Closed call for evidence

Mode shift grants review

Updated 9 January 2024

This was published under the 2022 to 2024 Sunak Conservative government

Applies to England, Scotland and Wales

Introduction

The Department for Transport (DfT) is undertaking a comprehensive review of the Mode Shift Revenue Support (MSRS) and Waterborne Freight Grant (WFG) schemes. These schemes, which provide vital support for the freight industry, are expiring on 31 March 2025 and 31 March 2026 respectively.

This call for evidence is designed to play a pivotal role in shaping their potential successor(s). We invite stakeholders, experts and other interested parties to contribute their insights and evidence to inform this crucial process.  

The MSRS and WFG are aimed at promoting sustainable transportation solutions within the country’s freight industry. These grant programmes currently allocate about £20 million annually towards the MSRS and WFG schemes. Through these programmes, eligible businesses and freight operators receive financial incentives to adopt greener modes of transportation, such as rail and waterways. By encouraging freight companies and customers to explore alternative transportation methods, the government aims to reduce road congestion, decrease carbon emissions and create a more sustainable and resilient freight network that benefits both the economy and the environment.  

This call for evidence concerns the MSRS and WFG schemes and possible successors.  MSRS and WFG currently operate across Great Britain with DfT responsible for funding in England. DfT will share information with the Scottish and Welsh governments, which are responsible for funding related to operations and benefits accruing in Scotland and Wales.

These schemes have remained relatively unchanged since their inception due to adherence to EU state aid rules. The expiry of these schemes means any new schemes will be introduced under the UK’s new domestic subsidy control regime, the Subsidy Control Act 2022, which offers an opportunity to introduce more flexible policies in line with government priorities. This review will explore the potential for any successor scheme(s) to address any issues and challenges identified. The roles of schemes in achieving environmental benefits will be an important issue in the consideration of what approach to take.

Background information

The Mode Shift Revenue Support Scheme started in 2010 (in its current form). It assists companies with the operating costs associated with running rail or inland water freight transport instead of road where rail or inland waterway transport is more expensive and less polluting.

In 2022/23, MSRS helped remove 900,000 lorry journeys from Britain’s roads, saving almost 40,000 tonnes of carbon dioxide (CO2) emissions. MSRS grants are awarded through a competitive bid round process and applications are awarded funding on the basis of value for money. A significant proportion of MSRS applications qualifying for an award are within rail transport where the most supported movements are intermodal containers, but there are also some bulk products. Within intermodal, most movements are to or from ports, but there are also domestic movements. See Table 1 for more information.

Table 1: MSRS 2022/23 award (£) by flow type

Intermodal (such as containers) to or from ports (onto rail)	16,412,676	89.5%
Intermodal on domestic journeys (onto rail)	1,646,131	9.0%
Bulk commodities (onto rail)	275,945	1.5%
Bulk commodities (inland waterway)	0	0.0%
Total	18,334,752	100.0%

The Waterborne Freight Grant scheme started in 2004. It is a one-off grant designed to provide time-limited support for the inception of new coastal or short sea shipping services. The grant is paid over 3 equal periods (maximum of 3 years), but at a declining rate (50% applies to the first period, 33.3% to the second and 16.7% to the third). Applicants have to demonstrate that the service will be viable at the end of the grant. There were no flows supported by WFG during 2022/23.

Objectives

The primary objective of this call for evidence is to seek information about the experience of those who are using MSRS and WFG or alternative schemes. It seeks evidence and views about the development of potential successor schemes. It’s designed to gather insights, data and opinions from a wide range of stakeholders, especially those within the freight industry. It aims to understand the current commercial landscape, identify potential improvements and gauge industry needs to ensure the effective design of any potential future schemes. 

An enhanced evidence base will help to consider the options for any new or amended grants. In addition, DfT and its contractors will be seeking further information about freight costs from a range of industry sources to inform the technical development of the modelling that underpins the grant awards.

The evidence base generated by this call for evidence will, therefore, be used along with other relevant information to inform decisions that could include but are not limited to:

• whether a new successor scheme should be formed
• the appropriate allocation for such a  scheme
• how applications would be made
• the criteria for deciding and prioritising applications
• the criteria for calculating the value of grants
• the appropriate terms of any offers made
• how grants would be paid.

