UK to Fund Transport Projects

Jan. 1, 2009
The UK Transport Secretary, Geoff Hoon, recently confirmed the government plans to inject an extra 1 billion into major transport projects next year.

The UK Transport Secretary, Geoff Hoon, recently confirmed the government plans to inject an extra £1 billion into major transport projects next year. According to the Department for Transport (DfT) statement, the investment is being made, “In order to stimulate the economy by accelerating Government plans to cut congestion and significantly increase rail capacity.”

This extra £1 billion, to be spent on road and rail plans, is in addition to the overall £10 billion for 2009-2014 already pledged by the transport minister in July 2007 to increase rail capacity. Other major long-term rail projects include the massive London Crossrail plan, the £5.5 billion Thameslink program and an additional £600 million to tackle congestion.

Major transport plans highlighted in this most recent DfT statement, include the enhancement of rail freight routes through London. This includes £54 million just for the North London route improvement. Other monies already allocated in Oct. 2007 to rail freight projects included TIF (Transport Innovation Fund) money (£132.5m) for Peterborough to Nuneaton (£80m) and Southampton to West Midlands (£43m) rail gauge enhancement to cope with modern taller containers on standard-height rail wagons.

While this is more welcome news for southern transport projects, which will continue to receive the lion's share of new rail funds, there is a rapidly growing consensus in the rest of the country that further expenditure in southern UK infrastructure is a failed model. It makes no provisions for tackling the identified problems of the UK's north-south economic performance divide.

“The UK Government needs to invest in the future and not the past,” stated Martyn Pellew, Group Development Director for PD Ports. “This latest injection of cash for road and rail projects into the already congested south will do very little to improve anything, it's just a perpetuation of pre-existing problems. Over three-years ago the Government's Northern Way initiative identified a £32 billion shortfall in the economic performance of the North of England. If the UK Government really wants to help our economy in this financial crisis and also meet the long term environmental targets that have been laid out in the recent Climate Change, Energy and Planning Bills, then the UK Government clearly needs a new direction for a sustainable future” added Pellew. “Despite the obvious benefits of moving freight by rail, so far there is still considerable misdirection in the way the UK Government treats and funds its rail network.”

As the recent DfT news indicates, a significant amount of funding has gone into rail access to the country's southern ports for increased freight shipment particularly to cope with the newer one-foot-higher containers bringing more and more product to UK consumers from the Far East, but as Pellew argues, “This latest investment will only continue the trend for shipping lines to add increasing cargo volumes on to the overcrowded southern UK infrastructure. It's an investment that will work against itself.”

Pellew adds, “The fact that Britain is an island with a history of maritime trade and excellent ports around our entire coast, plus the fact that the North has less road and rail congestion, is an incredible asset with some of the best potential for increasing inward investment to the UK and for reviving our economic development. The right mixture of good access to the sea, available brown-field land and an eager work force exists in the North East. It's clear to see that there is significant economic potential for the UK here. What's missing is a supportive rail infrastructure-especially in the form of rail access for trains and wagons capable of carrying the modern high-cube imported containers.”

Northern UK ports employers, the rail community and major retailers have been collectively calling on the UK Government to invest strategically on the rail infrastructure of the North and Northeast. “The UK needs to invest in its Victorian-era rail network and shed its prejudices toward everything good being in and around the south east. We need new ways of thinking if we are to realize that there is a vital latent economic power that exists in the Northeast,” suggested Pellew, and major retailers seem to agree.

ASDA Wal-Mart is already operating a 360,000 sq ft import center at the northern UK port of Teesport to handle its imported containers prior to onward transport to the company's distribution centers in the North. Furthermore, Tesco has commenced construction of a 1.2 million sq ft import center at the port in a move that will create over 800 jobs. Again this import center, when opened in 2009, will serve the UK's largest retailers northern stores and regional distribution centers.

Yet, despite the interest of UK and overseas business enterprises to invest in the North East, the Government, as recently evidenced, still doesn't seem to be catching on to the more economically viable and environmentally responsible transport solutions available up North. Those in the North suggest that this could be because the UK Government and Whitehall still have not shed archaic notions about how best to re-energize the economy and how best to move goods within the UK.

“As an island, we need to use our already available best infrastructure asset first-the sea, “explains Pellew. Like Pellew, proponents of the supply chain concept known as Portcentric Logistics, strongly argue that by bringing cargo farther north via the sea, closer to its end destination and then transferring to shorter distance rail movements, retailers can see a significant reduction in their shipment delays because their products will not be caught up in UK southern port and road congestion. This means that there will be an increase in the accessibility of inventory. They will also benefit from lower overall transport costs and cheaper land costs and lower labor rates in the North. All of which will help retailers significantly cut their supply chain costs. “When a product is moved from its overseas original source, in say China, to the UK retail shelf with greater efficiency, then everyone benefits, including the environment.”

Once again, there's data to back up the claims made by these northern UK infrastructure supporters. Tesco has been reported as having this year doubled some of its national haulage by rail, while ASDA said it had already reduced road miles by 25% since January 2005 and aims to cut another 15% by the end of 2009. “The results seen with Tesco and ASDA/Wal-Mart,” added Pellew, “indicate that the UK Government needs to open its eyes as to the benefits that result from a greater use of northern ports and the need for better rail infrastructure to accelerate this trend.”

Yet, while the recent DfT announcement included £30 million for certain road improvements to Immingham Port on the Humber, the East Coast ports of the Humber, Tees, Tyne and Grangemouth still have not seen money committed for urgently needed rail gauge enhancements to link these ports to the East Coast Main Line (ECML). The ECML is the crucial rail link that runs along the East Coast of the UK from London to Scotland, and has yet to receive any serious investment for freight.

According to estimates, a relatively small £100 million investment in rail freight capability on the ECML would allow the UK to effectively handle an ever increasing demand for imported containerized goods through east coast ports on the Tyne, Tees and Humber. Those in the North East, argue that as a matter of strategic transport investment, their request for a £100 million investment in the ECML is a relative “drop” in the UK's transport budget bucket.

“The country needs to develop more sustainable transport methods and there is a need to change traditional thinking. The UK Government cannot continue to neglect the North East and the ECML any longer, as this area clearly represents the most logical place for change to begin. A meager £100 million investment into this vital rail line will have a major and direct impact for all UK business in terms of reducing cost, carbon emissions and congestion. Investment in the ECML now represents an opportunity for the UK Government to act with responsible and decisive vision,” stressed Pellew.

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