduction of 34% in emissions 1990–2020 and 80% by 2050). With rail providing the most suitable mode of transport (considering the volumes required to generate the equivalent calorific values to coal) an efficient network must be in place to link the ports and power stations. This means provision of capacity on the network, as the product cannot be easily stockpiled between ship and power station, and furthermore the likely biomass rail network may not perfectly mirror that currently used for coal traffic. Secondly, planning policy must support and not hinder the private sector in developing the necessary handling facilities for the product within the ports. 15. The HLOS announcement of a £200m allocation to the SFN during the next Network Rail Control Period will be allocated to some of the schemes described in this response, although it should be noted that inevitably there will have to be a prioritisation exercise and some important improvements will not be delivered. 16. It is important that investment in programmes such as the SFN are not considered as one off projects but continual programmes that continue support economic and environmental benefits going forward. Prior to 2009 there had been little investment for decades in infrastructure to support rail freight and inevitably there has been, and continues to be a considerable catch up factor in order for infrastructure to be of a reasonable expected modern equivalent. Is the delay in producing a National Policy Statement for National Road and Rail Networks creating problems for improving access to ports? If so, in what ways and where? 17. The current cyclical nature of the NR Control Period process that requires Government investment to be staggered does not lend itself to effective strategic planning and the SFN would be more effective if the funding process could be continual or at least planned over longer periods, a longer term cross-party infrastructure plan could provide considerable economic benefit to the country. The development of a National Policy Statement for the National Road and Rail Network will be important and hopefully go some way to achieving this by framing the investment in rail freight into a longer and “rolling” strategy. 18. The National Policy statement also needs to be joined up and not consider the future needs of road and rail separately in isolation. It is vital that future policies to alleviate road congestion consider the benefits offered by rail on roads where modal shift is a realistic outcome, such as on the A14 for example where the road and rail routes directly compete to link Felixstowe to the West Midlands and North West. A clear strategy in the form of the NPS is likely to accelerate further private sector investment in rail connected warehouse parks (such as the recently announced Radlett project) along with port related strategic rail freight interchanges. Currently there is no national guidance for local authorities to use when trying to balance national benefits and local opposition of schemes. How satisfactory are the current and proposed decision-making structures, including Local Transport Boards? 19. In overall terms decision making and planning around the SFN is undertaken at a national level so it is more straightforward if Government’s decisions on funding are made on the same basis, which again links to the importance of the NPS. 20. It has been suggested that the Local Transport Boards are based on the same geographical boundaries as the Local Economic Partnerships (LEP’s). Freightliner has only engaged with one LEP and it is difficult for nationwide companies such as ours to engage with so many local organisations. It is also likely that LEPS, due to their size and local nature are unlikely to have any expertise in rail freight. 21. With the majority of rail freight flows spanning long distances, and likely to cover many LEP areas, the Local Transport Boards need to consider that the benefits of localised investment will be felt in other areas outside their areas of influence, particularly if modal shift is an output of the investment. There is often too much of a focus on the local impacts which can be both negative and positive, eg job creation but increased congestion on the local road network. Freightliner would hope that the Local Transport Boards are able to take a more strategic view when considering the potential benefits of rail freight schemes. 22. It is also important that any schemes developed by the Local Transport Boards, designed to benefit rail freight need to be developed with the engagement of the key rail freight stakeholders to ensure that they are effective and deliver value for money. 23. Freightliner also notes the proposals to dissolve some of the management of specific rail franchises in several Passenger Transport Executive (PTE) areas. There is a clear interaction with freight services and it is important that these local bodies recognise the regional benefits that rail freight can deliver when balanced against their inevitable aspirations for improved local passenger services. Up to now engagement with PTEG has been positive and Freightliner hopes that this continues should the devolution process develop further.




To what extent can investment in road and rail infrastructure influence the market and regional decisionmaking on port development? 24. In terms of the intermodal sector, for rail to compete effectively with road, it needs to be able to offer the same ease of access between the port and the mainline network. This primarily means gauge capability and capacity so that operators are able to develop cost effective and operationally efficient train paths—as a key dictator is often the availability of loading slots at the port terminal. 25. Freightliner has recently completed its largest ever capital investment at a terminal, by way of its installation of new rail mounted gantry cranes at its Maritime terminal at Southampton. These cranes will deliver a much increased capacity at the terminal and provide the ability to handle greater container volumes in the future. This investment would undoubtedly not have happened were it not for the prior commitment by Government to SFN investment to improve rail access into Southampton. 26. Other important investments made by Freightliner over recent years include new cranes at Manchester and Birmingham terminals, a new more powerful and environmentally friendly locomotive fleet (PowerHaul/ class 70s), new wagons to complement the gauge clearance programme and a new IT system that provides our customers with a state of the art paperless booking and delivery system. In total Freightliner has invested in the order of £450 million since 2000, none of which has been subsidised by government. 27. With these factors in mind, investment in both terminal facilities along with rail network capability and capacity can then act as a catalyst to grow rail freight (demonstrated in the recent increase in rail’s modal share from Southampton) and the overall viability of a port. Are decisions on port development taking sufficient account of the traffic generated by ports and associated development needs? 28. The SFN funding has been predominantly focused on rail routes from the major ports to inland terminals and these are the routes that have generated by far the largest proportion of rail freight growth over the last 10 years. With further and considerable private sector investment at each of the largest 3 deep-sea container ports at Southampton, London Gateway and Felixstowe we would expect the focus in Control Period 5 (2014–19) to continue to be on these core routes. How realistic are current assumptions about rail’s modal share of ports traffic? Under what circumstances could rail freight or inland shipping play a greater role in reducing port-related road freight? 29. In 2007 the rail industry commissioned MDS Transmodal to develop the forecasts to predict rail freight growth until 2030, these were supported by the Department of Transport and Network Rail as well as the operators and other industry bodies. These forecasts are currently being updated and will be published later in 2013. Latest ORR statistics demonstrate that these forecasts are already being exceeded in a number of areas of the country. For example, the forecast daily freight trains to Trafford Park (the busiest inland terminal) have already reached levels that were not predicted to be reached until 2019. 30. Rail has a growing market share at the two largest UK ports with 30% at Felixstowe and 40% at Southampton achievable over the next few years. Furthermore, the previously mentioned example of the completed gauge clearance scheme out of Southampton grew the rail modal share by 7% within less than 12 months. This statistic clearly demonstrates the effectiveness that the SFN has had during the current control period. The schemes planned for CP5, along with the private sector funded improvements to port rail facilities at Southampton, Felixstowe and London Gateway (due to open in late 2013) will provide an excellent opportunity for rail’s modal share to increase further. 31. Further benefit and modal shift could be achieved if there was longer term commitment to investment in the Strategic Freight Network beyond the constraints of the 5 year Control Periods. A longer term crossparty infrastructure plan would enable further investment and give confidence to potential customers of rail. 32. Further modal shift could be gained over shorter distances. However it remains virtually impossible to compete with road on price over distances of less than 150 miles. Decisions such as an HGV surcharge at Ports to level the playing field with rail (Currently £50 for rail and zero for road), road toll charges, reduced track access charges for freight or an emissions tax on HGV’s could provide the environment for shorter distance rail freight journeys to become competitive. 33. The existing Mode Shift Revenue Support (MSRS) grant supports the movements of predominantly containers by rail, where they would have otherwise moved by road. This grant is funded for £19 million per annum until 2015. It offers very high value for money to government at a ratio of approximately 5:1. The continuation of the MSRS grant beyond 2015 is vital to ensure that existing shorter distance container movements remain on rail. 34. A sudden curtailment of the scheme could result in radical restructuring of rail services from the major ports as non profitable services are ceased and customers who no longer have a portfolio of destinations served withdraw contracts from rail operators. The current level of funding could be increased by just a few million pounds per year and considerable benefits could be gained at a ratio of multiples above the cost in securing new flows to rail, which currently move by road. MSRS has been a successful scheme in removing movements




from the roads and is a no risk option for government as payments are only made once movements have been made by rail rather than road Are there any regulatory barriers to investment in ports? What could and should be done about them? 35. Our major concern in this area relates to the five year periods through which Network Rail are funded and access charges are set. Five years certainty is not sufficient to plan investments in assets which have long asset lives, eg cranes, locomotives and wagons all have an expected asset life of 35 years. A long term infrastructure plan would greatly assist the private sector in making more investment, which in turn would benefit the economy. 36. The Office of Rail Regulation announced in decision on capping of freight access charges on 11 January 2013 for the five years 2014–19. The Variable Usage Charges have been capped at an average increase of 23% however for individual customers the increase could be considerably more, and there are other charges paid that are not included in the cap. Such uncertainty and likely actual increases in charges is creating great uncertainty in the rail freight market. This is unhelpful when there is considerable momentum to further modal shift and potential customers will at best delay their decision to use rail. 37. This is particularly unhelpful in the context of fuel duty freezes announced by the Chancellor in November; fuel duty being in effect the only charges paid by lorries to use the road network. The charges paid by freight operators are far more complex and six different types of access charge currently apply. Such complexity is in our view unnecessary and is creating a barrier to further modal shift to rail. January 2013

Written evidence from UK Major Ports Group (PA 09) Summary 1. The UK Major Ports Group welcomes the Transport Committee’s decision to set up an inquiry into access to ports. It is our strong view that good transport infrastructure plays a vital role in the development of the UK’s economy. While ports themselves are financed through private investment and do not seek any financial help from the taxpayer, road and rail links to and from ports are rightly part of the publicly financed national transport infrastructure system. The importance of these international gateways was recognised in the Eddington report and schemes to enhance capacity and remove bottlenecks should continue to receive priority in DfT’s capital expenditure programme. Continued investment in connections to ports will promote economic recovery, not hinder it. It is also important to recognise the potential role of coastal shipping and to treat this equally with other modes. Introduction 2. UKMPG is one of two associations representing ports in the UK. Our 9 member groups handle over 70 percent of the UK’s international trade by volume, and therefore play a significant role in supporting the UK economy and promoting exports. UK ports are privately financed and do not seek any financial help from the taxpayer. Importance of ports to UK economy 3. The independent economic consultants Oxford Economics have produced a new report on the economic impact of the UK ports sector in 2011, updating their previous studies which used 2007 and 2009 figures. Their data shows that the ports sector consistently outperforms most other sectors for employment and productivity— for example, between 2009 and 2011 direct employment in ports rose by 5% to 117,200, while overall UK employment fell by 0.4%. The key measure of labour productivity, GVA (Gross Value Added) per worker, averaged over £67,400 in the ports sector, nearly 40% higher than the UK-economy-wide average of £48,400. 4. Overall this latest report shows the ports sector continuing to improve productivity and to make a significant contribution to the UK economy despite testing trading conditions. The maritime sector as a whole supports over half a million jobs in the UK economy and contributes nearly £32 billion to UK GDP, with the ports sector accounting for well over half of this. These figures, together with the fact that 95% of the country’s international trade moves through ports, show how vital ports are to the UK’s economic performance. Current ports investment programme 5. Annual investment in upgrading and developing port facilities has historically been running at £200–300m per year and this is increasing as several large development projects (which have already received planning approval) are taken forward. The private sector has shown confidence in the future of the UK ports sector with — a major expansion at Felixstowe the UK’s largest container port now completed, — a large new container port on the Thames at London Gateway due to open in late 2013, — a major capacity enhancement at Southampton now underway and




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financing in place for a new container port at Liverpool.

