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Alasdair Morgan (Scottish National Party)

The final item of business today is a members' business debate on motion S3M-7567, in the name of Cathy Jamieson, on freight facilities grants. The debate will be concluded without any question being put.

Motion debated,

That the Parliament celebrates the contribution of the Scottish Government's Freight Facilities Grants (FFG) in moving freight to rail and sea, and the contribution that this makes to reducing carbon emissions and congestion; notes that 37 FFG awards totalling £68.9 million have been made to projects in Scotland and understands that this reduces the need for 33,573,500 lorry miles per year; recognises that Transport Scotland is in advanced discussions with a number of bidders to the fund, including a proposal by a social enterprise in South Ayrshire for a railhead at Grangestone by Girvan; believes that a Grangestone railhead could provide great economic and environmental benefits to South Ayrshire; regrets the Scottish Government's proposals to reduce support for the freight industry from £10.3 million in 2010-11 to £2.9 million in 2011-12, including the closure of the FFG scheme for projects which will incur expenditure after 31 March 2011, and expresses great concern that this would put in jeopardy the work that has been done on the Grangestone railhead scheme and similar proposals across Scotland.

5:10 pm
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Cathy Jamieson (Labour)

I thank members, particularly those who have stayed for the debate, for their support for the motion, which has helped it to be selected for debate. I also take the opportunity to welcome the Minister for Transport and Infrastructure to his new post.

The freight facilities grants scheme is an extremely important issue—I would go so far as to say that it is a key issue—in this year's budget. It is a vital issue for my constituency, where it is fair to say that the announcement that the scheme would end came as a shock, because a considerable amount of work has been done on a bid for a new scheme at Grangestone, in Girvan.

The issue is also vital for the economy and environment of Scotland as a whole. That is borne out by the wide range of comments and submissions to the Transport, Infrastructure and Climate Change Committee's scrutiny of the budget process, in particular from Highland Spring in Perthshire, in the constituency of the Minister for the Environment and Climate Change. It is also borne out by the wide support for the motion from the rail industry, business, trade unions and environmental groups. I am sure that the speeches in tonight's debate will reinforce for the minister many of the points that have been made.

The amount of money that the freight facilities grants scheme involves is not huge in the context of the budget as a whole. However, such investment can help to regenerate communities, secure jobs, boost the economy and improve our environment. By any standards, the scheme has been a success. It has provided capital grants of up to 75 per cent of costs, to encourage the transfer of freight from roads to more sustainable methods of transport. Almost £70 million has been awarded in Scotland since 1997—I have just checked with Malcolm Chisholm, who is sitting next to me, that he was the minister with responsibility for transport at the time of the scheme's introduction. According to the Scottish Government's figures, the transfer of freight to rail and shipping has taken 33 million lorry miles away from Scotland's road network annually. That is a massive achievement, which we should all celebrate, as the motion says. Without the FFG scheme, our environment would be poorer and our roads would be more congested and dangerous. In addition, we should not forget the benefits of the FFG scheme to business and the economy, in particular in creating and sustaining jobs in rural areas.

Schemes throughout Scotland have been supported and members will no doubt talk about the benefits for their areas. I have seen the benefits in East Ayrshire, where massive amounts of coal are now transported by rail rather than road.

The Grangestone proposal, which is outlined in my motion, would remove some 4,000 lorry journeys from roads in South Ayrshire. It has the potential to reduce the number of heavy goods vehicles that travel on the A77, where, as the minister will have heard from his predecessor, communities such as Maybole, Minishant, Kirkoswald, Girvan, Lendalfoot, Ballantrae and Glenapp have long-standing campaigns for road improvements that would reduce the number of accidents, for speed reduction measures and for by-passes. No doubt the minister will also take account of what his colleague Adam Ingram, who is sitting next to him, says, because Adam Ingram well knows about the pressure from communities on the issue.

I am not for a minute suggesting that the Grangestone scheme could solve all the problems. However, it could reduce the pressure on local roads, cut emissions and improve the local environment. That is a win-win situation, which—rightly—has significant backing throughout the local community. Major businesses that operate in global markets are located at Grangestone, such as William Grant & Sons Distillers and Nestlé. In recent times, both companies have made major investments in their plants to cut carbon emissions.

We can build on that progress. The proposal provides a chance to bring to fruition an innovative and far-reaching project that will be good for business and the environment and which will have the community at its heart. The unique aspect of the project is that it is being taken forward by Ailsa Horizons, which is a social enterprise that has charitable recognition. The company has set up a separate community interest company to operate its proposed railhead, and the plan is that the share of the profits that went to Ailsa Horizons would be channelled into local economic development activity.

The proposal could be the first ever community-owned rail freight facility in the United Kingdom. That is why it has been supported so well and why there is such dismay that this ambitious plan appears to have been wiped out at the stroke of a ministerial pen. It is all the more surprising to me, as the plan seems to tick all the boxes for the Scottish Government's own priorities, given its economic, environmental, social and, indeed, commercial benefits.

