UK rail can help spur the country’s future economy
Rail is central to the UK's economic ambitions, but the Government needs to give the industry more visibility and certainty of its plans.
It is clear that – when we move on from the Coronavirus pandemic – the Government will need industrial sectors which can help the country deliver its ‘Build Back Better’ agenda. It needs sectors which can stimulate economic growth, which can help level-up, which are sustainable and help secure Net Zero, and which can promote Global Britain and exports abroad. Welcome to the UK railway industry, which is just such a sector.
The Government’s Budget and Spending Review last month (October) then, was something of a missed opportunity for rail. Whilst there was a welcome £1.5bn for local transport schemes, which included rail, there was a distinct lack of clarity in the numbers about what is new and existing investment for UK rail in the months and years ahead. What are the exact figures ear-marked for operations, maintenance and renewals work going-forward; what is the actual budget available for railway upgrade and enhancement projects in the next three years?
There was also little sight of the much-awaited Integrated Rail Plan for the North & Midlands, which will set out how the Government plans to deliver major infrastructure projects like HS2’s Eastern Leg, the Midlands Rail Hub and Northern Powerhouse Rail. And the Government has still yet to set out how it wants to decarbonise the rail network, through further electrification and orders of battery and hydrogen trains – both of which are even more pertinent given the world’s eyes are on Glasgow for COP26 this month.
As you can see, this is not an ask for subsidies or tax cuts, the general call made by lobbying organisations around Budget time. We in the railway industry are simply seeking clarity on existing Government plans.
Health Check – positive outlook
This is all quite surprising, given that rail could and should be front and centre in the Government’s plans for economic growth and building back better. A recent study by independent researchers Oxford Economics, on behalf of the Railway Industry Association, showed that in 2019, before the pandemic, rail generated some £43 billion in economic growth (GVA), supported 710,000 jobs and produced £14 billion in tax. This was an increase of £7bn GVA, 110,000 jobs and £3bn Treasury revenue on just three years’ previous, showing how the railway industry was a vibrant and expanding sector before Coronavirus hit.
Of course, the past 18 months have been difficult for the industry, as passenger numbers fell during the lockdowns and restrictions. But during that time, rail showed itself to be an essential service, transporting key workers and resources around the country at a critical time. The industry worked hand-in-hand with Government and clients like Network Rail, HS2 and Transport for London to keep work going, and goods and freight moving.
As we now look to the future, there is increasing confidence that the rail industry can continue the story of growth set between 2016 and 2019. New polling by Savanta ComRes, published today and announced at RIA’s Annual Conference this morning, show a sector quickly bouncing back.
A survey of more than 260 UK railway business leaders found that optimism about the industry has returned to 2019 levels after a sharp dip in 2020, with 45% now predicting growth in the coming year. When asked about their own businesses, three in five (60%) predicted growth in the coming year compared to half (51%) in 2020.
The recent easing of restrictions has also had an impact. Passenger numbers have returned to 65% of pre-pandemic levels only a few months after all restrictions were eased, and freight has seen a particularly strong return to 100% of pre-pandemic levels. For rail suppliers, two in five (42%) say the easing of Coronavirus restrictions has improved their business outlook, while just 6% say the easing of restrictions has made their outlook worse.
Building Back Rail
Over the next two days, the UK rail supply community comes together for RIA’s Annual Conference. The theme for the Conference is ‘Build Back Better. Build Back Greener. Build Back Rail’ – a message that could not be clearer for Government.
The rail industry is ready to help lead the economic recovery post-Coronavirus, delivering green investment and jobs across the UK. But to do so, the sector needs visibility of the Government’s plans:
- Firstly, the Government needs to publish that Integrated Rail Plan, and the Rail Network Enhancements Pipeline, a list of some 60 rail projects around the UK (it has now been two years since the list was last produced);
- Secondly, we need to get on with rail decarbonisation to help the country hit Net Zero – a rolling programme of electrification and fleet orders of battery and hydrogen rolling stock;
- Thirdly, we need to start rolling out digital signalling, replacing 60% of older signalling equipment on the rail network within the next 15 years; and finally,
- Rail needs to be treated not just as a mode of transport, but as a major UK export too – rail sells some £600 million a year in goods and services abroad, and with the Government soon to publish a new Exports Strategy, this is a great opportunity to put rail at the heart of its international trade thinking alongside other growing sectors. Additionally, European rail trade association Unife has forecast that the railway industry is set to grow globally between 1 to 2.3% every year until 2025, worth over 200 billion euros – that really is a market and opportunity to aim for.
So as the economy emerges from the Coronavirus pandemic, rail really can play a central role in boosting the UK economy. There is clear evidence via the Oxford Economics report that UK rail was a vibrant, growing, sector before the pandemic; and there is now increasing confidence amongst rail businesses that the industry can deliver even more GVA, jobs and tax revenues for UK plc. We also shouldn’t forget that for every one pound spent on rail, £2.50 is generated in the wider economy – clear evidence of its wider catalytic and regenerative effect. And that internationally the rail market for our exporters is set to grow every year until the middle of this decade.
If Government can work with us, by providing greater clarity and certainty on upcoming work, major projects, delivering decarbonisation and digital signalling, and promoting rail’s role as an export, the UK railway industry really can help it go a long way in supporting ‘Build Back Better’.
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