Mixed messages for rail freight as regulator approves £23.4bn CP6 spending plans

Mixed messages for rail freight as regulator approves £23.4bn CP6 spending plans

The Office of Rail and Road has approved plans to spend £24.3bn on maintaining and renewing the existing railway over the next five years from 1 April 2019, known as Control Period 6 (CP6).
 
John Larkinson, Chief Executive, ORR said that Network Rail, its routes and its system operator can now press forward with their plans to deliver a service which passengers and freight customers rightly demand and deserve.
 
"These plans are focused on improving performance for passengers and freight operators by getting the basics right – ensuring that the railway is properly maintained and renewed, and on improving the daily operation of the railway."
 
The ORR announcement was broadly welcomed by industry groups including Rail Freight Group and the FTA, but the latter believes news of higher charges to use the rail network over the final three years of CP6 could have a negative effect. The increase in charges recommended by the watchdog''s final determination provides a two-year freeze in costs, followed by a ramping up of charges over the final three years of the five-year control period. 
 
Elizabeth de Jong, Director of Policy at FTA, said the government’s regulator for rail and roads has missed an opportunity to boost use of the rail sector, at a time when the logistics industry is being asked by government to lower their carbon emissions and therefore seeking alternatives to traditional HGVs for the transportation of goods and services.
 
She added: “The introduction of increased charges for the use of the network could act as a deterrent for businesses looking for alternatives to road freight. At this time of economic uncertainty and challenging trading conditions, an increase of this size should have been avoided."  
 
The FTA said the increase in charges recommended by the final determination will generate an increase in the total variable charges over CP6 of 10% for freight in real terms, with possible further increases in the subsequent control period. The FTA is concerned that if these charges are introduced without any measures to alleviate their effects, it could affect the cost effectiveness of rail and leave customers with little choice but to switch to road.
 
“We are pressing the Secretary of State and Scottish ministers to consider their willingness to safeguard the place of rail freight within the UK supply chain,” continued Ms De Jong. “This is vital to keep rail cost-effective and therefore avoid further gridlock on our roads, which would also put at risk the carbon reduction targets set for road haulage.”
 
“Rail has a huge part to play in keeping Britain trading as efficiently and effectively as possible as we move into a post-Brexit world, and the recommendations should create a workable framework in which the sector can continue to flourish as it supports the work of UK PLC.”