To scrap the project now, after the significant time and money that has already been invested, would be seen as a slap in the face for Carrick. It would be a particularly bitter blow, as money was previously allocated to a freight facilities grant for the area to create a railhead at Barrhill to take transportation of timber off local roads. For various reasons, that money was never drawn down, but I argued at the time that future bids should be given a degree of priority to ensure that the area would get a fair share of available funding.

The Grangestone scheme has the support of many people outside the Parliament. Tony Berkeley, chairman of the Rail Freight Group, said:

"Projects such as the Girvan Intermodal Railhead show how small amounts of Government grant can support significant local investment in rail, and deliver economic and environment benefits across Scotland."

WWF said:

"Abolishing this scheme will limit any further road to rail switch and is likely to increase climate pollution as a result."

Keith Norman, the general secretary of the Associated Society of Locomotive Engineers and Firemen, said:

"Scotland's future low carbon economy needs a strong rail freight sector".

The National Union of Rail, Maritime and Transport Workers has added its support, highlighting that the loss of freight facilities grants would reverse the progress that has been made in transferring freight from road to rail.

I recognise that the Scottish Government's funding position is constrained. I did not and do not intend to make the debate party political if I can help it—I am trying to be as constructive as possible—but it is shortsighted to scrap a successful scheme with so much potential. At the very least, the Minister for Transport and Infrastructure could argue for keeping open the possibility of in-year funding for schemes that are already in progress, such as those at Grangestone and Blackford in Perthshire.

I have some experience of the way in which budget options are drawn up and I can only surmise that perhaps the FFG scheme came to be on the hit list as a result of underspends in some years leading to the belief that there was no need for the scheme. I see from today's newswires that the scheme is now described as "suspended", not scrapped. Perhaps that is a bit of movement, because scrapping the FFG would be bad for business, the environment and my local community, which has much to gain from the excellent proposal for Grangestone.

It is not too late to resolve the matter. As we are talking railways, I will not ask the minister to do a U-turn, but I ask that he stop, reverse, change direction and give an assurance that the FFG schemes will not be shunted into the sidings. I hope that, in his response, he will give a commitment to ensuring that the schemes that are in progress will proceed and a continued commitment to freight facilities grants for the future.

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Alasdair Morgan (Scottish National Party)

We come to the open debate. I ask for speeches of four minutes. The debate is oversubscribed, so I will stop members when they get to the four-minute mark.

5:18 pm
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Christopher Harvie (Scottish National Party)

I congratulate Cathy Jamieson on the motion and her eloquent presentation of it. I also declare an interest as the honorary president of the Scottish Association for Public Transport.

The debate is set against the background of great shifts in natural resources. The price of oil was $10 per barrel in 1999—the year of the Parliament's inauguration—but we are now on the edge of the $100 barrel, a figure that was not expected before 2030. That has already affected the USA, where the 50 cents gallon has given way to the $3 gallon, a fact that underlies the declining fortunes of the American middle class and the emergence of the sub-prime generation.

One result of that has been the declining profitability of road transport. In Scotland, we are presently menaced by rises in fuel duty. One hopes that that will be reversed, but it will not be the last such situation. In October last year, the coalition Government tabled the introduction of road freight lorry user charging following success in Switzerland and Germany with the Brummi-Maut—the lorry toll. That is bound to have a significant impact on road haulage in Britain.

Meanwhile, despite the recession, rail freight increased by 65 per cent between 1997 and 2009. Freight grants have, yet again, made Aberdeen a major centre of freight transfer, with three depots. Large amounts of goods for supermarkets run in dedicated trains from the English midlands to destinations in Aberdeen and Inverness. Given the right regime, rail is expected to rise fivefold during the next 20 years. Much of that could now be put at risk.

Some might ask whether, if growth is coming anyway because of rising fuel costs and so on, we need the freight facilities grant. In Germany, for example, a market has been enforced by restrictions and taxation on road haulage rather than by subsidy. In the case of the capture of supermarket traffic, those restrictions were probably the driving functions, rather than subsidies.

However, an important further challenge is waiting for us, and that is rail's contribution to Scotland's renewables revolution. We will require seamless transit from European factories to Scottish assembly plants. One key site is the Fife energy park at Methil, which is the host to Burntisland Fabrications Ltd's assembly plant for jackets for offshore wind farms. The components for those can come from up to a dozen different countries. In the opinion of Neil Henderson, the BiFab site manager, a railway siding into the Methil yard from the Thornton to Levenmouth branch line, which is mothballed at the moment and would require £46 million to be restored for passengers and freight, would, in his words, be "a godsend". It would add to a number of important local shifts from road to rail, notably that of the Diageo distillery, which produces whisky, Gordon's gin and Smirnoff vodka—as Michael Caine would say, not a lot of people know that—at Cameronbridge. Diageo has been trying for some time to get rail access from Network Rail. Surely it is time for rail access to that major region, which has a lot of social problems and enormous possibilities, but which is also an area in which freight facilities grants could be an implement of revitalisation. I plead with the minister to grant that.

