Companies that currently use railways to move goods around the UK have said they will have to switch to the roads if rail cannot compete on price, according to the FTA.

The Freight Transport Association's Rail Freight Council was discussing proposals from the Office of Rail Regulation (ORR) at its quarterly council meeting in London this month.

The proposals, which could see charges to rail freight operators for accessing the network double in some cases, are in the process of consultation by ORR before it presents its advice to transport ministers in February.

As yet there are no firm proposals on the levels of charging, but the FTA has warned of a suggested rise from £100 million £130m a year.

In addition, the charges for freight-only lines - currently paid by the Department for Transport - could fall to the freight operators, indicating a rise from £14m currently to up to £120m, it said.

Other proposals include an environmental fee, a ‘scarcity’ or ‘reservation’ fee, and geographical breakdown of charges.

The FTA's deputy chief executive James Hookham said: “ORR appears to be approaching the issue of network charges with no consideration that rail freight operators must compete against other modes. Increases in charges to freight traffic as outlined in ORR’s proposals would have a devastating impact upon the industry. If it is beyond ORR’s remit to consider factors outside the rail network - although it is supposed to make considerations of affordability - then FTA looks to the Government to honour the commitments made in its statement to Parliament in July 2005 which indicated encouragement for the growth of rail freight.

“Rail freight has a critical role to play in the UK’s economy and a major contribution to make in reducing CO2 emissions in the future. But the margins are slight, and if we start seeing charges of the order being discussed by ORR then it is unsurprising that customers would be discouraged from using rail, or worse still that existing rail customers will move back to the already congested roads.”

The FTA claimed that both operators and customers remain unclear why this review is taking place at all. Freight charges were last reviewed in 2001 when they were supposed to be set until 2012 unless there was material change in circumstances, it said, adding that stability and affordability of access one of the Government’s pledges in its 2005 statement.

“Never mind the value of the charges. The industry needs certainty in the charging regime. If customers can’t be sure what the costs of rail are going to be five years hence, they are not going to be prepared to make the necessary infrastructure investment required to make use of the benefits in speed and service reliability that rail should be able to offer.” Hookham said.