Rail Links (Teesport)

– in Westminster Hall at 1:29 pm on 27th February 2007.

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Photo of Ashok Kumar Ashok Kumar PPS (Rt Hon Hilary Benn, Secretary of State), Department for International Development 1:29 pm, 27th February 2007

First, I thank Mr. Speaker for granting me this Adjournment debate, in which I wish to raise the current situation relating to the urgent need to upgrade rail links to and from Teesport. It is at the heart of the case for the development of the Teesport complex and for attracting much needed inward investment to the area.

I wish to say a few words about the complex, as it is an economic driver for both Teesside and the UK. Teesport is the second largest port in volume in the United Kingdom and the 10th largest in western Europe. In 2005 the port of Tees and Hartlepool handled 55 million tonnes of cargo and goods, representing almost 10 per cent. of UK ports' foreign and domestic traffic flow. In recent years the port has handled an increasing flow of container traffic. At present about 7.8 million 20-ft equivalent units—TEUs—of containers enter and leave the UK per annum. Owing to the growth in the manufacture of finished goods in the far east and the increasing demand for such goods in the UK, that level is expected to rise by 400,000 TEUs of containers a year. The UK's port facilities are currently incapable of absorbing that growth.

I am aware of the recent decisions to allow for port expansion at Felixstowe and Harwich and of the Minister being minded to approve the London gateway. PD Ports remains convinced that there is a strong commercial case for the expansion of Teesport, providing deep-water berthing in close proximity to major consumer markets. That would make a strong case to shippers and handling agents, particularly as it is estimated that more than 50 per cent. of all container traffic to the UK via ports in the south is destined for markets north of Birmingham.

The port has submitted an ambitious planning proposal to the local planning authority, Redcar and Cleveland council, and separately to the Department for Transport. The proposal is for a major expansion of the container side of the port's operations to provide new berths so that larger, more modern deep-sea container ships can call at Teesport. The development would be a big employment boost for Teesside and the north-east, bringing 500 highly skilled jobs and a further 2,000 direct and 3,000 indirect jobs. The port has had recent success in developing a riverside facility for Asda Wal-Mart, and in 2003 it invested £12 million in upgrading its container terminal. This is not just a pipe dream.

The key issue that I wish to raise is the concern about access to and from Teesport and the best way to improve it. There is no real argument about road access, but container traffic being transported by rail rather than on the roads is more environmentally friendly and allows for greater security of carriage. There are significant constraints that preclude full access between Teesport and the east coast main line and beyond. Those constraints must be overcome. They are not on the availability of train paths, as evidenced by the partnership between PD Ports and Corus, which set up a direct internal rail link between the steelworks complex and shipping berths, which released extra freight trains paths. The problem lies in the present gauge limitation on much of the UK rail system.

The rail lines near the port that connect with the east coast main line are at W8 standard, which allows only old, 8 ft 6 in-tall containers to be carried on standard intermodal rail wagons. Global shipping lines are increasingly utilising more modern containers, known as high-cube containers because they are 1 ft taller— 9 ft 6 in. That places Teesport at a disadvantage. The rest of the east coast main line is currently at W9 standard. High-cube, modern generation, 9 ft 6 in containers cannot travel on both W8 and W9 gauge tracks, but both W8 and W9 are adequate for use by freight trains with low-wheelbase well wagons and those known as low-profile pocket wagons. In its planning application details, PD Ports has assumed the use of such wagons to allow the inland transportation of modern, high-cube containers to and from the port by rail.

However, the use of low-liners or well wagons is not the optimum solution. The payload, or economic viability, of freight trains is reduced by low platform-height wagons. In addition, Network Rail has identified 20 obstacles on the gauge of the Tees valley rail line, including one major obstacle in the shape of a tunnel near Yarm. Those obstacles need to be removed in order to create a rail line that is cleared to W10 standard gauge. The issue is quantifiable in scale, scope and remediation costs. The trouble is that it has been bogged down in the excessive complexities of the national rail investment programme.

Initially, the former Strategic Rail Authority decided that the matter needed to be considered in the rail utilisation study for the entire east coast main line. That work has now been taken over by Network Rail, operating under the aegis of the Office of the Rail Regulator. The east coast main line route utilisation study and its parallel freight route utilisation study were part of a 2006 consultation process undertaken by Network Rail. I fear that the study was so wide ranging and involved so many major players that smaller improvements such as the one that I am advocating may get lost in the long grass.

I am aware that the Minister has visited Teesport and recognised the strength of PD Ports' case. I was pleased when he suggested that the best way forward would be to consider the issue through the mechanism of a transport innovation fund grant. A submission was made and in July last year the Teesport rail connection was listed as one of the contenders for possible funding. My right hon. Friend the Secretary of State for Transport then announced the outcome of the transport innovation fund application process to the House on 18 December last year. On the bid for the Teesport east coast main line link improvements, he said:

"The Teesport/east coast main line rail gauge enhancement scheme fitted well with our strategic approach, but the scheme was not sufficiently developed to enable an accurate appraisal to take place. Network Rail have, however, been working with the Northern Way and other stakeholders to develop a wider Northern "W10 gauge" strategy for routes to markets for the major northern ports, in which Teesport would be a key element. We look forward to seeing the outcome of this work."—[Hansard, 18 December 2006; Vol. 454, c. 135WS-136WS.]