5:22 pm
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Michael McMahon (Labour)

I begin by congratulating Cathy Jamieson on securing the debate and providing members with the opportunity to highlight the short-sightedness of the Scottish Government's decision to cut off the supply of freight facilities grants. It also affords me the chance to join Cathy Jamieson in raising concerns about the impact that the Government's decision will have on my constituency of Hamilton North and Bellshill.

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Keith Brown (Scottish National Party)

Would the member like to address the impact of the £800 million cut in this year's capital budget? If Cathy Jamieson can describe the reduction of the freight facilities grant as "a slap in the face", does the member agree that the cut in the capital budget is tantamount to grievous bodily harm to the Scottish budget?

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Michael McMahon (Labour)

The minister makes a clever argument, but he can see the importance of his strategy—I will come on to that later—and he is undermining his position rather than making me defend the difficulties that he faces.

Twenty-five years ago, in January 1986, the then Tory Government's economic cutbacks meant that the traditional Lanarkshire steel-making industry began to be closed down. Ravenscraig was under threat, and the 12 Gartcosh to London marchers set off, determined to fight against the plant's already announced closure. We all know that the steel works are no more, but what is not so well known is the fact that Bellshill, which was one of the worst-affected areas in Lanarkshire, managed to recover by exploiting its geography and transport infrastructure links to become a hub for distribution and logistics. Central to that was the development of the Mossend rail freight terminal and Peter D Stirling Ltd's Mossend railhead depot.

In November 2003, the then Labour-led Administration announced the award of a freight facilities grant of £650,000 to English, Welsh and Scottish Railway Ltd for additional freight facilities at Mossend to enable the transfer of an express parcel service from road to rail. Other grants were also awarded, such as one for the then Safeway logistics depot in Bellshill to put trailers on to rail for transportation north to Inverness. Mossend was rightly identified by that Labour-led Administration as a strategically important centre for rail freight in Scotland, and those grants reflected the Scottish Executive's recognition of the site's significance in enabling the transfer to rail.

However, along comes the Scottish National Party Government and its transport myopia: no Edinburgh airport rail link, no Glasgow airport rail link, delays in the M8 and Raith upgrades, and many more transport projects postponed or shelved.

The Government has the stated policy, in its freight action plan, to make

"the movement of freight through the entire supply chain ... efficient and sustainable"

by pursuing activities that promote modal shift to rail and shipping, and we have heard that

"moving more freight to rail contributed to the Government's targets of making our transport network 'smarter' and 'greener'."

Mossend is geared up to play its part in that strategy.

As ASLEF has pointed out, there have been almost £70 million of FFGs in Scotland through 40 grants since 1997, which has taken 30 million lorry miles from Scotland's roads. By freezing FFGs, the Government is not only undermining its own policies, but is putting the brakes on the regeneration of Lanarkshire and the economic fightback against the cuts that started 25 years ago and which led to the fight to defend our steel industry. I ask the minister to ensure that, this evening, he sends out a signal that we will not have to look back to those days for an example of what has to be done to defend the industries that have grown in Lanarkshire out of the mess that was created so long ago. He has an opportunity to do the right thing. It is asking for money in a tight budgetary period, but the failure to deliver that money will undermine the Government's own strategy. That is the problem for the minister. He can throw figures around as much as he wants tonight, but it is the Government's problem—the Government created it and he must solve it.

5:26 pm
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John Scott (Conservative)

I congratulate Cathy Jamieson on securing the debate, which is relevant to Ayrshire and South Ayrshire, in particular, which we both represent. The freight facilities grants have had a very beneficial effect on the whole of Scotland, from Thurso to Galloway, and their importance in keeping freight off our roads and in developing freight modal shift should be regarded as a success. I support Cathy Jamieson's comments about the benefits of the scheme.

In Ayr, Associated British Ports, which is known locally as ABP, received one of the biggest awards in the scheme—more than £4 million—to bring in timber, which has had a positive economic impact on the ports of Ayr and Troon as well as on rural communities in Argyll. The grant award kick-started timber shipping on the west coast of Scotland and brought timber from Campbeltown, Ardrishaig, Portavadie and Sandbank mainly to Troon for onward transmission to Wilson's sawmills in Troon, the Caledonian paper mill in Irene Oldfather's constituency and the Egger chipboard plant in Cathy Jamieson's constituency.

That investment has played a vital role in sustaining jobs at those facilities, which must be recognised. However, the withdrawal of the scheme is now threatening economic development at the Ayrshire ports in my constituency, which is a matter of great concern to me. Indeed, a project has been threatened by the abrupt withdrawal of the freight facilities grant, with meetings with Government transport teams being cancelled recently at very short notice. That is a matter of the utmost concern to me. Commercial confidentiality does not allow me to give more details, in this most public place, of the proposal that has been put in jeopardy, but Government officials and, I am certain, the minister will be aware of the project to which I am alluding, and of the meeting that was scheduled for 15 November to discuss the project that was cancelled by Government officials.