DfT is currently exploring the following options:

• option 1: closing the 2 freight grants schemes 

• option 2: continuing the schemes as they are with necessary modifications to meet the requirements of the UK’s domestic subsidy control regime

• option 3: continuing the schemes as they are with necessary modifications to meet the requirements of the UK’s domestic subsidy control regime and with additional changes 

• option 4: replacing the current schemes

Key topics

We invite responses on various aspects, including but not limited to: 

1. The effectiveness of the MSRS and WFG schemes in promoting mode shift.

2. Challenges faced by the transporters and customers in accessing and benefiting from these schemes and future-proofing the schemes as far as possible. The focus will be on how best to develop an effective temporary grant rate to react to unexpected circumstances such as sustained international supply chain disruption, congestion at ports or lorry driver shortages.

3. The impact of new vehicle technologies and alternative fuels:

a. How to respond to the uptake of electric, biofuel or hydrogen-powered heavy goods vehicles, which could significantly affect both price differentials between road and rail/water and also the environmental performance of the different modes.

b. How to respond to longer-term emerging technologies (for example, more automation of road vehicles).

4. Potential alternative funding options that align with  wider government environmental objectives, both revenue and capital schemes:

a. How could an increased funding envelope support a wider uptake of mode-shift behaviours?

b. Could an industry levy or voluntary support supplement or replace the grant schemes?

5. Grant interactions with commercial initiatives, capital investments and charges:

a. How can DfT help industry promote modal shift initiatives to improve their environmental footprint?

b. Consider whether it would be beneficial to revive the Freight Facilities Grant (FFG) in England, either in its original or a modernised format, to assist with the extra costs associated with moving freight by rail/water by offsetting the capital costs of providing rail/water freight handling facilities (Rail FFG is currently available in Scotland and Wales and Water FFG is available in Scotland). Read about how the FFG works in:

• Wales
• Scotland

6. Review of the bidding process:

a. Could the streamlining of existing bidding process reduce the workload on bidders?

b. Could an alternative bidding process assist operators?

Evidence 

Policy decisions cannot consider freight and logistics industry needs in isolation, but must do so in the context of all relevant government priorities, such as:

• impacts on other transport network users, the environment and local communities
• value for money for taxpayers

To make the case for a potential change or to justify keeping the existing scheme, and to meet the objectives set out above, we need to ensure we have high-quality quantitative and qualitative evidence. 

This could include: 

• quantitative evidence, including methodological details such as study year, source of the data, number and characteristics of respondents
• qualitative and statistical analysis of published documents
• results of consultative processes with networks and groups
• domestic and international best practice
• information relevant to show how important wider government’s priorities (such as for net zero, growing and levelling up the economy and improving the resilience of UK supply chains) have or have not been met in the past and how they could be met by a potential successor scheme

Interested parties are encouraged to submit written evidence that addresses the key areas of interest and specific questions outlined above.

Respondents should seek to provide examples of applications or other specific information to help us understand where efforts to deliver change may be best focused. Evidence as to why the current scheme failed to meet its desired objectives is likely to help inform the case for change. 

Stakeholder meetings are planned to gather insights from industry and others in person and supplement this call for evidence. If you wish to be involved in these, contact us at freightgrants@dft.gov.uk.

How to respond

The call for evidence period began on 4 December 2023 and will run until 2 February 2024. Please ensure that your response reaches us before the closing date.

The easiest way to respond is via the online questionnaire. You can find a link to the questionnaire in the Ways to respond section of the GOV.UK home page for this call for evidence.

If you cannot respond online, there is also a downloadable form and an email and postal address.

If you would like further copies of this document, it can be found at DfT consultations or requested by emailing freightgrants@dft.gov.uk. Please also contact us should you need alternative formats, such as Welsh, Braille, audio CD and large print. 

When responding, state whether you are responding as an individual or representing the views of an organisation. If responding on behalf of a larger organisation, make it clear who the organisation represents and, where applicable, how the views of members were assembled.

We do not expect you to submit evidence or views in response to every question listed if not applicable.