6. Additionally ports are playing an important role in the development of renewable energy, particularly offshore wind and biomass, supporting private investment to be put in by renewable energy developers. Government’s policy on links to ports Access to ports featured strongly in the previous Government’s policy on promoting infrastructure. The ports sector gave a strong welcome to the transport study by Sir Rod Eddington published in December 2006. We were particularly pleased to see the report’s recognition that, given the international nature of the UK’s economy, good links to international gateways such as ports were crucially important, offered a high rate of return and should be a priority area for future DfT investment. We were also pleased that the previous Government acted quickly to implement Eddington’s findings through: — setting up a new streamlined planning system for major infrastructure projects through the provisions of the Planning Act 2008; — putting major ports at the centre of the strategic transport corridors set out in the white paper “Delivering a Sustainable Transport System”, published in November 2008; — bringing forward several major road and rail projects improving links to ports under the Transport Innovation Fund, Strategic Freight Network and accelerated Highways Agency programmes. 8. The present Coalition Government has yet to set out a comprehensive position statement on transport infrastructure priorities. The promised national policy statement on national (road and rail) networks has been delayed. UKMPG assumes therefore that the previous Government’s policies are being rolled forward at least for the time being. This policy vacuum is a little disturbing given that important decisions are to be taken shortly on the DfT capital programme for the period beyond 2014/15. 9. UKMPG notes that as part of the Government’s localism agenda, regional spatial strategies have been abolished and Regional Development Agencies replaced by local enterprise partnerships. We look to the Government to ensure that strategic transport priorities are secured through the emerging successor arrangements and that improving local road network links to ports will continue to be an investment priority (including a commitment that such access improvements will be a priority area for the new Local Transport Bodies). For their part, ports will continue to work closely with LEPs, Local Transport Bodies and other key stakeholders so that there is a good overall understanding of ports’ future development plans, bearing in mind the need to react quickly to changing market circumstances. Port masterplans can have a role to play here, though in line with Government guidance it must be up to individual port authorities to determine whether masterplanning represents a good use of time and resources in the light of local circumstances. 10. One major cause of delay for port investment schemes and associated connecting has been the processes needed to comply with EU Habitats legislation. The Coalition Government has reviewed the implementation of the legislation and is taking steps to reduce unnecessary bureaucracy and to improve procedures. While we welcome this, the improvements to date are fairly marginal and major reductions in time and cost are only likely to take place if there are changes to the underlying EU legislation. Delivery issues 11. A number of road schemes which are of particular benefit to ports have been taken forward in recent years. However a number of other schemes have been deferred because of spending pressures. Rail connections to ports have fared somewhat better. A number of schemes are nearing completion or have been completed over the last 5 years including capacity enhancements (ie passing loops etc) and gauge clearance (to accommodate modern 9’6’’ high cube containers) on East and West Coast main lines and connecting links from several major container ports (Southampton, Felixstowe, Tilbury, Liverpool, Teesport and the new port being developed at London Gateway). There have also been a series of improvements to facilitate rail movement of coal and other bulk traffic in the Humber area. 12. Ports are making a financial contribution to many of the above schemes though our strong view is that improvements to the national infrastructure should be financed through the public purse (see para 14 -16 below). 13. Coastal shipping can offer an attractive alternative to road and rail over longer distances. It is already well developed for transport of bulk materials where it accounts for around 20% of the total UK market for these products. However coastal shipping is less well developed in other sectors such as containers and roll on/roll off traffic. The industry is now taking steps to improve the marketing of coastal shipping through the Freight by Water website and modal switch programme run by the Freight Transport Association. However the Government needs to play its part by ensuring that the environmental grant support which is currently payable to rail freight operators is also available for coastal shipping so that there can be fair and equal competition between the modes. Financing 14. Good connecting links to and from ports are vital if port capacity is to be used to best effect. Until relatively recently UK policy was that connecting infrastructure was planned by, provided for and paid for by




the state, as in other EU countries. However some 8 years ago the previous Government started requiring port developers to make a financial contribution to infrastructure links as a condition of development planning approval. Negotiations were conducted ad hoc without reference to any supporting policy framework. The consequence has been to add significantly to the overall costs of the developments in question, reducing their viability. 15. In late 2008 the then Government introduced guidelines on financing transport infrastructure which had the effect of making port developer contributions to essential connecting infrastructure standard practice. We do not accept that this should be the case. As well as running counter to the direction set out in the Eddington Report it reduces the relative attractiveness of UK ports for international finance which could result in future expansion schemes not going ahead. UK ports which compete for international traffic could also lose out against competitor ports who do not have to pay for connecting infrastructure. 16. We remain strongly of the view that infrastructure links to and from ports should be a matter for public investment. If there is a need to generate additional finance for the road programme, UKMPG’s view is that the right way of achieving this is through universal road tolling. We note that the present Government are beginning to show more interest in possible road tolling options. What needs to be done? 17. The next transport spending review and the forthcoming Control Period 5 (2014–2019) determination for the rail industry are an opportunity to address remaining gaps in the network of road and rail links to ports. For rail these gaps include: — Capacity enhancements on Felixstowe to Nuneaton route (connecting Felixstowe to West Coast main Line); — Gauge enhancements on Bristol to London and Birmingham routes; — Completion of a diversionary freight route from Peterborough to Doncaster to relieve pressure on the ECML; — Gauge enhancement on the TransPennine route; — Additional capacity from Southampton; — Electrification of key routes affecting S Wales ports, Bristol, Southampton, London Gateway, Felixstowe — In addition several UKMPG ports are looking at handling biomass traffic which, if planned investments go ahead, is also likely to require investment in the rail freight network. We are pleased that several of these schemes are either already due to be addressed in CP4 or are proposals in Network Rail’s strategic business plan for CP 5 (2014 -19). We hope that ORR and the Secretary of State will reach a positive decision on these aspects of the SBP. 18. For road the main gaps are — Access to Immingham (A 160 and A 180 improvements) — Access to Southampton—improvement of junctions 9 and 14 of M3 — Access to Liverpool—A 5036 improvement scheme — Access to Felixstowe—A 14 improvements — Link from the M6 to the port of Heysham 19. For coastal shipping a revision to current environmental grant arrangements needs to be made so that there is equivalent financial support for rail freight and for coastal shipping. Severn Barrage proposals 20. The Energy and Climate Change Committee is currently carrying out an inquiry into proposals for a Cardiff- Weston barrage across the Severn Estuary. If such a scheme went ahead it would profoundly affect access by sea to the port of Bristol and to two ports operated by Associated British Ports in South Wales. The Bristol Port Company and ABP have submitted written and oral evidence to the Energy and Climate Change Committee explaining the serious consequences for the ports in question and also for the national and local economy, and the potential waste of existing infrastructure resources. The Committee has also received detailed evidence about the highly adverse environmental effects of such a barrage. UKMPG hopes that the Committee will end current uncertainty by concluding that this barrage scheme should not proceed. Conclusion 21. There needs to be a clear statement of overall Government policy confirming the importance of good access to the UK’s international ports with schemes prioritised on the basis of economic appraisal using DfT’s Webtag Transport Analysis Guidance methodology so that schemes are selected because of their economic value not their political attractiveness. The 2008 guidelines for transport infrastructure financing which serve to discourage port investment should be withdrawn.




Specific issues raised by Committee (a) What should be the priorities for improved access to ports, and why? Eddington principles on the importance of access to international gateways need to be firmly restated by the present Government. The Highways Agency, Network Rail and ports should continue to work closely together to ensure that access related schemes are brought forward in line with port development proposals set out in port masterplans and elsewhere. (b) Is the delay in producing a National Policy Statement for National Road and Rail Networks creating problems for improving access to ports? If so, in what ways and where? The lack of a clear national statement on access to ports is leading to some uncertainty about what the Government’s priorities are for the forthcoming spending review (c) How satisfactory are the current and proposed decision-making structures, including Local Transport Boards? The new post regional structure for decision taking on local transport schemes is complex and not easy to understand. The timetable for setting up Local Transport Bodies is extremely tight and we question whether they will have made sufficient progress to reach meaningful decisions on prioritising major local schemes in their areas for 2015 and beyond by April 2013. A clear national statement emphasising the importance of access to ports would be helpful here. (d) To what extent can investment in road and rail infrastructure influence the market and regional decision-making on port development? Decisions on new port infrastructure are matters for ports themselves as the Government has recognised in the national policy statement for ports. In deciding on schemes, ports and investors will clearly have regard to the quality of the connecting infrastructure. If ports have to pay for connecting infrastructure this will reduce the viability of the scheme and may result in much needed investment not going ahead. (e) Are decisions on port development taking sufficient account of the traffic generated by ports and associated development needs? The national policy statement for ports contains clear guidance on how traffic and wider development aspects should be taken into account in planning decisions on port development schemes. In bringing forward development schemes ports will have worked closely with local authorities, the Highways Agency, Network Rail and others to ensure that consequential effects on other transport users and on local communities are properly addressed. (f) How realistic are current assumptions about rail’s modal share of ports traffic? Under what circumstances could rail freight or inland shipping play a greater role in reducing port-related road freight? Ports already account for more than 50% of total rail freight traffic. Rail container traffic has been growing quickly (11% increase in 2011 in a flat market): some container ports are achieving more than a 30% rail market share. If bottlenecks continue to be removed this level could increase further. Coastal shipping is currently being held back by lack of customer awareness (being addressed by industry) and by lack of environmental grant funding equivalence with rail (g) Are there any regulatory barriers to investment in ports? What could and should be done about them? Some planning barriers have been addressed but more needs to be done to speed up the planning process and also associated licensing regimes. There is scope for introducing clearer time limits and ensuring that public authorities are properly resourced for carrying out their statutory functions. We are concerned about the possibility of new EU ports legislation which could introduce unwelcome additional bureaucracy and costs for UK ports. January 2013

Written evidence from Peel Ports (PA 10) Overview 1. Peel Ports welcomes the Transport Committee’s decision to set up an inquiry into access to ports. It is our strong view that the success or otherwise of a port is inextricably linked to the ability for freight to be moved in or out and therefore surface access (be it road or rail links) inland waterway and coastal shipping are of paramount importance. It is therefore disappointing that the Department of Transport have not as yet issued the Draft NPS relating to national networks (strategic roads and railways). We have previously expressed our concern that it was inappropriate to decouple transport considerations from Ports Policy, with the Ports NPS being adopted in isolation in January 2012. 2. It remains the opinion of Peel Ports that there should be a single freight policy covering all modes and not just road and rail. Such a policy should cover the total freight journey from port of arrival to destination of use of the cargo for imports and the reverse for exports. 3. While ports themselves are financed through private investment and do not seek any financial help from the taxpayer, road and rail links to and from ports are rightfully part of the publicly financed national transport infrastructure system. The importance of these international gateways was recognised in the Eddington report and schemes to enhance capacity and remove bottlenecks should continue to receive priority in DfT’s and Network Rail’s capital expenditure programme.




