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Sat, 6 June 2020

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If the new Chancellor wants to 'level up' UK rail, he needs to overcome five crunch points

If the new Chancellor wants to 'level up' UK rail, he needs to overcome five crunch points

Darren Caplan, Chief Executive | Railway Industry Association

4 min read Member content

In the Spring Budget, we have the chance to deliver a bigger and better rail sector, that can help bring investment to towns and communities across the UK, writes Darren Caplan, Chief Executive of the Railway Industry Association. 


All eyes will be on the new Chancellor in the coming weeks, as the Spring Budget is due to be presented on 11 March. With the Government keen to ‘level up’ the UK, much speculation has been made about possible infrastructure announcements and a National Infrastructure Strategy is due to be published too.

We have already seen the Government deliver on rail policy - with the green light given to HS2 on 11 February. This was a welcome decision for the Railway Industry Association (RIA), and its 300 members who build, maintain and upgrade the UK rail network. HS2 will unlock capacity across the rail system, freeing up the current network for more trains, and spurring jobs, investment and economic growth.

However, aside from the positive decision on HS2, our railways face a number of challenges over the coming few years. In our submission to the Chancellor, RIA identified five ‘crunch points’ – potential barriers to building a bigger, better rail network by 2024. These cover the entire industry, and when put together, could pose a significant challenge to the sector’s ability to deliver.

The first ‘crunch point’ is renewing the network – the work that takes place to replace the rail infrastructure like-for-like. Renewals are funded in five yearly cycles known as Control Periods, which – since the system was established – have suffered from ‘boom and bust’ cycles, with big upswings and downturns in workload. This makes it harder for rail businesses to deliver, reducing investment and jobs and adding up to 30% to costs.

The second is rail enhancements, or upgrades to the existing network. The rail sector has suffered from little visibility of upcoming enhancements, but in October 2019 the Government published a list of projects following lobbying from RIA and the industry. The list, however, has very few construction ready schemes, meaning little will be delivered by 2024. We’d urge the Government to speed up a number of schemes, if it is serious about increasing capacity.

Rolling stock is another area where a ‘crunch point’ could act as a barrier to investment. The next four years are likely to see a drop off in rolling stock orders, following a glut in the market over the past few years. This could be a serious issue for the industry, limiting the sector’s ability to deliver in the future. The Williams Rail Review into the structure of the industry is to be published soon too, and we would urge the Government to continue making investment decisions whilst the industry restructure takes place.

The fourth crunch point is around the sector’s ability to decarbonise. The Government has set the industry a challenge to decarbonise rail by 2040, yet it will struggle to do so without investment in electrification. With electrification work on Great Western Mainline recently finishing, and work on Midlands Mainline to be completed shortly, the UK could soon experience a hiatus in electrification work. If this happens, skills and expertise in the sector will go overseas or to other industries, making it harder to deliver when new electrification schemes come to market. Of course, the Government must also invest in new modes of traction, like hydrogen and battery technology too.

Finally, there is digitalisation. Over the next 15 years, 60% of the UK’s signalling equipment units require replacing. There is a big opportunity here to replace the life expired conventional signalling with new digital units that increase capacity and reliability. However, there is little work before a steep ramp up in 2024, which the sector may find difficult to deliver. We’d instead ask for some digital signalling work to be moved into the current funding cycle, Control Period 6, so the sector is ‘match fit’ to deliver this ambitious programme.

These crunch points do not require more funds from Government, but instead, often, a smoothing out in the way work comes to market. If we get this right, we have the chance to deliver a bigger and better rail sector, that can help bring investment to towns and communities across the UK. On 11 March, the Chancellor should seize the opportunity and deliver a Budget that ‘levels up’ UK rail.

 

RIA’s Submission to the Spring Budget can be found here

Read the most recent article written by Darren Caplan, Chief Executive - RIA welcomes Network Rail measures on supplier payments

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