RIA Manifesto 2024: A fresh start for rail

A warm welcome...

The railway has been a foundation sector of the UK economy for nearly 200 years.

By connecting communities to employment, education, essential services and leisure opportunities, rail is an essential catalyst for economic growth and productivity, contributing £43bn to the economy and £14bn in tax revenues. In addition to growth required in London and the devolved nations, the National Infrastructure Commission has recently argued that insufficient rail capacity now risks holding back growth in and around English major cities, such as Birmingham, Manchester, Leeds and Bristol.

Rail has always been an enabler of social mobility, and today supports some 710,000 UK jobs, with high-skilled positions and apprenticeships located right across the country in diverse roles spanning engineering, logistics, digital or environmental, disciplines.

Furthermore, growing rail use is one of the quickest ways to reduce carbon emissions. Transport generates more carbon than any other sector, but rail is responsible for less than 2% of emissions. Boosting rail passengers and freight also helps reduce road congestion.

Future demand for rail is strong. Expert research by consultancy Steer in February found that rail passenger numbers are likely to grow between 37-97% by 2050, while Office for National Statistics projections show that the UK population will grow by 10% to almost 74m by 2036, meaning many more journeys.

...to a fresh start for rail

Our five asks of the next government

The next five years are a real opportunity to reset. We must take a long-term and strategic approach to invest in what the UK needs. Our asks – which will help reduce costs and improve services - are to:

1. Publish a long-term rail strategy – that plans for growth (pg 7)

2. Deliver on industry reform (pg 8)

3. Accelerate new train orders and low carbon network upgrades (pg 9)

4. Support a sustainable supply chain (pg 10)

5. Leverage private investment (pg 11)

First 100 days

Immediate action is also needed, and we set out our priorities for the first 100 days of a new government (pgs 12-13). These are to:

• Urgently bring forward orders of low-carbon rolling stock

• End the uncertainty and delays over rail reform

• Move the whole industry to focus on top line growth, not just bottom line cost efficiency

• Provide the foundations for long-term certainty and investment

The UK led the world in first developing the railways. Politicians of all parties now need to help the UK lead the world again, investing today to create the rail network we need for the future.

We look forward to working with you.

Darren Caplan

Darren Caplan, Chief Executive, RIA

Why rail matters

A key public service

Rail matters because of the value and opportunities it brings through sustainable economic growth and improving the quality of people’s lives. The popularity of new rail infrastructure, whether the Elizabeth Line or the Borders Railway in Scotland, reflects its important impact. The next government should encourage a move to rail to grow revenues. Fares and ticketing reform are key to this and delivering mobility as a service.

A catalyst for economic growth and productivity

‘The UK has a problem which transport investment, including rail, should help to address’ - National Infrastructure Commission, 2024.

The railway is a foundation sector contributing £42.9 billion to the UK economy (GVA). It has been a catalyst for growth, productivity, exports and investment for nearly two centuries. Recent research highlights that poor transport infrastructure is a key constraint on growth across the UK. The National Infrastructure Commission has shown how cities like Birmingham, Manchester, Leeds and Bristol have worse public transport than their European comparators. The Commission highlights that rail plays a crucial role in enabling trips to and between city centres, and that better connections can boost productivity through increasing access to high skilled labour and attracting new investment and firms.

A provider of highly skilled jobs

Rail brings highly skilled work to all regions of the country and supports around 710,000 jobs. The railway provides diverse career opportunities from data and mechanical engineering to retail and customer service roles. Rail projects have been providing thousands of apprenticeships and other local job opportunities, growing the skills of the workforce, often in deprived areas. Quality and well-paid rail jobs boost regional economies and communities. There is huge potential social value and training and upskilling opportunities in local areas.

Connecting communities and levelling up

Rail lines are threads which connect communities with access to education, employment, and leisure as well as linking remote and rural communities. Access to quality public transport boosts social mobility in the UK. Government research shows that a lack of transport can be a key barrier to employment, and reduces access to education, training, healthcare and other key services. Rail is uniquely well placed to allow large volumes of people to quickly access urban centres where many such opportunities are located.