I am not criticising the Secretary of State's decisions, which I have no doubt were based on intellectually sound advice from his civil servants. I am sure that the work that he described will go forward and be examined when it is ready. However, I emphasise my concern that easily identifiable improvements to relatively short stretches of the lines between Teesport and the east coast main line will be subsumed into a wider study. That study will encompass a far wider geographical area, perhaps considering ports as diverse as the Humber and Liverpool. It will also consider a wider W10 gauge approach, which will be long, complicated and costly to first understand and then hopefully implement. I am concerned that the process will make the simple improvements to the Tees valley rail programme that I have outlined much more difficult to attain.

Teesport is crucial to the national economy and the implementation of the proposals and investments from PD Ports, and it can create jobs and increase competition. Some thought should therefore be given to fast-tracking these matters. For once, cash is not a problem. I am aware that transport innovation funds require contributions from proposed beneficiaries, and provided that those are geographically ring-fenced within a reasonable distance from the port, I am sure that PD Ports will play its part in possible financing schemes.

However, speed is of the essence. The west coast main line has recently been upgraded to W12 gauge at the expense of the public purse and Network Rail, but that is not the case for the east coast main line. Both lines are equally important strategic rail links. The need for extra container handling capacity in the UK both at our ports and on our railways is an issue here and now. If we only build new ports in the south, our road and rail networks in and around the south-east will be jammed for ever. We need to quickly enhance rail links to this key northern port to ensure that it can fulfil its huge potential. I am sure that the managers of PD Ports would welcome another meeting with Ministers to look at some of the points I have highlighted.

I hope that the Minister will seriously consider making a helpful reply today and grant me a meeting to explore some of these ideas, because as I said, they are essential for the Tees valley, the north-east economy and the economy of our country.

Photo of Tom Harris Tom Harris Parliamentary Under-Secretary (Department for Transport) 1:42 pm, 27th February 2007

I congratulate my hon. Friend Dr. Kumar on securing this debate and providing an opportunity for the House to debate rail links to Teesport. He finished his speech by appealing for a positive response from me. In recent weeks I have been referred to as the Minister for Westminster Hall, and more latterly, as the Minister for "No". However, I will do everything I can to offer my hon. Friend some comfort, and if he has raised any points that I am unable to answer today, I would be more than happy to meet him and any relevant constituent interest he might wish to bring along at the Department for Transport.

Rod Eddington's review of the long-term impact of transport decisions on the UK's productivity, stability and growth has highlighted the role of freight and the fact that reliable freight journeys are key to enable the economy to function effectively as an increasing volume of imports supports the shift towards a service economy. As prosperity and the demand for goods grow, efficient freight transport is increasingly vital to the UK economy. Rail freight is a competitive private sector industry, and since privatisation in 1995, the levels of freight moved have increased by 66 per cent. in net tonnes per kilometre. Rail freight's market share also increased over the same period from 8.5 per cent. to 11.7 per cent.

The Government welcome that growth and wish to see it continue. Our rail freight policy statement to Parliament in July 2005 outlined our clear policy aim to see goods being moved in a sustainable way, which maximises benefits to the economy and to society. Rail and water freight can bring substantial benefits as they generally have less impact on society than road transport. In 2005-06, the rail freight industry moved the equivalent of 1.22 billion lorry kilometres, saving 6.74 million lorry journeys, and delivering significant reductions in pollution and congestion. We believe, therefore, that rail has a crucial role to play in goods transport alongside other modes, and we wish to see freight travelling by rail instead of road wherever this makes the most sense.

I apologise to you, Mr. Martlew. I am trying to shake off a cold, which probably explains why I turned a particularly unattractive shade of puce on the Front Bench yesterday while I tried to contain my coughing. I shall try to keep it under control.

We recognise that, compared with road freight, rail and water freight can reduce accidents and congestion on our roads, and can cut pollution and carbon emissions. To support the movement of freight traffic by rail and water instead of by road, we operate two grant schemes that are administered through the sustainable distribution fund. The two schemes are the freight facility grants scheme and the rail environmental benefit procurement scheme. The latter starts in April and will replace and build upon the successful track access grants and company neutral revenue support schemes that have been in place for some years.

To support the rail freight market we have previously announced that a resource budget of £18.5 million a year has been allocated for the sustainable distribution fund until 2009-10. That is designed to give industry certainty that the grants will be available for the duration of their normal contracts with customers. Some of those grants are used to support flows from Teesport. In particular, two significant flows of intermodal containers out of Teesport by rail continue to be supported under the company neutral revenue support scheme. The support, which amounts to about £250,000 a year, removes about 8,000 containers a year from the roads of the Tees valley. In addition, the Department awarded a track access grant for the movement of chemical products from Teesport to Workington in 2005, removing about 14,000 lorry journeys from the roads over a two-year period.