I acknowledge the historical benefit of the scheme but greatly regret its withdrawal, in effect, because the economic benefit that its further application would have brought to my constituency will not now be enjoyed by my constituents. Further, the jeopardising of the proposal at Grangeton, in Cathy Jamieson's constituency, has an impact on my constituents as well, as many people travel from Ayr, Prestwick and Troon to take up employment in her constituency. Like her, I would like the grants to be reinstated.

I understand that the Government must make savings in its budgets. However, the obvious benefits of the scheme throughout Scotland, in terms of economic development, greenhouse gas reductions and, therefore, the meeting of climate change targets, mean that it is not a scheme to cut. In addition, given the fact that the roads maintenance budget is already a headache for the minister and councils throughout Scotland—particularly South Ayrshire Council—it is vital that other modes of transport be used for freight transfer.

In summary, the multiple benefits that the scheme supports and provides should not be put at risk by the proposed reduction in funding from £10.3 million to £2.9 million in this year's budget. Such a proposal is truly short-sighted and goes counter to many of the Government's and the Parliament's stated aims and agreed targets. Considering the relatively modest sums that are involved, in the context of the overall budget, I ask the minister to discuss the matter further with the Cabinet Secretary for Finance and Sustainable Growth with a view to restoring the freight facilities grant in full in this year's budget and thereafter.

5:30 pm
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Karen Whitefield (Labour)

I welcome the opportunity to speak in this evening's debate and I congratulate my colleague, Cathy Jamieson, on securing a members' business debate on this important matter.

Like many members speaking tonight, I am surprised and disappointed by the Scottish Government's decision to scrap the freight facilities grant and I struggle to understand the logic of the decision. To its credit, the Scottish Government has placed environmental sustainability to the fore in its policy making—perhaps as a matter of principle, or perhaps as a pragmatic response to the need to work in partnership with the Green party. However, the decision to scrap the freight facilities grant seriously undermines the Government's ambition to reduce carbon emissions.

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Keith Brown (Scottish National Party)

Does the member think that the decision of the Labour Government to scrap the scheme five years ago and the fact that it spent less money in five years in England—which has a much bigger transport network than we do—than we have spent in one year in Scotland, mean that the Labour Government should have attracted the same kind of criticism? Did she make any points about the matter at the time?

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Karen Whitefield (Labour)

We are talking about Scotland, and the minister is responsible for the situation in Scotland. Labour Party members criticise their party when they need to. We do not just do as we are told; we take responsibility, which is what we are asking the minister to do tonight.

The grant system was designed and implemented in recognition of the economic advantages of reducing long-distance road congestion, and of the social and environmental advantages of rail freight. Given the threat of climate change, those justifications have only grown stronger with time.

As others have pointed out, the freight facilities grant has helped to take over 33 million lorry miles off our roads since 1997. That has been delivered through 37 awards totalling £69 million. Indeed, the vast majority of the projects facilitating the shift from road to rail in Scotland in recent years have been achieved with the assistance of the freight facilities grant.

Given the significantly better carbon emission figures for rail—it produces 70 per cent less carbon than the equivalent road journey—that represents a substantial and positive impact on the environment.

That was recognised by Transport Scotland when it stated that moving more freight to rail contributed to the Government's targets of making our transport network smarter and greener.

In addition to the environmental impact of removing freight from our roads, there are also significant benefits in relation to congestion and road safety.

I support the call that is being made by Transform Scotland and the Rail Freight Group to retain the scheme with an initial suggested budget of around £5 million. That will ensure that the momentum that has been created and maintained through the FFG since its introduction will not be lost.

There is a real concern that, without the grant, future freight infrastructure projects will fall at the first hurdle due to insufficient funding. Indeed, concerns have been raised that withdrawal of the grant could lead to existing rail traffic reverting to road haulage.

Obviously, members' business debates finish without a decision. However, I hope that the minister is listening closely to the case that is being presented this evening by members across the chamber. This is not about scoring party-political points. I accept the Government's commitment to environmental sustainability. I ask only that the minister take the steps that are needed to turn that commitment into action.

5:34 pm
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Alison McInnes (Liberal Democrat)

I congratulate Cathy Jamieson on securing this debate, which provides us with an opportunity to discuss not only the future of the freight facilities grant but also the wider issue of sustainable freight transport in Scotland. For that, I am grateful.

There are many innovative ways to make the transport sector more sustainable—encouraging the use of private electric vehicles, for example—but, if we are serious about our intentions to create a transport network that is fit for the 21st century and is aligned with our climate change targets, the issue of sustainable freight management cannot be ignored.

Like others, I am dismayed by the Scottish Government's intention to withdraw support for the freight facilities grant. It is a tried and tested scheme that is designed specifically to make the transportation of freight more sustainable and we know that it has worked, bringing a reduction of 33.5 million heavy goods vehicle road miles per annum across Scotland.

