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Competing plans by the Conservatives and Labor to have a single public authority oversee Britain's railways both risk creating “real problems” for investment in rail freight, a top industry figure has said. I warned you.
Freightliner CEO Tim Schoveler said that if Labor wins government in an election expected this year, all franchised passenger train operations will be transferred to the government as existing contracts expire. He gave a speech after saying that it would be left in the hands of the government.
Meanwhile, the Conservative government's bill would give ministers the power to overturn decisions by the Rail and Road Authority, the regulator that guarantees the rights of freight operators.
Shovera said both plans could undermine confidence in rail freight operators' rights to “train routes” (permission to run trains on specific routes at specific times) and jeopardize future investments. I warned you.
Freightliner's U.S. parent company, the Genesee & Wyoming Railroad (GWRR), won't put money into operations without such solid rights, Shoveller said. GWRR is owned by a consortium of US-based Brookfield Infrastructure and Singapore's sovereign wealth fund GIC.
“Security of tenure for these track access rights is absolutely essential to the success of our investment request with GWRR,” said Schoveler.
Freight operators currently acquire train routes based on a process organized through infrastructure owner Network Rail. Route allocation is overseen by the industry regulator, the Rail and Road Authority, and operators can complain about unfair practices. Passes are typically guaranteed for 5 or 10 years.
Freightliner is currently spending millions of pounds on a new terminal in north-west England, Shoveller pointed out.
“The ability to know if you can get the train there is essential to getting investment,” he says.
Rail freight transport has been a private sector undertaking since the mid-1990s, with the exception of Direct Rail Services, which is owned by the government's Nuclear Decommissioning Authority. None of Britain's major political parties have plans to nationalize the operator, and the sector relies on private capital for new equipment, locomotives and other investment.
There is a broad political consensus in favor of moving more freight from road to rail. But a 14-year freeze on fuel tariffs has made it difficult for railroads to compete on price.
“If our track access rights are weakened, it's going to be a big problem in terms of leveraging private sector investment,” Schoveler said.
Shoveller was appointed CEO of Freightliner, Britain's second-largest freight forwarding company by revenue, in August last year. He was previously director of the North West and Midlands region for Government-owned rail infrastructure owner Network Rail.
Mr Shovera supports Labour's overall plan to consolidate passenger train operations into a single entity with Network Rail, provisionally known as Great British Railway (GBR).
Labour's plan, published on April 25, promises to include “safety measures” for freight carriers and targets to increase the amount of freight carried by rail.
But Shoveller warned GBR staff, when planning the timetable, that their organization would receive all the revenue generated by the new passenger trains. They only receive a “truck access fee” from the freight service. He said safeguards for this area would have to be very strong to mitigate potential conflicts of interest.
“Cargoes have to be evaluated in rounds,” he said. “The reason the mandate to increase freight is so important is because otherwise we would always default to adding more passenger trains.”
Louise Hague, Labour's shadow transport secretary, highlighted that Labor plans to impose statutory duties on Great British Railway to encourage the use of rail freight. The party added that it would also introduce safeguards to ensure freight trains continued to have “equitable access” to the network.
“The workforce will accelerate even further to expand rail freight transport on our nation's railways,” Haig said. “That's why our plan is supported by industry.”
Mr Shovela raised another question about the current Conservative government's plans. The plan would create a central authority to oversee the railways, but private passenger train operators would have a broader role to play.
Mr Schoveler said the provisions of the bill would allow the minister to change the rules regarding access to the network and to issue instructions to ORR on how to interpret the access rules.
“These new instructions could create a situation where ORR would have to waive or weaken my rights,” he added.
But the Department for Transport insisted his concerns were misplaced. Ministers said they could not change access rules without parliamentary consent.
The ministry said: “We have clear plans for the future of railways and Great British Railway will play a key role in our plans to leverage industry expertise to put passengers first and strengthen freight services. I will accomplish it.”