4. The emphasis of Government policy appears to be based around terrestrial access to ports be that road or rail linkages. However, in the absence of an overall freight policy for the UK the significant opportunities that coastal shipping and inland waterways can offer do not feature prominently enough in our opinion. It is important to recognise the significant potential for water freight solutions and to treat this equally with other modes. This is particularly so in the light of the subsidies enjoyed by the rail freight sector, and which can have the effect of distorting the market and placing water freight solutions at a competitive disadvantage. Furthermore, there are significant benefits in greater utilisation of coastal shipping, as this form of transport does not contribute to UK road or rail congestion or costs. 5. In identifying the Port of Liverpool as a “national” port forming part of the “Strategic National Corridors” we feel that surface access enhancements should be treated at a national level and not be devolved into a local issue with uncertainty over funding and delivery. We remain unconvinced that the consideration of strategic transport interventions being considered at a local level is in the best interests of the major English ports. Peel Ports 6. Peel Ports Ltd is the second largest port owner and operator in the United Kingdom, handling some 65 million tonnes cargo per annum. Our operations include upon the Mersey: The Port of Liverpool and The Manchester Ship Canal; the Lancashire Port of Heysham; upon the Medway: the Ports of Sheerness and Chatham Docks; in Scotland, upon the Clyde: King George V Dock (Glasgow), Greenock, Ardrossan and Hunterston, and with terminals in Dublin and Belfast. 7. Peel Ports Ltd is privately owned with ambitious investment plans identified for the next decade amounting to some £1 Billion of capital investment on port infrastructure projects. Additionally we continue to work in partnership with a number of our port tenants many of whom are blue chip international operators such as Essar, Cargill, European Metal Recycling, Tate & Lyle, and Scottish Power in terms of their current and further additional private sector investment plans. 8. The combined volumes of the Mersey Ports (Port of Liverpool and The Manchester Ship Canal) are some 40 million tonnes of cargo. This volume of cargo generates some 16,000 shipping movements per annum. The Mersey Ports are the most diverse range of cargoes compared to any other major estuary other than the Thames in the UK. Significantly the North West represents the largest container generating region outside of London and within a 125 mile radius has the largest concentration of distribution and manufacturing activity and the largest concentration of population (see attached plan). 9. In handling some 40 million tonnes of cargo, the Mersey Ports are the fourth largest port complex in the UK handling a greater tonnage than the ports of Southampton, Felixstowe and Dover. We believe the Mersey Ports have not benefitted to the same degree in terms of the road and rail improvements implemented to serve these Greater South Eastern ports. 10. In recognition of the increasing size of vessels (notably those employed on the global container routes) Peel Ports are developing Liverpool2, a Post Panamax Container Terminal upon the Mersey Estuary. The amalgamation with The Manchester Ship Canal and further projects thereon—Port Wirral, Port Bridgewater, Port Ince, Port Warrington, and Port Salford results in a unique “all water” freight solution stretching for 44 miles at the heart of the UK and Britain’s richest cargo creating and consuming region outside London. 11. A barge service linking the deepwater Port of Liverpool and Irlam Container Terminal on The Manchester Ship Canal was launched in October 2007 providing dedicated water freight capacity, thereby alleviating road congestion and contributing to cutting carbon emissions. The volume of containers moved has increased five fold since inception with the service removing 13,000 container journey’s from the strategic road network in 2012. The operation has been supported by a Mode Shift Revenue Support (MSRS) grant of £1.91 per container, helping to mitigate its early life trading loss. 12. In our submissions we have a number of concerns where we believe matters in respect of Access to Ports ought to be more fully assessed by Government. In announcing the Inquiry on 6th December 2012 the Committee advised they would like to hear views on the adequacy of access to ports, current and planned, and the likely consequences of Government policy in this area. In particular: What should be the priorities for improved access to ports, and why? 13. The Port of Liverpool (in conjunction with The Manchester Ship Canal) is one largest port complexes within the UK with the River Mersey the third busiest in terms of shipping movements. The Government have previously consulted upon and designated a number of “Strategic National Corridors” indicating the core road and rail connections to the largest ports (and airports) in England, with connections to the devolved administrations. The Port of Liverpool has been appropriately identified upon the network, and in our opinion through an enhanced role for coastal shipping and the greater utilisation of The Manchester Ship Canal is able to provide a greater role in terms of sustainable distribution thus relieving pressure on the strategic road and rail networks of the UK. 14. With a number of consents already in place for new and expanded port facilities in the Greater South East, with further in the pipeline, a fundamental question arises about the role of the Mersey Ports (and other




Northern ports) and the capacity they could have to take the strain off and alleviate congestion within the South East region. This is particularly so when in excess of 50% of containers imported through South Eastern ports are bound for destinations in the Midlands and northwards. In our opinion the continued reliance upon the Greater South Eastern ports will inevitably result in increased congestion upon the strategic road and rail network, and place further pressure upon the Government to fund and implement costly surface access solutions. 15. Government should take steps to prioritise the use of coastal shipping and inland waterways over road and rail for moving cargo. An increased role for coastal shipping in moving cargo from South to North would provide significant relief to an already congested strategic road and rail network. This would have an additional benefit in creating additional capacity for passenger growth upon the strategic rail network. 16. However, in order to properly realise the offer within the North West and Mersey Ports there are a number of road and rail improvements that need to be expedited as follows: —

A5036T Access to Port of Liverpool Highway Improvement;

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Re-instatement of Canada Dock Freight Line (Port of Liverpool);

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Re-instatement of Birkenhead Docks Freight Line;

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Freight Line connections to Port Ince, Port Warrington, and Port Salford.

17. The above initiatives would be reasonably regarded as offering excellent sustainability benefits and in cost terms would represent a fraction of the cost of some of the schemes that have hitherto been implemented elsewhere within England. Is the delay in producing a National Policy Statement for National Road and Rail Networks creating problems for improving access to ports? If so, in what ways and where? 18. The production of the National Networks NPS is significantly overdue and has been decoupled from Ports Policy. In our opinion the lack of a clear national statement on access to ports is creating uncertainty about what the Government’s priorities are and indeed where future financial resources should be appropriately allocated. 19. It is our considered opinion that access to ports should not relate solely to terrestrial access (road and rail), but should also embrace an enhanced use for coastal shipping (and inland barge) as part of a fully integrated freight strategy for the UK. The lack of a national freight policy leads to ports infrastructure being developed in suboptimal areas for road and rail networks, resulting in a consequential requirement for significant investment in the strategic road and rail network. How satisfactory are the current and proposed decision-making structures, including Local Transport Boards? 20. The relatively recent abolition of Regional planning and transportation structures has resulted in a new emphasis upon “Localism” with decision making being devolved to local level—be that through Local Authorities, Local Enterprise Partnerships, and Local Transport Boards. 21. By their very nature ports exist at a local level but more significantly operate and contribute to regional and national competitiveness. For the same reason we do not regard transportation as being a local issue, as often a ports attractiveness is dependent upon its regional and national connections. At a local level opinions can be parochial and would not necessarily adopt a more strategic outlook. We therefore remain unconvinced that the consideration of strategic transport interventions at a local level will result in more certainty and more timely delivery of transport interventions. 22. In identifying the Port of Liverpool as a “national” port we feel that surface access enhancements should be treated at a national level and not be devolved into a local issue with uncertainty over funding and delivery. The transport “bottlenecks” be they road or rail arise closest to the Port, and although there may be some shortterm relief during the current economic downturn, congestion and journey time unreliability are likely to get worse again as business expands and the Liverpool2 port expansion comes on stream from 2015. To what extent can investment in road and rail infrastructure influence the market and regional decisionmaking on port development? 23. The Ports NPS confirms the Government’s longstanding position in that “The UK ports sector is the largest in Europe, in terms of tonnage handled. It comprises a variety of company, trust and municipal ports, all operating on commercial principles, independently of government, and very largely without public subsidy” (Para.3.2.11). However, it is beyond question that significant amounts of public sector funding have been and continue to be directed into road and rail improvements in the Greater South East providing an indirect subsidy to a number of ports, and thereby providing such operators with a competitive advantage. Such investments have the effect of contributing to unnecessary and unsustainable long distance road and rail freight journeys.




24. In terms of the progression of new port expansion schemes, ports and their investors will clearly have regard to the quality of the connecting road and rail infrastructure. If ports are going to be expected to contribute financially towards the delivery of surface access connections this will reduce the viability of the scheme and may result in significant private sector investment not going ahead. UK ports which compete for international trade could also lose out against competitor EU ports whose countries often publically fund and deliver connecting infrastructure.

Are decisions on port development taking sufficient account of the traffic generated by ports and associated development needs? 25. There are previously consented schemes (notably for container port expansion) at a number of English ports. These approvals remain extant and in a number of cases works are being or are about to be progressed (eg Felixstowe, Southampton, London Gateway, and Liverpool). 26. In terms of any new port expansion projects that may come forward, the National Policy Statement for Ports (January 2012) , Marine Policy Statement (March 2011), and the National Planning Policy Framework (March 2012) provide the relevant advice in terms of how traffic and wider development aspects should be taken into account by the decision maker. 27. In bringing forward expansion projects, Peel Ports are well versed in ensuring relevant issues are properly identified in the preparation of Environmental Impact Assessments and we work closely with local authorities, transport agencies, and other statutory and non-statutory consultees. Through the publication and consultation upon our Mersey Ports Master Plan (June–September 2011) we have ensured that local communities are fully informed of our port expansion aspirations, and we continue to maintain a dialogue with all interested parties. 28. Whilst sufficient account is taken of the impact of port development on local road networks, we consider insufficient account is taken in relation to the impact on the national strategic road network, for example the South to North flows on both road and rail from ports in the South of the UK to regions in the North.

How realistic are current assumptions about rail’s modal share of ports traffic? Under what circumstances could rail freight or inland shipping play a greater role in reducing port-related road freight? 29. We believe the development of a national freight policy that considers all modes of transport (including coastal shipping) and their relative contributions to the effectiveness of the movement of goods is required to best facilitate the reduction in overall port-related road traffic. 30. In this inquiry, we expect the issue of congestion on the strategic road and rail networks will be raised. This congestion not only contributes to our carbon emissions, but additionally its drives supply chain inefficiency and the resulting costs to UK businesses that trade internationally. Northern ports are relatively uncongested and through an enhanced role for coastal shipping present an opportunity for Government to significantly reduce freight’s reliance on the strategic road and rail networks without the need for significant infrastructure expenditure to relieve congestion 31. Current assumptions for both rail freight and road freight growth are generally based upon port traffic ratios and take no account of the potential impact of new developments, such as Liverpool2 and The Manchester Ship Canal as a water-fed logistics hub, along with the role that other Northern ports can play in the development of coastal shipping. As such, we believe the assumptions for future traffic upon both the strategic road and rail networks are often overstated, and could result in unnecessary expenditure upon infrastructure. 32. In excess of 50% of unitised cargo that enters the UK’s southern ports is destined for the northern half of the UK, with a single-leg journey in excess of 200 miles on the strategic road or rail networks. By utilising the ports closer to the destination or origin of the cargo, these journey distances can be reduced by more than half. By way of an example, we estimate that goods destined for the North-West have an average journey distance of just 50 miles by road from the Port of Liverpool, compared to in excess of 200 miles on the congested road or rail networks from Felixstowe, London Gateway or Southampton. 33. We believe that other Northern ports operated by Peel Ports competitors can offer a similar strategy in removing unnecessary long distance road and rail freight movements through improving the utilisation of coastal shipping. Whilst focused investment in road and rail improvements to these Northern ports may be required, it will be significantly less than the investment needed to upgrade capacity on the major strategic road networks, such as the A14, M6, M1, West Coast Main Line and East Coast Main Line, to cater for further unnecessary long distance freight movements.




Are there any regulatory barriers to investment in ports? What could and should be done about them? 34. One of the most significant barriers to developing coastal shipping and utilising ports in the Northern half of the UK is the indirect subsidies offered to rail freight. It was recently concluded by the Office of Rail Regulation (ORR) that although rail freight traffic creates costs of £280–£400 million each year through factors such as wear and tear on the tracks, freight companies only pay a small proportion of those costs, around 21–28%, with passengers and taxpayers covering the shortfall. In our opinion such an anomaly has the effect of providing the rail freight sector with a hidden subsidy that distorts the market in favour of rail and discriminates against coastal shipping. 35. Over the last two years, Peel Ports has successfully encouraged two shipping lines to operate coastal shipping services into the Port of Liverpool, thereby removing over 500 containers per week from the strategic road and rail network in the UK. Both of these services have commenced without the need for public sector intervention. The full cost of maintaining the port infrastructure, vessels and all variable costs rest with the private sector. 36. One of these new feeder services operates from the Port of Southampton. At present, rail operators are eligible to receive £21 per container per single journey MSRS support for containers moved between Southampton and the North-West on a “call-off” basis. A return journey being eligible for £42 is effectively incentivising the movement of containers over long distances. 37. Whilst coastal shipping is theoretically eligible for Mode Shift Revenue Support (MSRS), the administrative process and bureaucracy that it needs to complete, from which rail is exempt, results in minimal applications. We are not aware of any containerised coastal shipping service operating in the UK that receives MSRS grant support. 38. We believe that the benefits offered through the MSRS scheme and the application process for grant support should be equalised between rail and coastal shipping so that both modes can compete equally for cargo removed from the strategic road network. Moreover, we also believe that by not having to fully contribute to infrastructure cost of the rail network, the market for mode-shift volumes is distorted in favour rail. Peel Ports again strongly believes that support for all transport modes that offer a modal shift away from road should be equalised.