In my own region, awards that were granted to Asda, W H Malcolm, ARR Craib Transport and DRS have resulted in the removal of around 12,000 lorry journeys from the A9 and A90 each year. Such grants are estimated to have provided roughly £4 million-worth of environmental benefits over the past five years.

Despite those positive results in the north east and throughout Scotland, there is much work still to be done, given that more than 1.5 billion HGV miles were travelled on the road network last year.

By withdrawing support for the FFG at this point, ministers are taking a puzzling approach that goes against the grain of the stated aims of transport and climate change policies. The national transport strategy states that the Government will

"Actively promote sustainable distribution strategies, aimed at enabling freight to use rail and sea as alternatives to road and reducing the environmental impact of freight ... on roads".

Despite the Scottish National Party's claim to be striving for a Scotland that is characterised by the sustainable movement of freight, it seems to be intent on jettisoning an initiative that is aligned with its policy objectives and is proven to work.

The TICC Committee raised concerns about the scheme's closure in its budget submission to the Finance Committee, but the concern is wider than that. Members will all have heard the concerns of Direct Rail Services, the Rail Freight Group, ASLEF and the RMT. Transform Scotland has warned that the loss of the grant may even lead to some of the freight that is sustainably transported at present reverting back to road haulage. That is a worrying prospect indeed, and I hope that the minister will address it later in the debate.

Even if that fear proves to be unfounded, the suspension of the scheme at the very least immediately puts at risk five large-scale modal shift projects throughout Scotland. In my own region, that means that a project by Lafarge to take hundreds of lorry-loads of bagged cement off the road may now not go ahead.

The minister should know that I will find it difficult indeed to explain to my constituents why a Government that is supposedly committed to moving freight from road to rail is, in this case, acting to prevent that from happening.

I have so far focused on the benefits that the FFG provides in terms of sustainability and emissions levels, but we should not overlook the other benefits of taking freight off the road. In road safety terms, for example, HGVs are involved in accidents that represent a cost of £1.3 billion a year throughout the UK. By reducing the number of HGVs, we can reduce the frequency and severity of such accidents.

I am told that the cancellation of the grant will result in an additional cost of £2.4 million per annum in road maintenance. We know that councils are already facing crippling road maintenance bills because of the harsh winter—surely we should be doing all that we can to reduce the number of HGVs that are pounding the roads.

I appreciate that we are facing unprecedented economic times, and that consequently Governments must look again at their actions. Nevertheless, the cancellation of the grant without any indication of how the positive outcomes from the scheme will be achieved in other ways can be described only as short-sighted.

It would be helpful if the minister, in his speech at the end of the debate, could inform us of how his Government intends to fill the gap that the cancellation of the grant will leave and ensure that Scotland is travelling forwards, not backwards, with regard to sustainable freight management.

5:38 pm
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Charlie Gordon (Labour)

I congratulate my colleague Cathy Jamieson on bringing to the chamber a debate that is at once important and very topical.

At the December 7 meeting of the Transport, Infrastructure and Climate Change Committee, I pressed the Cabinet Secretary for Finance and Sustainable Growth, John Swinney, on the proposal in next year's draft budget to close the freight facilities grant to new applications. The cabinet secretary pointed to a trend in recent years of a lack of draw-down of the grants that are available.

To what can that lack of successful applications be attributed? Operators in the freight transport industry have told me that they found some of the scheme rules a bit bureaucratic and that some applications were falling at various hurdles. The cabinet secretary took the view that some applications were falling foul of state aid rules, but we do not have more information on that point at the moment. There might well be merit in both of those contentions.

If there were no applications in the pipeline and given the severe budget pressures, there could be a financial case for the Government to say that, since no one is applying for the grant, it would not be wrong to use the money for something else and to close the scheme to new applications. However, Cathy Jamieson pointed out a scheme in the making that would have the benefit of eliminating 4,000 lorry journeys, Professor Harvie alluded to an example in Fife that has the potential to eliminate 13,000 lorry journeys and Alison McInnes alluded to another potential scheme that could account for 2,360 lorry journeys. Then there is the example of the John G Russell, Ferguson Transport and BSW sawmilling facility at Corpach, which has the potential to eliminate up to 5,000 lorry journeys, and of course the Highland Spring proposal in relation to Blackford, with the potential benefit of the removal of up to 10,000 lorry journeys.

The problem with stopping new applications at this stage is that this year, arguably unlike other years, there seems to be quite a lot in the pipeline. Therefore, we must look again at the proposal and say that this is perhaps not the year to eliminate new applications for freight facilities grants.

As other members have made clear, there are obvious climate change benefits in schemes of this nature; as Alison McInnes importantly made clear, there are obvious road safety benefits; but above all, there are jobs benefits, for both the retention of existing jobs and, crucially, the potential to create new ones. This evening's debate—unlike, perhaps, some members' business debates—should not result in just a bit of local propaganda. It points the way forward for the Parliament, in further consideration of next year's draft budget to look again at the whole idea.