A cleaner more sustainable mode of transport

Growing rail is one of the quickest and most cost-effective ways to reduce UK carbon emissions because it is one of the lowest carbon ways to travel. Transport now contributes more to UK greenhouse gas emissions than any other sector, so reducing this is key to achieving Net Zero. Growing rail can also reduce congestion pressures on road networks, making other people’s journeys more efficient too.

Emissions by transport mode per kilometer travelled (g)

Source: Department for Energy Security and Net Zero. 2023. Greenhouse gas reporting: conversion factors 2023

Passenger growth is exceeding all expectations, post-pandemic

Contrary to the popular narrative that rail passenger numbers have not recovered post-pandemic, passenger journeys made a significant recovery to 90% of their pre-pandemic levels by the end of 2023. Data from the Office of Rail and Road has shown that passenger journeys have increased in nine of the last eleven quarters, and it is expected that this trend will continue. The opening of the Elizabeth Line has demonstrated that investment in rail and infrastructure will lead to increased passenger demand for rail, with the 210 million journeys made in 2023/24 exceeding even the most optimistic post-pandemic predictions.

710,000 UK jobs supported

£2.50 generated in the wider economy from every £1 SPENT £

£1 4.1bn tax revenue generated

2,100 jobs generated per £100m of infrastructure spend

£42.9bn contributed to the UK economy (GVA)

38% higher than national average GVA per job

£48,979 average wage for transport sector employees

5 rail asks from Government

Source: Steer. 2024. Research on Long-Term Passenger Demand Growth

Publish a long-term rail strategy - that plans for growth

£1 of investment in rail already generates £2.50 of wider economic benefits. A long-term plan for rail can fully leverage this potential.

Given the life of rail assets can be many decades, a long-term strategy is essential to deliver a best value system. The strategic case for investment should be the most important question in making choices about rail projects. Decisions need to take account of the full impact on economic growth, connecting people with jobs and essential services, and decarbonising transport.

A clear plan for rail, beyond political cycles, is also needed to unlock the full economic and industrial potential of the supply chain. By planning effectively for the longer term, we reduce costs and help ensure healthy competition. Long-term certainty encourages investment and innovation by providing confidence for businesses to invest in the skills, equipment, and innovation to meet the needs of the future railway.

For all these reasons, rail decisions need to be made in the context of an overarching strategy, which is currently lacking. We are not alone in making this case – The National Infrastructure Commission says that a long-term plan is imperative and that “The government should bring forward a comprehensive and long-term plan for rail as part of an integrated interurban transport strategy”.

With a pressing challenge to decarbonise transport networks, the long-term plan needs to build on the recent Government commitment to grow freight by 75% to 2050 and should also set ambitious targets for sustained passenger growth, which has the potential to double by 2050. This is a huge opportunity that also requires significant forward planning, so that potential passengers are attracted to make full use of a modern, accessible and low-carbon public transport network.

‘A clear plan for rail, beyond political cycles, is needed to unlock the full economic and industrial potential of the supply chain.’

Deliver on industry reform

Rail reform can generate annual savings of £1.5 billion. Bringing track and train together will deliver a better and more efficient railway.

To get the best railway, it needs to be planned as a whole system, across track and train. The proposed reforms present a real opportunity to provide a better structure, and we have set out five tests for Great British Railways to ensure the restructure is a success:

• No hiatus in current work: The majority of Network Rail’s spend is with the private sector - there cannot be a pause in this work;

• Transparency: Be clear and transparent with rail suppliers, to allow them to deliver and invest;

• Partnership: Be an open and accessible client, and partner with the private sector for the best results;

• Productivity: Ensure the rail industry is able to thrive - financial sustainability will ensure rail delivers for UK plc; and

• Ambition: Leave a positive legacy, including in safety, decarbonisation, exports and the economy.

Six years on from the commissioning of the Williams Review, reform needs to happen soon, and in a planned way, removing ongoing uncertainty over the future structure of the sector. Businesses need to see a clear and realistic timetable to implement reforms.