21 January 2013

Written evidence from Royal Town Planning Institute (PA 13) Introduction The Royal Town Planning Institute (RTPI) is pleased to respond to the call for written evidence to the Transport Select Committee on Access to Ports. The RTPI is the largest professional institute for planners in Europe, representing some 23,000 spatial planners. The Institute seeks to advance the science and art of spatial planning for the benefit of the public. As well as promoting spatial planning, the RTPI develops and shapes policy affecting the built environment, works to raise professional standards and supports members through continuous education, training and development. Summary The RTPI considers that access to ports should be planned as part of transport investment more widely and not as a single issue.




Detailed Questions What should be the priorities for improved access to ports, and why? 1.1 One priority is the need to support the offshore industry.. The government has committed itself to investing £60m in developing offshore wind manufacturing facilities at UK ports and this commitment needs to be aligned across transport access. 1.2 Another priority is to undertaken ports access investments that serve other purposes as well. Other purposes would include providing additional capacity for general rail passenger and freight, providing good transport access to unlock housing land, or to provide surface access to airports. Investment that can achieve a variety of purposes will bring better returns. There is a crying need for investment in transport infrastructure to unlock housing land, and it is currently difficult to see how that can be financed from housing alone. 1.3 Since port competition is not necessarily between UK ports between also with ports on the Continent, investment in access to ports should take supporting UK ports in this competition into account. 1.4 A further priority for ports investment might be to relieve heavily inhabited areas of through freight traffic on rail or road. Is the delay in producing a National Policy Statement for National Road and Rail Networks creating problems for improving access to ports? If so, in what ways and where? 2.1 There is an exceedingly urgent need for National Policy Statement on railways and roads. It is now over four years since the Planning Act 2008 and there seems to be no sign of an NPS. But even with such an NPS the issue of planning all modes of transport in an integrated manner, and in a way which ensures strong connections with housing, and reaps the cross-sector benefits, would still not necessarily be addressed. 2.2 Network Rail at least has published very clear plans on investment which has implications for Ports such as the electrification of the Sheffield-Southampton route. The difficulty here is the relative lack of accountability of these plans, which are produced by (effectively) a private company (albeit with public ownership). An NPS on the other hand would be debated in Parliament and subject to proper appraisal of economic, social and environmental impacts. 2.3 The RTPI is pressing for a Map for England which would enable all government policies relating to the land of England, including major road and rail access to ports, to be clearly set out in map form so that they can be compared with other polices such as housing and environment. See www.mapforengland.co.uk How satisfactory are the current and proposed decision-making structures, including Local Transport Boards? 3.1 There are complications. CLG and BIS are promoting local enterprise partnerships as key players in strategic planning for growth in subregions. However, for understandable reasons, DfT delegation of spending decisions is to Local Transport Boards. This is a complication which risks different bodies pulling in different directions. 3.2 The Localism Act removed Regional Transport Strategies from the landscape. Within the planning sector there is some statutory encouragement to local planning authorities to “cooperate” on strategic planning issues. The new arrangements for the National Health Service require cooperation across principal authority areas (same areas as highways authorities). There is a risk that the very complex geometry of strategic planning for different purposes will be suboptimal. To what extent can investment in road and rail infrastructure influence the market and regional decisionmaking on port development? 4.1 No comment other than we would agree that road and rail infrastructure will have a strong influence on port investment decisions. Are decisions on port development taking sufficient account of the traffic generated by ports and associated development needs? 5.1 There are significant issues around assembly units/plants developing in and around ports and blurring the distinction between warehousing and manufacturing. There already have been examples of port developments that have not taken account of land side access, such as Eastport, Great Yarmouth with poor links to Trunk Road network and virtually no access to the rail network. If we are to enhance the economic potential of our port network then such issues will have to be rectified in the building of new ports.




How realistic are current assumptions about rail’s modal share of ports traffic? Under what circumstances could rail freight or inland shipping play a greater role in reducing port-related road freight? 6.1 No comment: we are not qualified to assess these assumptions. Are there any regulatory barriers to investment in ports? What could and should be done about them? 7.1 There are Issues around other consent regimes eg Harbour Revision orders. This issue has acted as a significant barrier to expansion of Teesport (Northern Gateway Container Terminal) January 2013

Written evidence from British Ports Association (PA 15) Introduction We welcome this inquiry which covers a subject which is critical to the success of the ports industry. The British Ports Association (BPA) represents 48 ports in England, all of which will depend on the adequacy of their links to the UK’s transport network. 1. What should be the priorities for improved access to ports and why? (i) The priorities should be to ensure that the UK transport network:— recognises ports as key gateways for UK trade; — provides sufficient capacity in the right places; — is properly maintained and efficiently managed; — is underpinned by stable planning and financing regimes; — is based on long term strategies. (ii) These priorities are hardly likely to be exclusive to ports and will no doubt be shared by all who have a stake in the commercial health of the UK and its competitiveness and productivity. The UK’s infrastructure is vital as an enabler of economic activity of which the ports sector represents a very significant part. An Oxford Economics report published in December 2012 showed that in 2011 UK ports contributed £7.9bn to UK GDP and supported 391,800 jobs. They handle 95% of import and export trade by volume. Their connectivity will therefore have an influence far beyond the port gates. (iii) There are features of the port sector which have a bearing on their hinterland connections and also distinguish them from ports in other EU member states. The sector is independent of government financial and strategic involvement and there are no national arrangements whereby port connectivity is regularly assessed in a formal, transparent way. This could possibly be addressed with a National Road and Rail Policy statement, and we return to this in our response to Q2. A consequence is that the quality of port connectivity varies greatly from port to port and much will depend on, for example, the success of local lobbying and the decisions of the Highways Agency and local authorities. (iv) Other influencing factors are the UK’s geography and industry structure. The number of active UK ports (c.120) is amongst the largest of any EU member state. UK ports are generally smaller than their EU counterparts with a high total volume stretched along an extensive coastline. In contrast, the Netherlands, for example, has a relatively short coastline with heavily concentrated port traffic; the Port of Rotterdam itself handles more traffic than all the Spanish ports put together. So, although strategic road and rail decisions may not necessarily be easy in the Netherlands and other member states with significant port activity, they are nevertheless likely to be easier than in the UK where there are many more competing demands for limited resources from a greater range of ports with more diffused activity. (v) Economic conditions since 2007 and the weakening of demand have obviously had an impact on port volumes. These rose to a peak of almost 600m tonnes in 2005 but are now at a level of just over 500m tonnes. Nevertheless, tonnage forecasts, which are part of the 2012 National Policy Statement for Ports and which show a doubling of ro ro traffic and an increase of 182 % in container traffic between 2005 and 2030, are still sound indicators of growth and endorsed by the DfT and the industry. Demand will return and port volumes will increase. So in the case of long term planning, there remains an overwhelming case for improving the network (vi) It is also worth reiterating some of the conclusions of the Eddington Report which, although published in 2006 is, we believe, still very relevant. It was the last all-encompassing document produced by government to try and capture the UK’s infrastructure requirements and their link with economic growth. Two of its main conclusions were firstly, that investment in links to ports represents exceptionally good value for public money. Strong cost benefit ratios for investment in access to ports were assessed as between 3 and 15, which translate into equivalent GDP benefits. Secondly, that the basic transport network for the UK is largely complete and the concentration should be on optimising and improving that network rather than necessarily investing in larger, more




prestigious transport schemes. We agree with this latter point and the basic need to maintain and improve the existing network and the importance of local connectivity to it. Devolving decision making to Local Transport Bodies could be a helpful step in this direction. (vii) In preparation for this response we carried out a short survey of some BPA members. Conditions from port to port vary enormously with different issues and problems, but a recurring theme was the lack of good local connectivity to the main network and “long delays in the final two miles to the port”. Problems ranged from lack of dualling of local roads to concern about the effects of extreme weather. Handling significant volumes of HGV traffic within routes that are also used intensively for local short journeys is a challenge to all planning authorities and requires clear strategies and funding. Asked to quantify the adequacy of road connections on a scale of 1–10, answers ranged from 3–5 with a single 7. There is a general lack of confidence that even if a scheme is identified and accepted, the funding will simply not be there—”a distinct lack of money in the local system”. This creates extra pressure on developers to enter into Section 106 Agreements. Port connectivity therefore is as much an issue of local planning, recognising the importance of the port and its links to the national network. (viii) Two further factors are worth mentioning at this point. One is that improving transport efficiency is not always a matter of the physical network. Better signage, real time information on traffic flows and other traffic management initiatives can make significant differences, especially on mature routes. The other point is that in both the UK and the EU, there is a preference for high cost rail passenger schemes rather than investing in road. Road may suffer from its environmental reputation, but it is still the main means of getting into and out of ports, and any decline in the quality of road connections would seriously restrict port growth and efficiency. 2. Is the delay in producing a National Policy Statement for national road and rail networks creating problems in access to ports? If so, in what ways and where? (i) We do not believe that the delay in the production of the NPS for road and rail networks per se is creating problems for improving access, but we do believe that what could be a problem is delay in reaching decisions on transport funding. It is difficult to have much meaningful discussion about transport without coming back to budgets and it is here that the government will have to take some difficult and far reaching decisions if the road and rail networks, and consequently the connectivity of UK ports, are to be sustained and improved. (ii) We understand, for example, that the Treasury and the DfT are now looking more seriously at the prospect of road tolls and that this will be subject to consultation in 2013 as part of a wider DfT and Treasury review of financing transport. (iii) Based on what we know now, the outlook for the UK’s transport network is extremely concerning. A National Audit Office report in October 2012 noted that although the DfT’s funding, which provides around 60% of capital funding to local authorities for transport, has remained stable, there is a 28% fall in grants from the DCLG. The Audit Commission reported in 2011 that there is “a significant but unquantifiable backlog of maintenance work needed to get local highways to a sustainable level”. Since then we have had extreme weather events which can only have exacerbated the problem. This means that funding for routine local highways maintenance is likely to be reduced. Tolling may be part of the eventual approach, and we make no comment on the benefits or otherwise of tolling, but whatever is decided, it needs to be in place reasonably quickly. (iv) In addition, there needs to be more long term certainly about budgets. The 2010 spending review set a transport budget that was 15% lower in 2014–15 compared to 2010–11. As part of this the Highways Agency budget was cut by £1bn for the 2014–15 period. Nevertheless, we understand that this shortfall has been largely re-instated as a result of subsequent Treasury decisions. Although such a re-instatement is welcome, it can hardly make forward planning within the Department or the Agency any easier; the structure and status of the Agency itself are also under review. Stability in budgeting would be very welcome; we suspect that it will be the Treasury which will have more influence on the transport network than any National Policy Statement (NPS). (v) Currently, about 66% of all goods are transported to and from ports by road. All the indications are that road usage will increase. This is partly a function of population growth and also a result of (eventually) increasing demand in the economy to pre-recession levels and beyond. In comparison with other member states, in terms of adequacy and reliability, our road network is probably midtable. A World Economic Forum report published in 2012 put the UK at 24th and 16th place respectively for road and rail quality. In comparison, France’s relative positions are 1 and 4, Germany’s 10 and 7 and Spain’s 13 and 18. This situation is partly the result of not only a lack of investment but also the UK’s planning system which can mean that road and rail developments are controversial and subject to local opposition. This is in comparison with some other member states which apply national infrastructure plans in a more robust way. (vi) However, one function of a NPS for road and rail could be to consider in a more formal way how the adequacy of links to ports as gateways to trade and generators of traffic can be factored into policy and funding decisions.