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Alasdair Morgan (Scottish National Party)

At this point, I would be prepared to accept a motion without notice to extend the debate by 10 minutes to complete the business. I ask Cathy Jamieson to so move.

Motion moved,

That, under Rule 8.14.3, the debate be extended by up to 30 minutes.—[Cathy Jamieson.]

Motion agreed to.

5:42 pm
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Patrick Harvie (Green)

I add my thanks and congratulations to Cathy Jamieson for bringing the motion to the chamber for debate. I was happy to sign up to it almost as soon as it was lodged, and if the measure of cross-party support that has been built up so far can persuade the Government to change its position, that will be extremely constructive.

The freight action plan, which is available at the back of the chamber, was published before the current Administration came into office, so the current minister clearly cannot be held accountable for every word of its contents. However, it does give an accurate description of where things stood before the decision that we are debating today was made. Four grant schemes are listed, of which the freight facilities grant scheme is the principal one. It is clearly the principal means by which the previous Administration and the current one have attempted to achieve their stated objective to get modal shift in freight.

That is where we have to begin—with a recognition that no other mechanisms are being talked about. Chris Harvie's description of the experience in Germany included some sticks as well as some carrots, with some restriction on road freight. I do not think that I will surprise anybody by saying that I would be quite comfortable if we were talking about that as well as about some carrots, but the fact is that the Government has not brought in those alternatives.

I suspect that if the Cabinet Secretary for Finance and Sustainable Growth had come to the Transport, Infrastructure and Climate Change Committee a few weeks ago and said, "We don't think the freight facilities grant is working as it should, so here are some options for improving it," the committee would have found that a welcome conversation to have, and we might have had our own ideas about how it could be improved. However, that discussion did not happen. There was no discussion about how to improve the grant.

The cabinet secretary did say that the money had not been spent and that it had been difficult to get the money out the door, and he also complained about the budget reductions that the Government is suffering. I sympathise with that, but those things do not, in themselves, form a rationale for abolishing or closing to new applicants a scheme that is, as I said, the principal mechanism by which Government can achieve its stated objective. Instead, they form a rationale for asking how we can make the scheme better.

The size of the overall budget is not the only issue, albeit that it is, of course, an important one. The size of the cake is one important issue, but how it is sliced up is also important. Year after year, our committee has complained about the share of the transport budget that goes to increasing capacity and locking in high-carbon behaviour as opposed to assisting a transformation to low-carbon behaviour.

As Transform Scotland has argued, scrapping this grant scheme appears wholly inconsistent with the Government's policy objectives on climate change, sustainable economic development, environmental protection and road safety. That is one reason why such a broad range of voices is speaking out against the decision. We have heard business voices speaking out, as well as trade union voices, environmental voices and the voices of transport experts and a range of others. In the face of all of that, it seems astonishing that, instead of trying to make the scheme better, the Government has simply decided to abolish it.

I will close by talking about "Low Carbon Scotland: The Draft Report on Proposals and Policies", which we debated earlier this week and which is the Government's plan for meeting its climate change objectives. The report talks about financial

"incentives to encourage modal shift".

If that is the direction in which we are going, how can we approve a budget that takes us in the wrong direction? The Government says that those incentives are

"Dependent on cooperation of other bodies."

I suggest that, first of all, it is dependent on the intention of the Scottish Government and the budget that it brings to Parliament.

5:46 pm
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Hugh Henry (Labour)

I, too, thank Cathy Jamieson for the opportunity to debate this important issue. I also thank her for alerting me to something that I had overlooked completely: the proposal in the budget to remove this funding. When you look into the matter, it is startling to find that that has happened, given the relatively small amount of money it represents in the bigger scheme of things. In a sense, it is a no-brainer: we should support this grant scheme.

As Alison McInnes said, there is an environmental impact to putting freight back on to our roads. After the winter that we have had and the scenes that we have seen up and down the country—including of huge potholes, which councils are struggling to repair—do we seriously want to put more freight, by way of more lorries, on to our roads? I am talking not only about the impact on my own area in Renfrewshire but right across Scotland.

The FFG is a scheme of proven value. It takes lorry journeys off our roads and puts them on to rail. I spoke to Andrew Malcolm and Jim Clark at W H Malcolm, a Renfrewshire-based company, about the scheme and its value. The company has two sites that have benefited, at Elderslie and Grangemouth. They told me in particular about the 20 loads per day that the company is involved in taking up and down to Aberdeen. I think that Asda is a particularly big user of that service. Other members have spoken about Aberdeen. The consequences of putting that freight back on to our roads would be horrendous. W H Malcolm has two projects in the pipeline that would be threatened by the removal of the grant scheme. The projects are not in the west but the east of Scotland. The company has the capacity and ability to take yet more lorry loads off our Scottish roads and the UK network. We are talking about around 50 to 60 loads per day and journeys that range from 50 to 100 miles to Anglo-Scottish routes of up to 350 miles.

