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Network Rail announces ‘sweeping’ reform to attract private sector participation

31 Jul 2017

UK: Infrastructure manager Network Rail announced ‘sweeping new reforms’ on July 31 which are intended to enable third parties to become ‘heavily involved’ in delivering railway investment projects. At the same time it published the Unlocking rail investment – building confidence, reducing costs report commissioned from Professor Peter Hansford in December 2016. This makes 12 recommendations for increasing contestability with the aim of encouraging third party investment and infrastructure delivery.         

Network Rail’s reforms include:

  • By the end of 2017 Network Rail's routes will publish 'pipelines' of projects they want to put out to market, and will work with government on producing a list of opportunities for third parties. This would start with smaller projects such as new stations, depots and car parks, which will be used to develop best practice criteria for larger projects such as improved rail links to support power plants or projects funded by local transport authorities.
  • 'Third-party project champions' will work with delivery bodies, investors and funders to ensure projects are successful;
  • Service level agreements will provide third parties with clarity and reassurance regarding Network Rail's legal obligations;
  • Flexibility will be introduced to railway standards where Network Rail can 'encourage innovation and reduce costs' without compromising safety;
  • Money saved from introducing a new idea or innovation would be shared between Network Rail and the company or individual;
  • Potential investors will have choices over who delivers projects for them.

‘By welcoming open competition into the core of our business we will increase the pace of innovation, creativity and efficiency and could deliver even more improvements to our railway and for the people that use and rely on it’, said Network Rail CEO Mark Carne. ‘I am determined to create an environment where innovative third party companies can compete for and directly deliver railway projects. These reforms mark the next stage of Network Rail's transformation, having already decentralised into nine devolved individual businesses.’

Carne added that he was ‘determined to find ways for the private sector to directly invest in railway projects’, believing that by ‘unlocking private finance we can potentially deliver railway improvements that would otherwise not be possible’.

Darren Caplan, Chief Executive of the Railway Industry Association, said the body ‘strongly supports the view that greater contestability in the UK rail market would provide the opportunity and encouragement for third parties to invest in rail infrastructure improvements’, and was pleased that the Hansford review had addressed barriers to entry such as standards, scope control, complex business cases and funding agreements. ‘We all know that the industry has to change’, he said. ‘These changes mark a welcome, positive, approach from Network Rail which has previously resisted such radical steps.’

Balfour Beatty CEO Leo Quinn said the changes ‘should provide a steadier flow of investment, moving away from the stop-go nature of a regulatory cycle, and helping the rail supply chain to invest in the skilled workforce necessary to build  world-class railways.’

 

 The Hansford review: Unlocking rail investment – building confidence, reducing costs