3. How satisfactory are the current and proposed decision making structure, including local transport boards? (i) There are two main issues with the decision making structures. Firstly, they are subject to constant change. For example, RDAs set up strong links with ports, produced their own transport strategies and in some areas we were able to set up regular liaison between groups of ports and RDA transport representatives. RDAs have now been wound up and in their place LEPs and Local Transport Bodies (LTBs) created. Each system has its strengths but considerable time is taken up with these changes. (ii) The second issue is that it is simply too early to judge whether LTBs are going to be effective. There is a very ambitious timetable for their setting up which is contained in a document published by the DfT in September 2012. This has a deadline of December 2012 for LTBs to set out proposals for their governance and financial management; LTBs have until April 2013 to publish an initial list of priority schemes for funding from 2015 onwards and, according to para 8.6 of the document (Devolving Local Major Transport Schemes: Next Steps), if LTBs fail to meet the timetable there are no guarantees that funding will be available. 4. To what extent can investment in road and rail infrastructure influence the market and regional decision making on port development? (i) Hinterland connections are vital to any port’s success, so the level of investment in road and rail infrastructure and the adequacy of that infrastructure will influence port choice. Although generally the UK has a good major highways network, some of the potential of medium and smaller ports is compromised by lack of access to that network. We would certainly not support any policy aimed at deliberately distorting the ports market through heavy investment in a particular region by the government. But we do support higher investment in a range of more local repair, maintenance and improvement schemes for both road and rail which enhance port connectivity and allow the UK’s collective port assets to be used in a more optimal way. (ii) Another relevant issue is the Office of the Rail Regulator’s (ORR) review of track access charges. The review of the charges, which are used by Network Rail for the maintenance of the rail network and cover wear and tear from freight use, has thrown up some unwelcome possibilities. Under the ORR’s proposals certain cargoes, such as power station use coal, are facing steep increases in costs which could disadvantage ports at a greater distance from power stations. These increases might impact sensitive port markets and freight routes, and disadvantage some ports. We are also concerned that the government’s assessment of the impacts has not been thought through properly, with limited attention to potential distortions. We are studying the ORR response with interest. 5. Are decisions on port development taking sufficient account of the traffic generated by ports and associated development needs? (i) We believe they are. There is a section on measuring traffic impacts in the planning guidance set out in the National Ports Policy Statement and, for example, the system of “developer contributions” referred to in 7 (ii) below is one consequence of this. It is not so much decisions on port development taking account of traffic generation, it is dealing with existing traffic generated by existing facilities. 6. How realistic are current assumptions about rail’s modal share of ports traffic? Under what circumstances could rail freight or inland shipping play a greater role in reducing port related road freight? (i) Rail’s modal share of port traffic has shown remarkable consistency at about one-third of the total; the vast majority of this traffic will be containers and bulk goods, so rail’s modal share will be heavily dependent on the volumes of these categories of cargo rather than the totality of cargo passing through UK ports. The volume of ro-ro traffic is still greater than container traffic and ro-ro traffic is of course not susceptible to rail connections. So we are not aware of any factors at play to indicate any significant change in rail’s modal share. As the Transport Committee itself pointed out in its recent report, rail freight can be marginalised and receive considerably less priority than passengers on a crowded network. We do not have high expectations that rail can provide significant new capacity for ports and freight. We expect the dominance of road to continue. (ii) On short sea shipping there have been many initiatives over the years. We are members and supporters of the “Freight by Water” organisation which promotes the sector and is co-ordinated by the Freight Transport Association. Improved port connectivity should assist in encouraging coastal shipping. Of course ports would welcome increased coastal shipping and increased trade, but it has to make commercial sense to the port concerned. The port “offer” is readily available to the freight industry, and the freight market will decide, but to actually achieve a significant modal shift will probably require an additional incentive of some kind to convert from road and rail to ship and we do not see any prospect of this happening. 7. Are there any regulatory barriers to investment in ports? What could and should be done about them? (i) We are not aware of any particular regulatory barrier to investment in ports, although there can be barriers to development resulting from the planning regime and environmental constraints. We have been working closely with Defra on the influence of the Habitats Regulations on planning consents




and have made good progress with a revision of guidance which should facilitate a more development friendly planning regime. Section 106 agreements and conditions under the Town and Country Planning Act 1990 are also sometimes cited by ports as providing real and unwelcome barriers to port development and investment. (ii) A potential barrier for investors in UK ports is the policies expressed in the DfT’s “Funding Transport Infrastructure for Strategically Significant Developments”. This outlines a system whereby a port development which requires a new road or rail connection from which the development will receive benefits means that the port is required to make a contribution to the cost of that connection separate to any Section 106 Agreement. From a public policy point of view this may seem fair, but it is a situation unique, so far as we know, to the UK. In other member states the connection would be a matter for public funding. (iii) It is also significant that in the review of the TEN-T legislation and policy by the EU Commission, one of the underlying assumptions is that funding would only be available for rail connections, not road connections. We see this as an example of a prejudice against road building (already referred to under Q1) which emerges from time to time as it is too often regarded as an environmentally unfriendly mode and investment in it would be at the expense of other modes. We believe that this prejudice is entirely misconceived and that improving the road network reduces congestion and pollution. January 2013

Written evidence from Transport for London (PA 16) 1. Introduction and summary 1.1 Transport for London (TfL) welcomes the opportunity to contribute to the Committee’s inquiry into Access to Ports. 1.2 TfL does not have views on all the questions raised by the Committee, however best use of the rail network in London, climate change and air quality, are of vital interest to TfL. Many of the goods carried by rail from ports pass through London’s rail network, and London is the end market for many of the goods brought into the country, so TfL has a direct interest in ports and consequent mode share issues. 1.3 To summarise the response given below, TfL’s priorities in relation to ports are for: — Electrification of the Gospel Oak to Barking line and the Thames Haven branch — Completion of the Felixstowe to Nuneaton (cross country rail route) project, to the maximum possible capability — Electrification of other sections of diesel line in London — A London freight by-pass scheme in the longer term — A solution to the High Speed 2 to High Speed 1 link that does not have a detrimental impact on North London Line passenger and freight services — The development of intermodal (container) rail freight facilities in or around London, to handle portrelated traffic and increase rail’s mode share — The development of freight terminals in the London Riverside area serving High Speed 1. 1.4 Our response to selected questions in the terms of reference for this inquiry is as follows. 2. What should be the priorities for improved access to ports, and why? 2.1 The priority for access to ports from TfL’s perspective is for sufficient rail capacity such that rail’s mode share of the goods carried can be maximised, whilst catering for the ever-increasing passenger demand in the London area. 2.2 Mayoral policy on rail freight, as set out in the Mayor’s Transport Strategy, supports mode shift from road to rail, and the development of rail freight terminals serving London and the South East. It also calls for electrification of the remaining diesel lines in London. 2.3 However there is also a need for increased passenger services, and with the rail network in London operating at or near its maximum capacity, there are constraints on the ability to run additional services. This situation is being managed at present, but will present a serious constraint on future growth in passenger and freight services in the longer term if not addressed. 2.4 The background to this is London’s dependence on its rail network, the growth forecasts for the capital set out in the Mayor’s London Plan, and the contribution London makes to the UK economy. It is important to remember the sheer scale of existing public transport use in London with more than 11m journeys made on an average day. Almost half of all bus journeys in England take place in the city and 60% of all rail journeys in Great Britain start or finish in London. On top of this, the London Plan forecasts population growth of 1.25m people from 2007 to 2031 and 750,000 jobs over the same period. Meanwhile, London and the South




East together contribute in the order of £20bn a year to the rest of the country via a tax export, and provide more than 40% of all tax revenues in the UK. 2.5 The London Overground network plays its part in contributing to national GDP. Demand has more than doubled on the “original” network that TfL took over from Silverlink in 2007, and has quadrupled if the extensions to the East London Line are included. By 2021 it is forecast to carry 165 million passengers a year. TfL is currently seeking to lengthen trains to 5-cars, to cope with demand up to the mid-2020s, but thereafter adding further capacity becomes considerably more difficult. 2.6 The enhancements TfL has made to the London Overground since taking over from Silverlink have unlocked huge levels of previously suppressed demand for orbital travel, such that the Overground is now the 4th busiest National Rail franchise in the country, with only South West Trains, Southern and South Eastern carrying more passengers. It carries four times the number of rail passengers in Wales; 1½ times the number in Scotland; and 30m passengers a year more than Northern. 2.7 The London Overground rail network is shared with other services, most notably freight where it provides essential routes from ports in the south east to the rest of the country, but also other passenger services too. The main East London Line corridor is shared with Southern services up to New Cross Gate, the North London Line and Gospel Oak to Barking Line are shared with freight services, and the West London line corridor is shared with both Southern services and freight. These corridors are already operating at, or very close to the maximum existing line capacity, dictated primarily by the signalling system (and the need to route trains over flat junctions). 2.8 Sharing services with freight is a particular constraint on line capacity. The combination of different length passenger and freight trains, different speeds and service characteristics, flat junctions and the longer signal section in Hampstead Heath tunnel, limits the current North London Line capacity to an effective 12 trains per hour (eight Overground trains per hour and four freight paths per hour) west of Gospel Oak. Similarly, the Gospel Oak to Barking Line is constrained to eight trains per hour—four passenger and four freight. The West London Line, which is the most crowded part of the Overground network, could potentially accommodate 10 passenger trains per hour (a mixture of Overground and Southern services), but is constrained beyond that by the 35 freight paths per day protected by international agreement for Channel Tunnel traffic. 2.9 By contrast, the Victoria line, with dedicated passenger services, a single rolling stock type and no branches, operates at 30 trains per hour in the peaks (soon to become 33 trains in the peak hour) and 24 trains per hour off-peak. 2.10 Freight trains suffer from the inefficiencies of slow speeds and stop-start journeys, when stuck behind slower-moving metro-style passenger services. There are also constraints on the maximum length and speed (ie braking distance) of freight trains, as these drive the distance between trains, which in turn determines the overall line capacity. An optimal passenger service requires high frequencies and consequently has closelyspaced trains, whereas an optimal freight service requires high speeds with long braking distances and consequently has trains further apart. In short, the mixture of passenger and freight services on London’s rail network results in compromises which suit neither type of operation. 2.11 Meanwhile, the freight services which use the rail network in London currently have little choice but to do so, given their commercial imperatives. From the Haven ports (Felixstowe, Ipswich and Harwich), there is not as yet a commercially viable route of sufficient capacity to the markets in the north without using the North London Line and/or the Gospel Oak to Barking Line to access the West Coast Main Line, the East Coast Main Line and the Midland Main Line. 2.12 Market competition with highways requires freight services to take the quickest route, so any alternatives to routings via London must be of equal (or better) journey time, as well as having sufficient capacity. In the case of the Haven ports, a part scheme is underway in the current Control Period (2009 to 2014) to upgrade the cross-country route for traffic from Felixstowe to the north. Known as the Felixstowe to Nuneaton project, further works will be required in the next Control Period (2014 to 2019) to complete this scheme. TfL wholly supports this scheme, and considers its completion, to the maximum possible capability, to be essential. 2.13 However, rail freight traffic from the Thames ports (Tilbury and the major London Gateway port currently under development) has no choice but to route via the Overground network. Unlike the Haven ports, there is no existing cross-country route that can be upgraded. Furthermore, growth from London Gateway port is such that it is forecast to consume all capacity released in London by the Felixstowe to Nuneaton project. 2.14 In the longer term this presents a significant problem for London. Mayoral policy would like to see as much of the Thames Gateway traffic as possible carried by rail but this will be limited by the capacity of the North London Line, and similarly the ability to further enhance London Overground capacity will be limited by freight services. 2.15 It is also worth noting that London is not the immediate destination for rail freight traffic from the Haven and Thames ports. It is not economically worthwhile to load and unload trains for the very short journey from London Gateway, say, when carrying goods by road is cheaper. So much of the rail freight traffic on




