Freight grant cuts
GOVERNMENT plans to cut the Mode Shift Revenue Support (MSRS) grant could have a major impact on rail freight and force more lorries onto the roads, according to Freight on Rail.
The grant is to reduce by more than £4 million, from £19.85m this financial year to £15.74m from April 1 2017, with a further reduction from April 2018 for the year 2018-19 to £15.17m.
The grants are paid to allow rail freight operators to better compete with Heavy Goods Vehicles. They are based on the volume of traffic removed from the roads, rather than forecast impacts.
The news came as a survey claimed that Britain has the third most congested roads in Europe. It follows the Government’s own Rail Freight Strategy in September 2016, which stated that rail freight needs support, pointing out that it reduces congestion, crashes, pollution and climate change impacts.
Freight on Rail Manager Philippa Edmunds told RAIL that “this budget reduction is not aligned with the Government’s stated policy”, and that the wider social and environmental costs of freight transferring from rail to road could be greater than the savings made by reducing the grant. She added that domestic intermodal services could be jeopardised, including those for Tesco between the Midlands and Scotland, and that freight operators and customers could lose confidence in the security of other grants aimed at encouraging modal shift.
Department for Transport spokesman Jaber Mohamed said: “We are providing more than £15.5m to encourage companies to move their goods by rail in 201718, which will mean up to 800,000
fewer lorry journeys. We recognise the environmental and economic benefits from moving goods by rail, and we are committed to supporting the long-term growth of the industry.”
The DfT did not respond to questions asked by RAIL about why it was cutting the grant, or whether it planned any other measures to mitigate the effect of the cuts.
Freightliner Head of Rail Strategy Lindsay Durham said: “The Mode Shift Revenue Support scheme has played a crucial role in growing and sustaining modal shift from road to rail on key regional flows, so the reduction in the budget for the scheme from April 2017 will be very challenging for us and our customers. This is particularly pronounced where funding for certain specific flows has completely disappeared rather than transitioning over time.
“The scheme has, and continues to offer, tremendous value for money - the scheme has been operating on average with an increasing value for money [environmental benefits over level of support] greater than 5:1 for the past two years, and the unfunded traffic for 2017-18 offers value for money in excess of 3:1.
“We remain in dialogue with officials, and while we understand that money is tight, we are hoping that they might yet identify some additional funding for 2017-18 and the remaining years of the MSRS scheme. This would be consistent with the recognition of rail freight’s importance to the UK economy in the DfT’s recently published Rail Freight Strategy.”