The existing system which allows firms to claim grants - worth only pounds 6m - to help them invest in railheads is to be extended enabling grants to be paid for all forms of capital projects, including locomotives and track.
Grants will also be made available to private operators, as well as customers and hauliers and will be worth pounds 1 for every rural lorry mile saved, and pounds 1.50 per urban lorry mile. Grants will also be counted, for the first time, against mileage saved on motorways.
John MacGregor, the Secretary of State for Transport, said he wanted to 'halt the decline in freight by rail' and see more freight switch from road to rail.
In an even more dramatic U- turn, Mr MacGregor said he would give grants to subsidise freight hauliers to encourage them to use rail. Last year, BR's freight operations, which Mr MacGregor wants privatised, lost about pounds 50m and the Government has refused to provide any subsidy for these services.
The new grants, which will come into force in April 1994 when Railtrack is created, will be paid if hauliers can show that they could not afford to pay track charges for using rail under the new system after privatisation and if they can demonstrate that otherwise they would use road transport. In some cases, all of the track charges will be paid.
Mr MacGregor also gave details of the new track-charging regime. It will involve freight hauliers paying at least the costs they directly impose, such as track wear, and he said the Government expects that charges will be made on a 'commercial, freely negotiated basis' which will be 'market- based'.
This is to ensure that freight users make a contribution to track costs, but most will need the subsidies to enable them to keep using rail.
The Department of Transport has not put any value on these grants which will clearly involve new money from the Treasury and which may be at the expense of existing BR funding.
In a third concession, which has infuriated road hauliers but is designed to boost Channel tunnel rail freight, the Government is to consult on a proposal to allow 44- ton lorries, rather than the current 38-ton maximum, but only if they are taking containers to railheads.
The concession will apply only to a specified radius around each railhead and will come into force by the end of the year if the consultation is successful.
Sue Moody, of the Freight Transport Association, said: 'This will penalise road hauliers. Why doesn't he extend the 44-ton concession to all road hauliers which would save 480 million lorry miles each year?'
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