London’s rail network is simply passing through, but doing so on some of the most heavily used rail infrastructure in the country. 2.16 The ultimate solution for through-freight traffic in London, and Thames Gateway traffic in particular, is some form of freight by-pass. There are no specific plans for this at present, but it is likely that it will become necessary in the longer term if demand continues to grow as predicted, and any strategic planning work undertaken now should take this into account. 2.17 A further priority for improved access to ports is electrification of the rail freight network. Electric traction is more efficient; longer trains can be hauled, at greater speeds, and with faster acceleration. It is also more environmentally sustainable, less polluting, and contributes towards the goals for carbon emission reductions and air quality set in the Mayor’s Transport Strategy. Given the high value of AM peak train paths, and the high loadings on North London Line passenger services, it is essential to get the most out of the existing network; electrification, with its greater efficiency, is one way of helping to achieve this, and demand management could be another, for example with the AM peak given over to passenger services. 2.18 The government in its High Level Output Specification is promoting the concept of the Electric Spine, from the south coast to south Yorkshire, and other electrification schemes. TfL naturally welcomes this, but take-up of electric traction by Freight Operating Companies requires a critical-mass of end-to-end electrified routes before it is worth their while investing in electric locomotives. The Gospel Oak to Barking line remains a critical “hole” in the electrified network, and this short stretch of non-electrified line prevents freight services from making use of the fully electrified East and West Coast Main Lines to Scotland, for example. Filling in this short section, along with the Thames Haven branch, would enable services from Thames Gateway port to be electrically hauled. Electrification of this line would also benefit TfL’s passenger services, and TfL has offered to contribute the value of the rolled-up cost savings from its passenger service arising from electrification, worth £25m. 2.19 There are other small sections of non-electrified line in London, such as Kew East, Dudding Hill and related chords that would also support or enable long distance services to be electrically hauled, in conjunction with the schemes announced by government. 2.20 The final point relates to the proposed link between High Speed 2 and High Speed 1. High Speed 2 Ltd’s current proposals would make use of existing track in the Camden Viaduct and Camden Road station area. As the paragraphs above highlight, this section of railway is crucial to both passenger and freight services, and with growth of Thames Gateway traffic may reach the point that a freight by-pass becomes necessary. Operational analysis undertaken by Network Rail indicates that the current HS2 proposals would create serious conflicts with passenger and freight operations (including traffic from the ports to the east, if high speed trains are introduced into this already congested area. TfL is firmly of the view that any link between the high speed lines should be on separate infrastructure, entirely additional to the current layout, or an equivalent solution that has zero impact on passenger and freight operations. As this is likely to be expensive, the opportunity should be taken to consider freight in London more widely, and whether a by-pass scheme might represent a better long term solution. 2.21 To summarise, TfL considers the priorities for access to ports to be: — Completion of the Felixstowe to Nuneaton project, to the maximum possible capability — Electrification of the Gospel Oak to Barking line and the Thames Haven branch — Electrification of other sections of diesel line in London — A London freight by-pass scheme in the longer term — A solution to the High Speed 2 to High Speed 1 link that does not have a detrimental impact on North London Line passenger and freight services 3. How realistic are current assumptions about rail’s modal share of ports traffic? Under what circumstances could rail freight or inland shipping play a greater role in reducing port-related road freight? 3.1 TfL’s priorities for access to ports are described above, which would enable rail to claim a greater modal share of ports traffic. A further enabler in reducing port-related road traffic would be the provision of rail freight terminals. 3.2 Many goods brought by container ship into Felixstowe, for example, are taken by rail to Daventry International Rail Freight Terminal, a major distribution centre in the midlands. Some of these are then taken by road to local distribution centres or stores in London. Intermodal (ie container) rail freight terminals in or around London would enable this and other intermodal traffic, either domestic or from other ports, to be carried by rail to the capital. 3.3 With the UK rail freight industry being entirely privatised, development of rail freight terminals is a matter for the private sector. However as they are generally large and often controversial, their development boils down in practice to planning permission. Government policy is supportive of the development of strategic rail freight interchanges (SRFIs), with a Written Ministerial Statement published on 29 November 2011 along with a policy guidance document. The government asked Network Rail to:




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“provide industry support to the development of a network of SRFIs, working collaboratively with the wider logistics industry to: speed up the delivery of SRFI sites to meet business demand; assist with funding mechanisms (potentially including Network Rail funding); and establish appropriate delivery vehicles for rail infrastructure elements of such proposals.”

3.4 TfL very much supports these measures and would be keen to see some developments taking place on the ground. TfL supported the earlier Strategic Rail Authority proposal for a ring of terminals in and around London, and provided evidence to the Howbury Park inquiry. (Howbury Park is a planned Strategic Rail Freight Interchange near Dartford, which has planning permission). TfL is supportive in principle of proposals for rail freight terminals at Radlett on the Midland Main Line, and Colnbrook near Heathrow. TfL believes that such facilities would reduce port-related road traffic. 3.5 A related point concerns the use of High Speed 1 for freight, which remains an under-used facility. It is Mayoral policy, set out in the Mayor’s Transport Strategy to support the use of High Speed 1 for freight, and the development of associated rail freight terminals in the Barking and Dagenham (London Riverside) area. This could provide an attractive alternative to lorries from the continent using the Port of Dover and the motorways in Kent. January 2013

Written evidence from The Freight Transport Association (PA 19) 1. The Freight Transport Association (FTA) is one of the UK’s largest trade associations representing over 14,000 companies in the UK engaged in freight transport. Our members range from logistics companies, retailers and manufacturers covering all modes of transport-road, rail, sea and air. FTA members operate approximately half of commercial goods vehicles and vans operated on UK roads and represent 90% of goods moved by rail and 75% of goods moved by sea and Air. FTA has also taken responsibility for promoting mode shift and co-modality strategies on behalf of UK industry, including the running and management of Freight by Water. 2. Whilst some FTA members are port and terminal operators, the main focus of FTA’s ports policy approach is determined by the needs of port users, eg British industry as users of ports and terminals and the nation’s transport infrastructure. What should be the priorities for improved access to ports, and why? 3. Maritime transport is responsible for carrying 95% of the UK’s external trade (imports and exports). Ports therefore play a critical role in the international maritime supply chain. Efficient ports and adequate and reliable inland road and rail infrastructure are a vital component in UK industry’s capability to compete internationally. While world trade in goods has slowed in recent years due to the global economic recession, trade in goods has grown over the long-term by an estimated 1.3 and 3.4 x GDP (depending on the economic and trade conditions). So, while trend growth levels are likely to see slower forecast levels for the next few years global trade will continue to grow at more than GDP. UK industry will consequently depend on adequate investment in road and rail infrastructure investment to and from the UK’s major ports in order to remain competitive in the international market place. FTA believes therefore that the forecasts in the National Policy Statement for Ports of traffic growth of a doubling of ro-ro traffic and an increase of 182% in container traffic between 2005 and 2030 remain robust and realistic. 4. The importance of international gateways was identified in the Eddington report commissioned under the last government. FTA agrees with the key conclusions of the Eddington report, particularly the report’s assessment that investment in road and rail infrastructure to and from ports represents exceptionally good value for public money, and rather than spending on large grandiose prestigious schemes the concentration should be on improving the basic transport network. We agree with that, and for the reasons set out above believe investment should be prioritised towards links to ports. Is the delay in producing a national statement for national road and rail networks creating problems for improving access to ports? 5. The Eddington report recommendations made clear that government needed to ensure that the delivery system is ready to meet future challenges. In essence, this means that industry requires firm and longer term assurance on key transport infrastructure investment priories. Given Eddington’s recommendations and the current Highways Agency independent review into enhancing and funding the strategic road network, the government has plainly accepted that there is a need for a longer-term approach and commitment to national infrastructure investment. Moreover, the government has recently signalled its understanding that transport infrastructure investment is essential for stimulating growth. However, the lack of national policy statements for road and rail networks has created uncertainty and concern about a long-term commitment to road and rail priorities and is undermining confidence in future funding for those priorities in the context of the up-coming comprehensive spending review. Unless industry has confidence the key schemes identified by industry (see attached annex-FTA briefing: investing in rail freight:2014–2019) are confirmed in national statements doubts




will persist about commitment to enhancing the quality of the UK’s international links and its understanding of the need for a long-term strategic approach to infrastructure priorities and investment. This in turn will undermine international confidence in Britain’s capability of delivering a world-class transport infrastructure, thus widening the gap with our competitors and threatening inward investment. How satisfactory are current and proposed decision-making structures, including Local Transport Board 6. These are new structures, so inevitably there is concern about how Local Transport Boards and Local Enterprise Partnerships will work and interact and how they will be able to cope with local infrastructure investment decisions which are of national significance. FTA is also concerned about the tight timetable for setting up these bodies. FTA is further concerned about how these bodies will co-operate across local and regional boundaries and whether they will have sufficient expertise to deal with complex local, regional and national transport infrastructure investment and planning decisions vital to the freight industry. It seems to FTA that this is an area which needs national government oversight and advice. Clearly, national statements on ports and road and rail infrastructure would provide invaluable guidance and support to LEP and LTB’S. In this respect, the National Infrastructure Plan 2011 recognised that the UK’s national infrastructure is a system of increasingly inter-dependent networks-which is especially relevant to ports which are an integral part of the nation’s national and international trade networks. To what extent can investment in road and rail infrastructure influence the market and regional decisionmaking on port development? 7. National policy statements should guide all potential infrastructure development-not just those that qualify as Nationally Significant Infrastructure Projects (NSIPs). Many new developments and extensions to existing facilities which are too small to count as NSIPs could greatly enhance UK port capability. The National Ports Policy statement states that port development must be responsive to changing commercial demands and the government considers that the market is the best mechanism for getting this right, with developers bringing forward applications for port developments where they consider them to be commercially viable. As UK ports are entirely privately run and funded we believe that is absolutely right as development must be market-led to deliver the UK’s needs now and in the future. Clearly, in any future investment decision linking hinterland road and rail infrastructure will be a key influence on port infrastructure investment. For example, investment for the new DP World London Gateway port development would have been unlikely to have been forthcoming without the decision to build a new rail head and good road and rail access to the strategic road and rail networks. It therefore follows that when port development is thought appropriate, local planners must be aware of the effect that it will have on their local and rail networks and plan accordingly. Are decisions on port development taking sufficient account of traffic generated by ports and associated development needs? 8. The National Ports Statement set out criteria for traffic impacts and as ports are market-led they are likely to work closely with the highways agency, Network Rail and local authorities on the traffic likely to be generated by port development. How realistic are the current assumptions about rail’s modal share of ports traffic? Under what circumstances could rail or inland shipping play a greater role in reducing port-related road traffic? 9. The nation’s major container ports roughly account for 50% of containerised intermodal rail freight movements. And there are increased opportunities for coastal shipping transhipment particularly to Scotland. With rail gauge enhancements, greater intermodal terminal facilities and the development of 9’ 6’’ containers it should be possible to increase rail modal share. On behalf of UK industry FTA is leading Freight by Water (FbW) and has developed a Modal Shift Centre to provide information on rail and water solutions and to assist industry in using alternative modes. For example, FTA’s FbW website provides an interactive map highlighting the wide range of water service available throughout the UK, see http//freightbywater.fta.co.uk. Are there any regulatory barriers to investment in ports? What could be done about them? 10. Not withstanding the government’s “localism” agenda and devolved decision-making inherent in this approach, planning arrangements still present some difficulties in investment. FTA believes that there should be one single consent unified planning regime and that the decision-making process should be speeded up. Other barriers for investors include DfT’s Funding Transport Infrastructure for Strategically Significant developments. FTA believes that the requirement for port developers to provide a significant contribution to the costs of road and rail connections is likely to be a major disincentive for port investment. This can place UK port development and investment at a considerable disadvantage compared to the UK’s continental competitors where arrangements do not exist. January 2013




