UK: The Department for Transport has told the Transport Select Committee that service optimisation will be prioritised over infrastructure investment, but equivocation over future projects is already pushing rail suppliers to embrace export opportunities instead.
The Department for Transport has set out its position on funding rail enhancements ahead of the forthcoming Spending Review in a written submission to the House of Commons Transport Select Committee.
DfT was responding to the committee’s inquiry into rail investment pipelines, launched in December last year. The committee has been seeking to assess how far establishing clear investment pipelines could help end what it termed the ‘turbulent years of boom and bust in the rail supply industry and give more certainty to passengers, workers, suppliers and investors’.
In its written response released on April 29, DfT was unequivocal that its priority in the short to medium term will be to improve rail services through measures which do not involve major expenditure on new infrastructure or major route modernisation schemes.
‘Better connectivity by rail should only be delivered by infrastructure when cheaper interventions such as better staff and train utilisation, more staff, more trains and improved signalling, cannot deliver the improvement necessary’, DfT said. ‘It is important that we recognise that this is not always best achieved through infrastructure and that investment in the rail sector is made where it can make the greatest contribution to those missions.’
DfT defends pipeline delay
The submission also addresses the visibility of future rail investment through the Rail Network Enhancements Pipeline. The rail supply sector has been campaigning vociferously through the Railway Industry Association in recent months for the government to publish an update to RNEP, which was last formally issued in October 2019.
On April 12, RIA noted that there had been no update to RNEP for 2 000 days, with Chief Executive Darren Caplan commenting that ‘it is quite remarkable that we are still awaiting a schedule of rail schemes which railway suppliers can plan, invest and resource for’.
DfT said in its evidence to TSC that ‘the ability to provide a level of certainty via this transparency was due to relative economic and policy stability’ which enabled RNEP updates to be published in 2018 and 2019. ‘This was then severely disrupted by the Covid-19 pandemic, with the then government focusing on providing essential services. Since then, there has been an ongoing need to review investment plans, in light of the changes to the economy and transport demand, which has been a significant barrier to publishing further RNEP updates.
‘Instead, transparency is provided on a project and programme basis and through Network Rail’s Enhancements Delivery Plan updates published once a quarter and direct engagement with the industry and public on those individual projects and programmes.’
The department then went on to defend the funding available for rail improvements, while recognising that smaller businesses in the sector may not always get the visibility they desire. ‘Since the introduction of the RNEP approach in 2018, RNEP funding has averaged around £2bn per year. This level of funding has been secured at successive Spending Reviews, even in the face of fiscal constraint, in part because of the value seen in maintaining this funding consistency to support the economic growth benefits investment in rail enhancements can create.
‘Although it does not necessarily provide the same clarity to the entire supply chain, particularly tier 2 and 3 suppliers, this consistent and controlled pipeline has avoided a boom-and-bust approach, providing a steady flow of projects and funding to the supply chain.’
Strategies to come
The government say it remains committed to publishing a 10-year national infrastructure strategy in June 2025, which will include a pipeline of projects for investors and the supply chain. ‘This strategy will outline the government’s approach to core economic infrastructure, including transport, energy, water, flood risk management, digital, and waste’, DfT told the committee. ‘For the first time, it will also bring together plans for housing and social infrastructure, such as hospitals, schools, colleges and prisons. By providing stability and certainty to the market on the long-term plan for infrastructure, the strategy aims to drive growth and productivity.’
In addition, DfT said it ‘will publish a long-term rail strategy for when Great British Railways is established’. This ‘will set out the long-term strategic objectives for the new organisation and provide clarity over the long-term direction of travel for the industry. While it will not be a list of projects, the long-term rail strategy will provide confidence over key long-term priorities, allowing the supply chain to invest with greater confidence, unlocking both efficiency and innovation’.
Suppliers turn to exports
With little apparent prospect of the RNEP process being formally revived, UK rail supply companies are increasingly turning to export opportunities.
RIA held a workshop in London in early April to support SMEs in their ‘export journeys’. RIA told Rail Business UK that the event sold out within 24 h of launching, demonstrating the high level of interest from the UK rail supply chain to learn more about exporting and the available support.
Speakers included representatives from the Department for Business & Trade, UK Export Finance and Innovate UK. This was followed by an interactive session where SMEs including Anturas Consulting, FirstClass Safety & Control, Hird Group and PriestmanGoode shared their best practices and exporting experiences. Topics on the agenda included how far government, quangos and trade associations could support small businesses in rail exports, and how the barriers to export opportunities could be more effectively overcome.
RIA Exports Director Neil Walker said ‘events like this help to shape future activities and allow us to understand the concerns of SMEs as we look at new ways to support them. We hope to publish a paper soon to help form a narrative and influence the government’s support for UK exporting companies.’