If you have any suggestions for others who may wish to be involved in this process, contact us at freightgrants@dft.gov.uk.

What happens next

The responses will be considered by DfT and inform our future work on the MSRS and WFG grant schemes. In particular, DfT will use this information to narrow down the 4 broad potential options for the future of the scheme. 

If you have questions about this consultation, email freightgrants@dft.gov.uk or write to:

Freight Grants Team
Department for Transport
Zone 3/03
Great Minster House
33 Horseferry Rd
London, SW1P 4DR

Full list of questions

These questions are listed here to give you an overview of what we are asking. Questions 4 to 15 apply to organisations only.

See the Ways to respond section of the GOV.UK home page for this consultation for an online response form and other ways to respond.

1. What is your name?

2. What is your email address?

3. Are you responding on behalf of an organisation?

4. What is the name of your organisation?

5. How many people work in your organisation?

6. Where are you located?

7. What best describes the type of organisation you work for?

8. What is the range of freight services you operate?

9. For which schemes do you consider your organisation eligible?

10. Have you previously applied for the MSRS scheme?

11. Have you previously applied for the WFG scheme?

12. Were you successful in your scheme applications?

13. What challenges, if any, did you encounter when applying for your scheme?

14. Were any of your applications successful?

15. How, if at all, have the schemes impacted your organisation and industry regarding modal shift and environmental outcome?

16. Do you agree or disagree that our schemes could benefit from being altered?

17. In your opinion, what changes could enhance the effectiveness of the existing scheme?

18. How in your view, if at all, could an effective temporary increase in grant rate be developed to respond to unexpected events?

19. How, in your view, can the mode shift grants effectively respond to the adoption of new vehicle technologies while preparing for the longer-term impact of emerging technologies?  

20. What additional areas, if any, do you think could be funded to promote environmentally sustainable freight?   

21. How in your view, if at all, would the reintroduction of the freight facilities grant in England help accelerate the transition to alternative sustainable modes of freight transportation?

22. How in your view, if at all, would the modernisation of the scheme, GB-wide, help accelerate the transition to alternative sustainable modes of freight transportation?

23. Do you have any other comments about these schemes?

24. Any other comments?

Consultation principles

The call for evidence is being conducted in line with the government’s key consultation principles. If you have any comments about the process, email consultation@dft.gov.uk.

Freedom of information 

Information provided in response to this call for evidence, including personal information, may be subject to publication or disclosure in accordance with the Freedom of Information Act 2000 (FOIA) or the Environmental Information Regulations 2004. 

If you want the information that you provide to be treated as confidential, please be aware that, under the FOIA, there is a statutory Code of Practice with which public authorities must comply and which deals, among other things, with obligations of confidence. 

In view of this, it would be helpful if you could explain to us why you regard the information you have provided as confidential. If we receive a request for disclosure of the information, we will take full account of your explanation, but we cannot give an assurance that confidentiality can be maintained in all circumstances. An automatic confidentiality disclaimer generated by your IT system will not, of itself, be regarded as binding on DfT. 

DfT will process your personal data in accordance with the Data Protection Act (DPA) and in the majority of circumstances this will mean that your personal data will not be disclosed to third parties. 

Confidentiality and data protection 

DfT is carrying out this call for evidence to gather evidence on modal shift freight grants in England, Scotland and Wales.     

This call for evidence and the processing of personal data that it entails is necessary for the exercise of our functions as a government department. If your answers contain any information that allows you to be identified, DfT will, under data protection law, be the controller for this information. 

As part of this call for evidence, we are asking for your name and email address. This is in case we need to ask you follow-up questions about any of your responses. You do not have to give us this personal information. If you do provide it, we will use it only for the purpose of asking follow-up questions. 

DfT’s privacy policy has more information about your rights in relation to your personal data, how to complain and how to contact the Data Protection Officer. 

To receive this information by telephone or post, contact us on 0300 330 3000 or write to:

Data Protection Officer 
Department for Transport 
3rd Floor 
One Priory Square 
Hasting 
East Sussex, TN34 1EA

Your information will be kept securely on secure IT systems within DfT and will be destroyed within 24 months after the consultation has been completed.