Written evidence from GB Railfreight (PA 21) GB Railfreight (GBRf) is one of the most dynamic companies in the railway industry. It is a rapidly growing business, having gone from 2 employees in 1999 to over 400 staff today, and it operates around 650 trains a week in the UK. This growth has been possible by the application of commercial principles to the rail freight industry. GBRf welcomes this inquiry as an opportunity to further open the market to competition. GBRf operates from the ports of Tyne, Immingham, Liverpool, Felixstowe, Redcar, Blyth, Bristol, Southampton, Hull, Cardiff, and Teesport. Ports are the life source of our business and it is crucial that they are readily accessible to bulk and multimodal rail freight to allow them to work at maximum efficiency in order that they can be utilised to their full potential. Rail freight is one of the most effective ways to transport goods across the country and, as such, is vital to the smooth running of Britain’s economy. Indeed, it is responsible for moving over 100 million tonnes of goods across the country every year.4 In order to keep the economy moving, it is essential that UK policy-makers at all levels create suitable conditions for rail freight operators to access UK ports and for investors to make long-term decisions to support growth and jobs. The economic significance of the rail freight industry, and therefore the importance of proper access to ports, should not be thought of in terms of running trains; it should be measured against each commodity we deal with: Intermodal: Overall, 28% of deep sea containers that arrive or depart from the major ports are transported by rail.5 However, it is not just container traffic that is important. Other commodities which rail freight transports are crucial to the economy (see 1.4.1–1.4.7). Coal: Gas prices are so high, coal has become 40% of the UK energy source, 50% at its peak. GBRf hauls 30% of the coal haulage on our railways. Biomass: Biomass offers the UK a renewable, low carbon fuel and can help significantly reduce the net carbon emissions when compared with fossil fuels. With biomass representing a crucial future replacement to coal in the UK, and equating to two-thirds of the density of the fossil fuel, it is essential that the right conditions are set to ensure suitable rail freight transportation of biomass in the future. Petroleum: GBRf works with Greenergy, a leading supplier of petrol, biofuel and diesel, to haul its road fuel around the UK. Greenergy supplies around a fifth of the UK’s entire road fuel, making 120,000 deliveries per year to supermarkets, oil companies and forecourts. Retail sector: The retail sector is now looking towards rail to offer environmentally sound, economically efficient logistics solutions as part of its supply chain package. Rail is now performing the trunk movement from import point to distribution centre, with road performing the final delivery to stores like Tesco. Aggregates: The only way to build our economy and infrastructure up is through the efficient transfer of construction projects. An example of this is Heathrow Terminal 5. Infrastructure: The rail freight industry facilitates both the maintenance and renewals of the rail networks for Network Rail. Indeed, Network Rail is the single biggest customer of the freight industry. Delays to motorway traffic are increasing as network congestion increases. If the economy is to grow, we need to create capacity for rail freight movements and remove traffic from the roads. INRIX suggests that congestion on the roads currently costs the UK economy £4.3 billion per annum. In terms of lost time to the commuter, this cost amounts to £331 for each individual, or £2.7 billion in total. Meanwhile, hold-ups to business or freight vehicles amounts to £1.1 billion annually being added to household costs.6 In order to grow the UK economy, the freight industry requires full, intelligently coordinated access to ports. However, there are currently three main barriers that stand in the way of rail freight’s access to ports that policy-makers need to consider. In summary, these are: The rail freight industry needs an aligned growth strategy and investment plan for ports and rail as one system: The freight industry is suffering under decision-makers who lack a joined-up approach to policy making on ports. Policy-makers need to understand freight not in a standalone manner but as part of a wider economic conversation: The rail freight industry acts as a gateway for aggregates, retail, energy and other sectors of the UK economy to grow. It is essential to facilitate their growth in the right manner by supporting the rail freight industry. 4 5

6

Office of Rail Regulation, National Rail Trends, October 2009 Office of Rail Regulation, Freight access charges consultation document, 2012. Found at: http://www.rail-reg.gov.uk/pr13/PDF/ freight-charge-consultation-may2012.pdf The Telegraph, Traffic congestion costs UK economy £4.3 billion a year, 10th December 2012. Found at: http://www.telegraph.co.uk/finance/newsbysector/transport/9734126/Trafiic-congestion-costs-UK-economy-4.3bn-a-year.html#




The rail freight industry needs a regulatory regime that promotes competition: Allowing particular companies to hold control of ports is stifling the growth of rail freight and the economy as a whole. Chapter 2: What should be the priorities for improved access to ports and why? 2.1 The number one priority for improved access to ports should be an aligned growth strategy and investment plan for ports and rail as one combined system. Ports are the key source of demand for the rail freight industry and suitable investment therefore needs to be clustered around this source. However, the existing piecemeal approach that has so far driven investment in the key rail freight corridors serving the UK’s strategic ports has meant that certain aspects of a corridor are invested in without due cognisance of the whole route. In addition, this approach has appeared to randomly prioritise particular ports and commodities at the expense of others. 2.2 This piecemeal approach is reflected in the historical mismatch between the Department for Transport’s (DfT) policies and priorities in comparison to the privatised port owner’s investment plans to improve efficiency in handling freight volumes. 2.3 For example, there has been considerable investment directed by the DfT and implemented by Network Rail in the infrastructure on the freight route from the port at Southampton to the distribution centres in the Midlands and the North. Paradoxically, ABP at Southampton have not invested in quayside railway facilities as they do not regard the risk as being worthwhile. 2.4 The port of Felixstowe is another clear example of a lack of alignment in investment plans at UK ports. Felixstowe’s planning permission for the second stage of the dock development was granted on the basis of the port paying for partial double-tracking of the branch line from Ipswich to Felixstowe. This second stage has not yet started (leaving only a single track 10-mile branch line to serve the port), there are seemingly no plans to rectify this, and there is no legal obligation on the port to double track the branch. This is despite Hutchinson Port Holdings Group, the owners of the port, investing £40 million in a new rail terminal to support its business growth. Chapter 3: Is the delay in producing a National Policy Statement for National Road and Rail Networks creating a problem for improving access to ports? If so, in what ways and where? 3.1 A fully coordinated approach to ports and rail policy is necessary in order to ensure that their contribution to the national economy is maximised and that port operators, local authorities and others are aligned on their objectives. A National Policy Statement for National Road and Rail Networks could help to play a role in ensuring that this happens, and any delay is therefore going to have a detrimental impact on improving access to ports. 3.2 It is often the case that policy and politics are heavily passenger-focused. However, this means that the rail freight industry can be overlooked and not given due consideration by policy-makers. The National Policy Statement for National Road and Rail Networks is an opportunity to ensure that there is an appropriate balance between passenger and freight policy. 3.3 Whilst GBRf welcome the development of the Freight Route Utilisation Strategy by Network Rail, the company believes that there is a lack of a long-term asset management strategy for freight routes. For instance, GBRf is a keen supporter of electrification, particularly in relation to the deep sea container market, and is very enthused by the opening of the Nuneaton North Chord. This is a very important element in creating a vital freight corridor from the Port of Felixstowe to the Midlands and the North West. However, GBRf is extremely frustrated that the Government’s plans to electrify parts of the rail network do not include the busy Nuneaton—Felixstowe corridor that would enable electric locomotives to haul containers to the Suffolk port and to capitalise fully on the Nuneaton North Chord. The Policy Statement is an opportunity to bring the treatment of freight assets in line with the policy for passenger routes. 3.4 There are substantial inconsistencies in recent approaches to planning permissions for investment in ports across the UK.7 This has led to calls for an equal approach made by Government to port development. GBRf would recommend that there be clear and unambiguous long term policy guidance from Government on their plans for investment. Chapter 4: How satisfactory are the current and proposed decision-making structures, including Local Transport Boards? 4.1 Unlike passenger rail, which may benefit from devolution to Passenger Transport Executives, freight requires a single guiding authority at the national level because freight corridors often pass through multiple routes. At the moment, the decision-making is largely within DfT and subject to micro management. This is in contrast to passenger issues where, since the McNulty Review the industry via the Rail Delivery Group and Network Rail, work jointly to arrive at the best value outcome. 7

See the different approaches taken to investment in the ports of Thames Gateway, Felixstowe, Southampton and Liverpool as clear examples of this patchwork approach.




4.2 The lack of a central decision-maker has an impact on the way that developments of rail freight corridors are funded. At the moment, the monies for such works tend to be supplied via the Strategic Freight Network fund (SFN). This fund sits within Network Rail, but the DfT provide direction with regards to spending priorities. In order to streamline the decision-making process, the new Freight Director at Network Rail should manage the SFN fund. Part of this role should be to adequately consult with interested parties on spending priorities on the freight network. 4.3 A fully functioning decision-making structure should consult regularly with leading stakeholders. At the moment, for example, the role of Local Enterprise Partnerships (LEPs) has not been utilised to its full advantage. The freight and logistics industries are critical to the ability of businesses to grow and create jobs and there should be greater consultation with LEPs and other leading stakeholders to ensure that thinking is joined up. Chapter 5: To what extent can investment in road and rail infrastructure influence the market and regional decision-making on port development? 5.1 Proper investment in road and rail infrastructure is naturally going to positively impact port developments. In the past, it was Government policy to match any private sector investment in the quayside and handling facilities at ports. However, match funding is a successful way of improving access to ports and should be re-adopted as Government policy. 5.2 There should be an integrated strategy targeting gauge clearance of routes and increasing capacity for rail freight (via investment in signalling system) in order to stimulate demand and encourage private sector investment. This should be informed by dialogue with port owners on their asset management/investment plans and dialogue with local authorities on their planning policy for the ports. 5.3 In order to unlock private investment in port infrastructure, investors also require clear decisions from Government on planning permissions as well as clear and unambiguous policy commitments to investing in Britain’s infrastructure. Chapter 6: Are decisions on port development taking sufficient account of the traffic generated by ports and associated development needs? 6.1 The planning approval process for ports tends to focus on development needs in the immediate vicinity of the ports as this is where the jurisdiction of the planning authority lies. As part of the planning process, there should be a wider remit to examine the development needs on the rail corridor serving the port. Often the capacity constraint might lie on the rail network up to 100 miles away from the port itself. Chapter 7: How realistic are current assumptions about rail’s modal share of ports traffic? Under what circumstances could rail freight or inland shipping play a greater role in reducing port-related road freight? 7.1 The DfT maintains forecasts for port traffic in the UK and the impact of traffic numbers on inland distribution. 7.2 In general, these forecasts are based on the existing status quo which is one that is heavily weighted towards ports in the South East. Some consideration is given to scenarios with increases in transhipment, but there is little consideration given to scenarios where ports in other areas grow their port traffic. This is despite that fact that ports outside of the South East are seeking to develop their capabilities (including Bristol, Liverpool and Tees). As a result, current assumptions remain focused on the South East despite the fact that developments at other ports could generate a shift in distribution patterns to and around the UK. 7.3 In terms of Network Rail’s investment, too much priority has been given to the intermodal ports to the detriment of the bulk ports. The assumption appears to be that container or intermodal freight will be encouraged off road and onto rail and that bulk commodities have to go on road. The justification for this investment is clearly driven by the environmental objective to reduce lorry movements. As a result, Network Rail is missing the opportunity to encourage a greater volume of bulk commodities onto the rail network. 7.4 For example, the decisions being taken by the Department of Energy and Climate Change on the burning of biomass will have a direct impact on the number of freight trains operating from bulk ports (in particular, the Port of Immingham and the Port of Tyne) as biomass is two thirds the density of coal. No linkage has been made between the decision by the Department of Energy and Climate Change and the need to create capacity and improved access to a number of the key ports that serve the generation market. Chapter 8: Are there any regulatory barriers to investment in ports? What could and should be done about them? 8.1 The regulatory regime for ports must promote competition in order for services to improve and costs to drop. As a rule of thumb, increased competition at ports will also result in an increase in rail freight traffic levels. The industry’s recent growth has in large part come about from an effective open access regime which allows for incumbents and new entrants to enter markets and grow within a stable regulatory structure.




