Mode Shift Grants Review

11/4/13 12:18 AM

FTA recently met with DfT where the subject of mode shift grants was discussed. Given recent discussion on the differences between mode shift grant schemes available for rail and for water freight, it was timely to discuss with DfT on the matter and other relevant detail.

  • EU State Aid clearances for both Mode Shift Revenue Support and Waterborne Freight Grants run out in March 2015. Decisions by UK Government have not yet been made about the future of freight grants post 2015. The State Aid clearances are granted to the UK Government as the currently constituted EU Member State, but for Scotland the administration of the schemes and budgets are devolved to the Scottish Government, likewise Wales.
    • FTA is in dialogue with DfT on the various issues and will update members on developments. FTA also maintains separate regular dialogue with the Scottish Government on matters of this policy within its separate control.
    • Consultants have been commissioned by DfT to interview stakeholders and grantees on efficacy of grants regime. This will help inform Ministers' decisions about the future of the schemes. FTA has contributed to this and is also helping the consultants in the area of road freight comparative costs.
  • After the Comprehensive Spending Review (CSR) in 2010, UK Government suspended the Freight Facilities Grant (FFG) scheme (for England) that gave cash incentives for businesses to take freight off congested roads and move it by rail or water. The scheme officially closed in England on January 2011.
  • DfT is continuing to support modal shift away from road to rail and water transport through the Mode Shift Revenue Support (MSRS) and Waterborne Freight Grant schemes (WFG).  The budget for the operating grants is £18.632m  for 2013 to 2014 and and is expected to be a similar amount for 2014 to 2015.
    • MSRS covers rail and inland waterways freight (not coastal / short sea water freight)
    • Coastal/short sea intermodal water freight is covered under WFG which has a separate EC State Aid Clearance from MSRS
    • MSRS and WFG are covered by separate EU State Aid clearances and hence operate under different rules
    • Unlike MSRS, WFG allows only one grant per company and operates in three declining periods
    • Guidance is available at https://www.gov.uk/government/organisations/department-for-transport/series/freight-grants
  • Scotland – the devolved administration of the schemes and budgets are as shown in the attached earlier circulated email. Please note Scotland retains FFG (re-instated after successful FTA led campaign)

Bulk and Waterways MSRS currently have two inland waterway grantees. WFG has a poor history of take up. Essentially this appears to be because the water freight grants regime (both MSRS and WFG) are designed around mainland European uses of water freight not the predominantly coastal or short sea nature of UK operations. UK Government has previously lobbied on the matter and the EC carried out a review questionnaire in 2012. FTA has taken part in a research survey that DfT is undertaking prior to this, and is in continuing dialogue with DfT. The research survey report is due by December, with report to Ministers by early 2014.

Obviously FTA would welcome feedback from members on their experiences of the mode shift grants regime delivering modal shift benefits as examples we can feed to DfT in their review.

Jackie Langridge