It is urgent to improve incentives to grow industry revenues, which will support a financially sustainable railway. The focus in recent years on short-term cost management with tight control by central government risks eroding future revenues by undermining the quality of service. There needs to be a strategy to grow revenues sustainably over the longer term which will require strong and aligned incentives across the industry and commercial expertise in serving customers.

‘To get the best railway, it needs to be planned as a whole system, across track and train.’

Getting the relationship right between the Department for Transport and Great British Railways is fundamental for success. There must be clearly defined responsibilities, with the Department’s role focusing on strategic oversight and being held to account. To unlock innovation, operational railway decisions need greater separation from day-to-day government interference. Businesses need freedom to try new approaches to help attract passengers, for example, through modernising ticketing or dynamic timetabling.

Rail reform legislation should be brought forward in Parliament as soon as possible, along with clear proposals for the Great British Railways operating model and licence. RIA has worked with the Transport Select Committee to suggest practical improvements to the draft legislation and is ready continue to provide advice on implementing reforms in a way that will get the best value from the supply chain.

‘An order for a fleet of battery-electric trains should be accelerated as a matter of priority to bring forward benefits at no additional cost to the public purse.’

3 Accelerate new train orders and low carbon network upgrades

£1.7bn value of manufacture and maintenance of rolling stock.

In April 2024 RIA published a strategy to deliver a lower cost, higher performing Net Zero railway by 2050. It builds on existing Government rail commitments and sets out how a co-ordinated ‘track and train’ approach could improve outcomes for passenger and freight users, taxpayers and the supply chain.

RIA’s plan fast-tracks benefits by focusing on quick-win opportunities to reduce carbon and boost air quality. It will also improve performance by introducing newer and more reliable trains, while achieving lower costs and greater economic benefits and reduce ‘boom and bust’ for the rail supply sector.

• Current Government plans will increase the proportion of the UK rail network which is electrified from 38% to 51%. RIA’s strategy identifies a further 15% of routes which if electrified could decarbonise 100% of passenger services and 95% of freight services.

• A third of the network does not need to be electrified and can be decarbonised now with battery trains. An order for a fleet of battery-electric trains should be accelerated as a matter of priority to bring forward benefits at no additional cost to the public purse.

• Ongoing uncertainty around future UK rail manufacturing capacity highlights the need for a more consistent pipeline of work for infrastructure and rolling stock.

RIA’s analysis provides an ‘art of the possible’ strategy for the Government and the railway industry. Ordering a fleet of battery-electric trains, a strategic and a consistent approach to electrification and quick green wins on less intensively used routes, can all help achieve a more efficient and low-carbon railway by 2050. Considering this as a ‘track and train’ strategy allows us to permanently lower the cost of running the railway.

Support a sustainable supply chain

The rail sector’s total contribution to the UK economy is £43 billion.

Over half of all rail expenditure in the UK is spent through companies in the supply chain. A steady and visible work pipeline for rail infrastructure saves taxpayers money. Changing plans often increases overall costs, especially if done at short notice or in a piecemeal way.

Visibility of, and confidence in, a relatively stable future pipeline of work allows suppliers to ensure there are appropriately trained staff and equipment ready to deliver. It also helps ensure healthy competition. In contrast, a ‘boom and bust’ investment profile increases the cost of work and undermines the job security of a highly skilled workforce. For example, Germany has a steadier, rolling programme of electrification, with costs around 40% lower than in the UK.

‘Having certainty over the long term pipeline of rail enhancements and renewals is important… it gives confidence to the supply chain to invest in the capacity and capability to deliver these projects, ultimately driving down unit costs’ - National Infrastructure Commission, 2024.

At present, companies in the rail sector do not know which enhancement projects will happen, when, or what funding is allocated. Only Government is in a position to look across the whole portfolio to schedule and sequence work to optimise the efficiency of the supply chain. It is now over four years since the Rail Network Enhancements Pipeline (RNEP) was last published, and a clear pipeline is urgently needed.