It is becoming difficult for many freight companies to operate in the current environment because of the recession and high costs. In these difficult times, and given that those companies are already struggling to survive, do we honestly expect them to find all the money to do something that benefits us all? Freight companies are not asking for anything that is unreasonable. No one is asking for long-term subsidies for rail. I think that the freight industry recognises that rail should ultimately be able to stand on its own feet and compete. We are talking about a relatively small amount of money to kick-start something that we will all benefit from.

I hope that there has been an oversight. I hope that it is just that when the officials were producing the figures, they did not give proper thought to the issue. Even at this late stage, I hope that, rather than have a confrontation over the budget to resolve the issue, common sense can prevail and the money be restored. If that happened, everyone would win.

5:50 pm
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Dr Richard Simpson (Labour)

I, too, congratulate Cathy Jamieson on securing the debate.

I welcome the new Minister for Transport and Infrastructure to his post. I want to tell him a little story. It is about a company that set up in Cowie in his constituency. When it set up, it was keen to use rail, and some of us argued at the time that with a small amount of what is now called mode shift revenue support, that would be possible. A railway siding was built at the works where the manufacturing process was to occur, but it was never used. The company is still going. It built a special road to access the area. Hundreds of lorries thunder up and down it. The story dates back to a time before climate change or the other issues that we have been hearing about today.

If we are serious that £7 million is too much to be our contribution to dealing with the huge global issues that we face, something is badly wrong. I hope that the closure of the FFG scheme is a mistake and that we can address the issue on an all-party basis.

In my area, Malcolm transport at Grangemouth has benefited enormously from taking lorry loads off the roads. As Charlie Gordon said, the Highland Spring proposal would take 10,000 lorries off the roads. Highland Spring has a £30 million expansion programme. It is not just the current lorries but the future ones. If we really are talking about the development of the economy, and if companies are going to be expanding, there will be more road traffic. If we can eliminate some of that road traffic now, it will at least arrest the problem with our roads and prevent increased carbon emissions.

The fact that the issue has united business with unions, some of which are, I think, quite far to the left, is fairly unique. They have come together and said that although the FFG is a small grant, they all feel that it should continue.

I will ask a couple of questions before I finish. I understand that out of the £68.9 million that the FFG scheme has taken out of our budget since 1997, £10.9 million has been contributed by the Department for Transport. I take it that if we abolish the grant we will lose any contribution from the DOT. Will the minister tell us whether that is the case?

Can he confirm that the mode shift revenue support grant will continue? If it does not, there are some borderline schemes in which there may be a return to road from rail.

Major projects like the Thornton rail extension in my constituency—I think that Christopher Harvie said that £46 million would be required—are for the future, when things are restored. I am not referring to such projects. We are talking about a modest grant—a small part of the budget—that can have a continuing significant impact. I therefore ask the minister to join us, to tell his budget colleagues about our support for the grant and ask them whether they could not think again.

5:54 pm
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Keith Brown (Scottish National Party)

Like other members, I congratulate Cathy Jamieson on securing the debate.

I think that it was Aneurin Bevan who said that politics is the language of priorities. Given members' arguments, I see the freight facilities grants scheme as a far higher priority than, for example, spending £500 million on the tram scheme in Edinburgh. It is a question of the priorities that we want to advance. I say that because the FFG scheme has without question played an important part in moving freight from road to rail and water by funding new freight facilities. As many members said, it has led to a reduction of millions of lorry miles in the past 10 years.

I join Cathy Jamieson and others in celebrating its success in delivering environmental benefits across Scotland. Many of the FFG-funded facilities will continue to remove lorries from Scotland's roads for years to come. On Richard Simpson's point, I confirm that the resource element will continue, so traffic that has been taken off the roads will not revert back on to them.

Like other members, we are clear about the FFG scheme's positive environmental impact. That is why its budget has totalled more than £40 million since 2007. During that time we have made FFG awards to seven projects. It would repay the members who are most interested, among whom I certainly include Charlie Gordon, to look at the history of the projects. Many projects that are talked about for many years do not come to fruition. The business case is sometimes not presented and, in some cases, an award is made that is not subsequently taken up. It is worth having a look at that information, which might go some way towards explaining the response that Charlie Gordon received at the committee from John Swinney on the take-up of grants so far.

The projects that have been successful include the daily Eddie Stobart-Tesco rail service to Inverness, which takes more than 270 lorry journeys off the A9 each week, and the innovative JST floating pier, which enables timber to be transported to sawmills by sea.

The nub of the situation is the UK Government's decision to cut the Scottish Government's budget by £1.3 billion in 2011-12. Whichever party members represent, they must agree that there is no question but that that presents a real financial challenge—a challenge that is without precedent since devolution. On top of that is the reduction of £800 million in the capital budget, which was hit particularly hard.