8.2 However, there are currently a number of individual operators who have control of the unloading facilities within a port. For instance, the port of Southampton is an example of where access is currently restricted to a single operator on the basis that the unloading facility has insufficient capacity. This is a clear barrier to growth when there is demand from potential customers that is currently unable to be fulfilled. If the unloading facilities were managed as part of the national rail network then it may well be possible to investigate operational solutions or make a business case for investment to allow multiple operators to use the facilities and satisfy the latent demand. This would therefore remove more lorry movements from the road network. January 2013

Written evidence from the Department for Transport (PA 22) Overview Road and rail access to ports in England and Wales is generally good or at least satisfactory to meet existing distribution needs. Consents have been given for a very substantial increment of port capacity, particularly for a series of deep-sea container terminals and for a second major ro-ro terminal at the Port of Dover. In each case, transport assessments have been considered through the planning system, and transport-related conditions or obligations have been agreed as appropriate. What should be the priorities for improved access to ports, and why? 1. National priorities for improving access to ports should be: (a) firstly, schemes already committed in relevant investment programmes; (b) secondly, those improvements to which port developers are themselves contributing—it is important that network providers should play their part promptly once contributions have been definitively agreed; (c) thirdly, schemes showing strong expected benefit/cost performance, for example those relieving pinch-points in the network, subject of course to those budgetary constraints that are inevitable in the wider national economic interest. 2. Regardless of whether access improvements are identified as national priorities they may be prioritised and funded locally by local authorities or Local Transport Bodies using a mix of funding sources including funding devolved from central Government. 3. Also, ports need to ensure they are well prepared to maintain accessibility in the event of disruption due to severe weather or other threats to their resilience. 4. In general, road schemes, whether national or local and including those for which the Welsh Government is responsible, will be assessed on the basis of standard appraisal methodologies including those in the Department’s online guidance suite (WebTAG). Particular emphasis should be given to reliability over the logistics chain as a whole. 5. Government’s prioritisation of future investment does recognise the importance of improved access to ports, and improvements to the strategic routes to ports. For example, future improvements delivered through the Highways Agency’s major road programme has prioritised the acceleration of improvements to the A160/ A180 near the port of Immingham, and the development of future improvements to the A63 at Castle Street in Hull has been prioritised given its impacts on access to the Port of Hull. 6. Additionally, the Department remains keen to see greater use of coastal shipping where feasible. The Government has pressed the Commission for a loosening of maritime State Aid guidelines to help facilitate this where specific, quantifiable reductions in lorry mileage can be attained. Is the delay in producing a National Policy Statement for National Road and Rail Networks creating problems for improving access to ports? If so, in what ways and where? 7. No, the Department does not believe that this has caused any significant problem for access to ports. No project, that can improve ports access, has been refused or delayed in the planning system because of any lack of clarity about the importance of such connectivity. 8. There is already wide understanding of the need for freight benefits to be accorded due weight in deciding investment priorities, and initiatives such as the strategic rail freight network have been developed without the need for a national networks NPS to facilitate planning processes. 9. The Department is currently undertaking a wide-ranging review of the status and organisational future of the strategic road network. Once this work has concluded, the Department will use the results to prepare a new NPS for national networks.




How satisfactory are the current and proposed decision-making structures, including Local Transport Bodies? 10. The Government is intending to devolve funding for local major transport schemes from 2015. Under the devolved arrangements, funding decisions will be made by 38 Local Transport Bodies. The Department will be responsible for ensuring that local decision making processes are robust, but will not be involved in the setting of local priorities or the selection of individual schemes. 11. The Department shares the Government’s wider aspirations to encourage faster and more streamlined decision-making in general, including through the planning system. 12. The Department strongly encourages major ports to produce port master plans, has issued guidance on this, and is gratified by the response of the industry, as many ports have consulted on such plans. Master plans can help Local Transport Bodies and network providers generally to plan for the long term with greater early awareness of commercial ports’ strategic business plans, infrastructure projects, and traffic expectations. To what extent can investment in road and rail infrastructure influence the market and regional decisionmaking on port development? 13. Good inland access is essential to most port developments. There are exceptions for port activities such as offshore wind turbine manufacture, where materials are brought in and leave by sea, and for those liquid bulks which use pipelines for inland transport, but for the majority of traffic, availability of good road, and often rail, links is essential. 14. Fortunately, most ports already enjoy good or at least adequate connections for existing distribution needs, although the Department is aware of some bottlenecks (and is addressing them)—for example, on the A14—and is not complacent. 15. Rail is essential for certain bulk traffics, notably coal, where the consolidated trainloads tend to be large and reliable and/or the distances are (in UK terms) substantial. The same principle would apply for coal power stations converted to operate from biomass. For entirely new power generation facilities, the likelihood of reliance on imported fuel materials means that location at, or very near, the port facility itself becomes very attractive, thus in turn prospectively reducing the burdens on inland networks. 16. Rail connections are also generally essential for deep-sea container terminals, in order to take a substantial proportion of container movements off busy roads. The appropriate pathing capacity for such rail connections varies depending on local circumstances, and this in turn is likely to influence developer funding needs. 17. Network Rail undertakes a programme of market and demand studies in order to understand the likely pattern of developing demand from the freight sector, including ports. It works closely with its customers, including the ports, to determine the extent to which that demand can be accommodated within existing capacity or may require capacity enhancements. This process informs the prioritisation of Network Rail’s investment in the Strategic Rail Freight Network and its discussions with Government over future funding requirements in the High Level Output Specification. Are decisions on port development taking sufficient account of the traffic generated by ports and associated development needs? 18. The key principle is that port operators are free to develop facilities where they are needed, while at the same time taking account of the costs that their developments would impose on other transport users and on the environment. This underlies the guidance in the National Policy Statement (NPS) for Ports. So, for example, any application for major port expansion would need to be accompanied by a transport assessment; and where that assessment reveals a need, by commitments to mitigate the transport impacts. By the same token, associated development should so far as possible be considered as part of the same development planning process. 19. In this way, the traffic and other external impacts of the development can be internalised so that the costs facing developers reflect, as fully as possible, the society-wide costs. 20. There is specific Departmental guidance on developer funding for inland infrastructure. The approach has broadly been to require that substantial detriment should be avoided. 21. This may be done through mitigation measures such as traffic management to spread peak impacts on critical junctions or paths, or through contributions to improving the infrastructure, such as junction improvements or gauge clearance work on the rail network. 22. Through this policy, an economic “signal” is conveyed to port developers so as to incentivise them against expanding capacity where the traffic impacts are most costly, but at the same time so that traffic can be accommodated where it is worthwhile to mitigate the external costs that would otherwise arise.




How realistic are current assumptions about rail’s modal share of ports traffic? Under what circumstances could rail freight or inland shipping play a greater role in reducing port-related road freight? 23. The Department does not publish assumptions about rail’s modal share. This is a matter for individual ports, rail freight operators and Network Rail to consider (in some cases, in the context of planning obligations) and they would be best placed to comment on the extent to which planning forecasts and assumptions have been, or are expected to be, fulfilled. 24. In general, rail is most cost effective and most successful in attracting traffic where frequent large consolidated hauls can be carried over a substantial distance. Analysis by MDS Transmodal, under the previous Administration, showed this as an advantage of containers routeing through large ports in the Greater South East that could be set against any reduction in overall inland mileage if they were constrained to tranship through a Continental port and were then brought to the UK on a regional feeder vessel, but on balance did not suggest a justification for policies prescribing either greater concentration or greater dispersion of port capacity location. 25. By the nature of inland waterways in Britain, the scope for them to relieve road congestion is limited by comparison with the Continent of Europe, where inland waterways play a major role. However, there are some local opportunities that should not be disregarded—most notably on the Manchester Ship Canal, which Peel Ports is working to exploit with substantial and ambitious planned developments. As another example, the Thames has been used successfully to help minimise lorry mileage carrying aggregates for building developments, as well as materials and spoil associated with Crossrail, Blackfriars Railway Station redevelopment and proposed for the Thames Tideway Tunnel. It is also expected that water transport will be extensively used in support of the Northern Line extension project. 26. There is also greater scope for coastal shipping. Recovery and growth in port traffic should increase the opportunities for the sort of regular consolidated loads that will make coastal cargo services more viable. In this context, we have made representations about the EU Maritime State Aids guidelines governing freight grants for coastal shipping, as the present rules are at odds with those on State Aid for rail and inland waterway operators.

Are there any regulatory barriers to investment in ports? What could and should be done about them? 27. There are no regulatory barriers in the sense of restrictions limiting those who may invest in ports specifically. 28. Development at ports is subject to planning and environmental constraints, as is development of all forms of infrastructure. Permitted development rights exist up to certain thresholds on port operational land, which helps ports to respond flexibly to changes in the patterns of demand for various commodities. The Government acknowledges that the system can still be complex despite recent reforms, and is committed to making the planning system work more effectively precisely so that it is not a regulatory barrier to investment, provided that potential environmental and congestion disbenefits are avoided, mitigated or where necessary compensated. 29. The National Policy Statement for Ports aims to help applicants and decision makers to ensure that the necessary assessments are undertaken in environmental statements and other application documents. It sets out the issues which applicants need to consider in their assessment, and the requirements which, in broad terms, they must satisfy in order to be confident of success. It stresses that there is a strong presumption in favour of environmentally responsible development. 30. By their nature, many ports are subject to European habitats law. The Major Infrastructure and Environment Unit (MIEU) has been set up within Defra to help guide applicants (and others) through these legal requirements, without prejudice (of course) to consideration and eventual decisions in the planning process. 31. The Department is working with Defra colleagues to ensure that the proposed Marine Conservation Zones (MCZs) take full account of the economic importance of ports, and do not impose unwarranted costs or barriers to worthwhile and environmentally responsible investment. Defra’s consultation on the first tranche of MCZs is currently open and those ports affected, and their trade associations, have been strongly encouraged to respond in detail. January 2013




Letter from Louise Ellman MP to Stephen Hammond MP dated 27 September 2013 I am writing to follow up those aspects of your oral evidence on 10 September which related to access to ports. I would be grateful if you could address the following questions: —

Could you please specify the occasions on which the process set out in Funding Transport Infrastructure for Strategically Significant Developments, including the appointment of a Developer Contributions Coordinator, has been used to establish whether and to what extent a developer should contribute to a transport infrastructure improvements, both in relation to ports and more generally?

—

What is the timetable for the review of this guidance?

—

Has Hutchison Ports been asked to make a financial contribution to the construction of the new A14 development?

—

What is your assessment of the impact of Port Master Plans on local decision making on transport infrastructure priorities? Can you give any examples of where a Port Master Plan has influenced decision making on transport infrastructure?

—

In its written evidence, Hutchison Ports said:

The practice of commercially funding maritime access channels has also had the benefit of ensuring only investments backed by a sound business case proceed and has avoided the inefficient use of public funds. The recent decision to fund maritime access to the Port of Liverpool through a Regional Growth Fund grant to Sefton Borough Council, undermines this principle and, due to the competitive nature of the UK port market, threatens the viability of commercially funded investments elsewhere Similar sentiments were expressed by the Haven Gateway Partnership. We would be grateful if you could respond to this point and clarify Government policy on public funding for dredging. It would be helpful if you could reply by Friday 18 October.

Letter from Stephen Hammond MP to Louise Ellman MP dated 14 October 2013 (PA 22a) Thank you for your letter of 27 September, in which you ask several questions about access to ports. I answer these in order, below. Funding Transport Infrastructure Publication of the Department’s guidance on Funding Transport Infrastructure for Strategically Significant Developments followed a period in which there had been an unusually large number of applications for container and ro-ro facilities at ports, plus other major schemes such as Heathrow Terminal 5; and coincided with the global economic downturn. Consequently, as matters have turned out, it has not yet proven necessary to bring the process envisaged in the guidance (including the nomination of a Developer Contributions Coordinator) into operation. The Department intends to review the guidelines, as they apply to ports, by April 2014. A14 funding Hutchison Ports has not been asked to make a financial contribution to the new A14 development. However, the A14 proposal includes tolling and assuming the project proceeds, port users making use of the road would be expected to contribute through the applicable tolls. Master Plans The Department does not maintain detailed records monitoring the influence of port Master Plans on local infrastructure priorities and it would be difficult to do so. However, awareness of ports’ strategic plans and expectations can clearly be helpful to local highway and rail network operators in formulating their own plans and priorities. And it is in the essence of the master-planning process to engage in thorough consultation with network infrastructure providers. Liverpool RGF and public funding The Regional Growth Fund award for the Liverpool Bay capital dredge was made subject to State Aid compatibility and took into account the Government’s priorities to promote growth in the current exceptional economic climate, to address regional regeneration in the North West, and to rebalance the economy. This was an exceptional case and one that in no way represents a precedent for future container port cases, nor does it mark a change in the Government’s general presumption, because of the potential for distortion of competition within the UK, against subsidy to ports in England and Wales.




In a wider setting, we are continuing to press the European Commission to produce robust guidance on State Aids in the ports sector that properly acknowledges the commercial nature of most ports infrastructure (including capital dredging), as well as superstructure. I hope this is helpful. October 2013

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