Of course, rail links are simply part of the logistics chain. Teesport is the second largest port in the UK by tonnage, and as such represents a crucial node in the UK supply network. Recent growth confirms it as a thriving port, especially in the bulk sectors. Teesport has ambitious plans to foster growth in its container traffic, as my hon. Friend said, and has prepared plans for development accordingly. As the port's applications in this respect are either under active consideration or soon will be, I cannot comment further on the proposals.

We are currently conducting the ports policy review, which we intend to conclude this summer. As part of the review, we will consider the many and varied responses to the consultation process, including those of the operators of Teesport. We will also consider the recommendations of the Select Committee on Transport, whose report on the ports industry in England and Wales was published at the end of January. Among other things, the review is looking at the policy frameworks that support port development and surface access. We are looking at the various modes on this issue, and have sought views in the consultation on encouraging modal shift.

The review has already shown that rail access is an important issue for UK ports. I am pleased to see how the rail freight industry has worked together to formulate the forecasts that have been used in the freight route utilisation strategy—the rail industry never uses one word when six will do—and Network Rail's other route utilisation strategies, as well as other parts of the rail industry planning process, including the high level output specification.

The forecasts cover the period until 2015 and indicate that rail freight growth will both continue and be concentrated on specific sectors, such as electricity supply, industry, coal and intermodal traffic to and from the UK's deep sea ports and in the construction market. In the next few years, the Government will complete a number of major projects aimed at enhancing the capacity and capability on the current network. These include the west coast project where enhancements such as the Trent valley four-tracking scheme will increase capacity for passenger and freight services and additional capability is being provided to accommodate further growth. That is just one of several schemes being taken forward by the Government and the industry to improve capacity.

However, despite record levels of investment, we recognise that capacity in some areas remains an issue. We remain convinced that in the short term significant benefits can be gained through making maximum use of the capacity available within the current railway network. Network Rail is taking forward a series of route utilisation strategies that will help achieve this objective, which aim to ensure that capacity is used as efficiently as possible and that demand and supply are as closely matched as they can be, while ensuring better performance and reliability.

The route utilisation strategy process also highlights areas where small-scale investments will enhance capacity and capability, some of which may be funded by the Network Rail discretionary fund and some of which may be incorporated into the high level output specification. Teesport falls within the area of the east coast main line route utilisation strategy, which has been the subject of a year's work by the rail industry and for which a consultation draft is expected in the next few months.

Although the majority of these route utilisation strategies cover passengers and freight in specific geographical areas, the specific network-wide needs of freight have also been recognised in the work undertaken for the freight RUS—the final version of which Network Rail plans to publish in March this year following consultation on the draft. The freight RUS consultation document shows the important role of both Tees and Hartlepool, and Redcar, as ports—centres of industrial and commercial activity. They are also the origin of rail freight flows to locations across the UK including power stations, inland rail terminals, metal processing and production facilities and, locally, the potash mines at Boulby and steel production facilities close to the docks.

The document also recommends further work on the evaluation of options for rail gauge enhancements on the route from Teesport to the east coast main line. During the next 18 months, the proposal will be taken forward by Network Rail, with support from the ports and the regional developments agencies, as part of a gauge evaluation package for the key northern rail routes.

Each Network Rail route utilisation strategy covers a period of about 10 years. In the longer term, the Government will continue to take forward a number of projects to enhance capacity, including the Thameslink project, for which we have recently received planning permission, and to whose further development we have allocated £30 million in advance of the outcome of this year's comprehensive spending review.

This year, our strategy on the high level output specification programme will set out our long-term expectations for rail. I should mention at this point that the high level output specification will not specify outputs for freight because the Government are not actually customers of the freight industry, but it will specify clearly what it expects from passenger rail during the next control period—from 2009 to 2014. One of the main considerations will be the capacity of the network and how to respond to the inevitable increases in demand. The document will specify passenger outputs and also draw on work done by the industry in the freight route utilisation strategy. That will take into account the reasonable requirements of freight to inform directly our demand models so that we can plan for passenger growth while keeping an informed eye on the needs of freight as well.

Given that rail projects can take a number of years to come to fruition, the Department will also consider the strategic direction for the railways over a longer period so that in the shaping of the first high level output specification we will be aware of the likely pressures and requirements in subsequent years. That will ensure that we do not carry out abortive works and that any renewals that occur are designed with the longer-term requirements in mind, which will save time and money when schemes are implemented in later years.

We recognise the importance of Teesport to the immediate locality and to the UK as a whole, and the strategic importance of its rail freight links to the east coast main line and beyond. We also welcome rail freight growth and wish it to continue across the country, including north-east England. The challenge for the future will be to develop the rail network to cater for such growth. I pay tribute once again to my hon. Friend the Member for Middlesbrough, South and East Cleveland, and thank him for raising the matter today.

Question put and agreed to.

Adjourned accordingly at eight minutes to Two o'clock.