Reported cut in grant funding for rail freight operators

Proposals announced recently by the Department for Transport may have a major impact on rail freight operators and force more lorries on to the roads. In 2016/17, a total of £19.9m was awarded to freight operators under the Mode Shift Revenue Support Scheme (MSRS). The grants are paid to rail freight operators to allow them to better compete with road haulage operators. It has been reported that this amount is to be cut to £15.7m in 2017/18 and cut further again to £15.2m in 2018/19.

The DfT has not indicated why it was planning to reduce the budget for the grant, or whether any mitigating measures were planned in the future This is a further challenge for a sector that has already been hit by traffic flow reductions arising from the run down of coal burning power stations and falls in steel traffic.

Conversely, analysts have estimated that the reduction in the grant will lead to approximately 190,000 additional HGV movements each year. Whilst on the surface this may seem like an opportunity for the road haulage sector, it will put further pressure on already scarce driver resources and the country’s road infrastructure.

For further assistance on how the changes may affect your logistics business, please get in touch with your local Hawsons contact. In addition, we are experienced in dealing with monitoring reports for a range of grant schemes in the transport sector.

Paul Wormald, Partner and Transport Specialist at Hawsons, had this to say: “The need for a co-ordinated freight strategy that utilises the best aspect of both road and rail is crucial to the efficient cost effective movement of goods around the UK. The MSRS Scheme has played a big role in encouraging inter-regional freight movements from road to rail. The planned reduction in the MSRS budget is unlikely to help develop further co-ordination between the two modes of transport, will provide further challenge for the rail freight sector, and put additional pressure on both our road infrastructure and scarce labour resources in the road haulage industry.”

Paul Wormald is a partner at Hawsons, working in the Doncaster office. He worked previously with two national firms of Chartered Accountants prior to joining Hawsons in 2001. For more information or advice on anything covered in this article, please contact Paul on pw@hawsons.co.uk or 01302 367 262.[/author_info]