Freight companies face 25% hike in costs to pay for track wear and tear

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Rail freight operators will see their average charges jump by almost a quarter to help meet the costs of wear and tear on train tracks, under plans unveiled by the industry regulator.

The Office of Rail Regulation (ORR) said the freight sector was “flourishing”, saving some 6.7 million road journeys in 2008, but damage caused by freight traffic costs between £280 million and £400m each year.

Cathryn Ross, the ORR’s director of markets and economics, said freight companies “only pay a small proportion” – about 21 to 28 per cent – of those costs under the current charging regime, with passengers and taxpayers covering the shortfall.

She added: “The new charge will mean freight operators paying, at most, a third of the costs their services create. This will help to ease some of the burden from taxpayers’ and passengers’ shoulders.”

Following an industry consultation, the regulator will set a maximum cap of £1.68 per 1,000 gross tonne kilometre (kgtkm) on the average variable charge that companies will pay to access the rail network from 2016. That represents an increase of almost 25 per cent on the current cost of £1.36 per kgtkm.

The ORR is also introducing freight-specific charges, ranging from £2.96 per kgtm for iron ore to £11.64 per kgtm for 
nuclear fuel.

Maggie Simpson, executive director of industry body Rail Freight Group, said: “The sector is committed to increasing its efficiency and contributing to a lower cost railway. But significant increases in access charges risks destabilising the sector and forcing business back to road.”