Members have said, with some justification, that, in the global scheme of those reductions of £800 million and £1.3 billion, the figures that we are talking about for the FFG scheme are small. However, we have to get the smaller figures to add up to achieve the huge cut. As Karen Whitefield said, we are in Scotland and we have to talk about Scotland. However, the money that we get comes from Westminster.

It is interesting to draw a comparison, because the Labour Party in England did not have the same scheme when it was in government. I think that the Labour Government in England spent £8 million on such grants over five years, whereas we have spent £40 million over a slightly shorter period. That shows a level of commitment to freight facilities grants that has not been replicated elsewhere.

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Hugh Henry (Labour)

The minister highlights a mistaken decision by Westminster-based politicians and a very correct decision made by ministers of the same party in Scotland.

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Keith Brown (Scottish National Party)

I acknowledge and welcome that intervention, but what has changed is the financial situation. I think that Hugh Henry would go on to say that that is the reason why we should continue to fund new projects, but we must recognise how much the financial situation has changed for Scotland in the interim.

We should remember the last words of the Chief Secretary to the Treasury in the previous Labour Government on leaving office: "There is no money." That is what his note said and that is what the Labour Party said. We are now dealing with the consequences of that and we have to live within our means.

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Michael McMahon (Labour)

Is the minister not missing the point? The freight facilities grants scheme in Scotland was much more flexible and operated in an entirely different way from the scheme in England. He continually talks about the situation in England when he has the power to continue with something that was working better here. That is his responsibility. No amount of talk from him about what happened in England will deflect from his responsibility to get his priorities right.

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Keith Brown (Scottish National Party)

Power is one thing, but resources are another. It would be useful if the member would acknowledge, even for one second, the disastrous effects of Labour's handling of the economy and the implications for budget lines across the whole budget in Scotland. It is true that, because there has been no progress so far on borrowing powers, we have to fund large projects, such as the Forth crossing, from current budgets. It is an impossible situation.

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Keith Brown (Scottish National Party)

I am sorry, but I have to make some progress. The new hospital in Glasgow is another project that will take a huge chunk out of a capital budget that has been substantially cut, leading to our having to make very difficult decisions. Of course, significant commitments are already in place, including the £1 million of FFG that we are committed to funding in 2011-12.

There have to be cuts somewhere and, reluctantly—

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Keith Brown (Scottish National Party)

I have to make some progress.

We have concluded that we cannot fund new FFG projects for the time being. We have allocated £2.9 million to support the freight industry in 2011-12, which enables us to continue to support significant modal shift across Scotland.

I understand the disappointment felt by those who have FFG projects in development, such as the promoters of the new railhead that Cathy Jamieson mentioned. As has been said, the FFG scheme is a discretionary grant scheme and applicants can never be certain of grant support during the project development stage. There is no formal application at that stage.

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Keith Brown (Scottish National Party)

Although I have already taken two interventions and do not have much time left, I will take the member's intervention provided that she is very brief.

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Cathy Jamieson (Labour)

Almost six minutes into his speech, I am glad that the minister has mentioned the Grangestone railhead. His predecessor was supportive of the project, on which a significant amount of money has been spent. What comfort can he give to people that the project might proceed?

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Keith Brown (Scottish National Party)

I have been trying to deal with that subject. Cathy Jamieson made the point in her speech that the FFG scheme is suspended, from which I think she took some comfort. The scheme in England has also been suspended for a number of years.

There is potential for change. I understand that the Tory-Lib Dem Government down south will look at the matter again in its budget. If that resulted in an increase in transport expenditure with which the FFG scheme could identify, consequential moneys would come to Scotland. We could benefit from that so we should keep the matter under review. Although we are unable to fund the scheme at the moment because of the draft budget, if additional moneys come in we can quickly go to projects that are ready to go. I ask people who are interested to continue to register their interest.

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Keith Brown (Scottish National Party)

No, I do not have time.

Charlie Gordon mentioned that there is another remedy, through the budget process. If he or Cathy Jamieson want to propose an amendment to the budget and say from where we could lose money, that is entirely within their gift, as it is within the gift of any party. Part of the remedy lies with others. If the priority attached to the scheme is as has been described, the Labour Party can make that move. The Conservative and Liberal Democrat parties can also bring pressure to bear on their colleagues south of the border. If we have that funding, we can continue to support FFG projects. Funding for FFG projects of £40 million over five years is substantially more than has been allocated elsewhere and gives an idea of our continuing commitment to such projects.

We also facilitate the sustainable transport of timber through the strategic timber transport fund, which has been allocated £3 million in the forthcoming year. In addition, we continue to fund other activity to help the freight industry to reduce emissions, such as the distribution of freight best practice information.

Remedies are available and the situation is not as bleak as it seemed at the start of the debate. I have confirmed that the scheme has been suspended, as it has been elsewhere, but there are other remedies. If others take different decisions to help us with the resource situation that we are in, the matter can be looked at again.

Meeting closed at 18:02.