As well as reducing supply chain costs, a clear pipeline enables local authorities to co-invest around rail improvements to support regeneration, giving an even greater return on the investment. It also helps send a clear signal to the market, which can attract private sector investment.

Government needs to re-build trust that such a pipeline is a reliable commitment, for example, looking at institutional mechanisms that give greater confidence that once committed schemes will go ahead and cannot be cancelled without full consultation.

To get best value from the supply chain, Government

Leverage private investment

Over £20 billion of private finance has been invested in rolling stock since 1995

While private finance has been deployed successfully in the UK rolling stock market for many years, there is no clearly articulated Government strategy to bring wider private investment into the railway.

In the latest year, 8 per cent of new rail investment was privately funded, but two thirds of this was rolling stock, with only 2.5 per cent invested in all the other areas involved in running the railway.

The benefits of unlocking further investment, including private finance and even private funding sources, could be significant: bringing forward investments earlier, encouraging innovation, greater long-term certainty through longer contracts, and introducing market discipline (sharing the risk of cost overruns). Private investment could help bring forward much needed schemes in diverse areas spanning stations, electrification, digital signalling, new rail links, freight depots, renewable energy, and other innovative technologies.

National Government funding continues to be a central pillar of the railway and has remained relatively consistent over the last few control periods. Other options, including best practice from overseas, should be consider to attract third party investment.

Government rules and decisions in this area are currently opaque and lack the transparency and certainty that the private sector needs to invest and innovate. The experience of recent years has shown it is often very difficult to secure approval. Government’s role needs to switch from just being a gatekeeper, to also act as a facilitator of private investment, setting out a clear playbook for how and where private investment can be used in rail. Our research shows the need for:

• A clear Government policy on rail and private investment to provide certainty of approach and confidence for investors;

• More pathfinder projects and a streamlined approach around rail investment scheme opportunities;

• Professional market engagement and a targeted review of procurement practices, in order to unlock innovation to ensure the private sector can support public sector objectives; and

• Fair comparison of the costs and benefits of private finance, with public borrowing Government appraisal methodologies, need to explicitly assess the potential benefits of using private finance.

Private investment into the rail industry has actually been diminishing since 2017-18, largely - but not only

First 100 days of a new Government: priorities

Urgently bring forward orders of low-carbon rolling stock

• To avoid factory closures and job losses, bring forward orders of battery-electric trains which will be needed under any scenario to help decarbonise the rail network, and will also help lower the running costs of the railway.

End the uncertainty and delays over rail reform

• Include the rail reform bill in the King’s Speech, including legal commitments to publish a long-term strategy and pipeline of projects.

• Publish a clear timescale for all the steps necessary to fully establish Great British Railways.

• Begin an open consultation on a draft licence and operating model for Great British Railways.

Move the whole industry to focus on top line growth, not just bottom line cost efficiency

• Incentivise Train Operating Companies to grow revenues through their contracts, and ensure commercial skills are retained within the industry.

• Immediately roll-out innovative pilots of new approaches to ticketing.

• Commit to fares reform, with a clear timeline to simplify ticketing and grow ridership.

• Spending decisions should be evaluated on the basis of the long-term value and sustainability of the rail network and not short-term costs.

Provide the foundations for long-term certainty and investment

• Set a firm date for consulting on and finalising a comprehensive long-term strategy for rail, to be completed within the first 12 months of the new government.

• Publish the indicative rail enhancements pipeline, which was last seen in 2019, clarifying the status of schemes’ business case development and funding approval.

• Start developing a clear policy on rail and private investment, which should be developed in collaboration between government, industry and investors.

• Set out institutional reforms so that major infrastructure schemes do not face frequent or short notice changes in scope, which are always costly.

About RIAhow we can help

The Railway Industry Association (RIA) is the national trade association for UK-based suppliers to the UK and world-wide railways. It has over 360 companies in membership representing the full range of UK rail disciplines, including all aspects of rolling stock and infrastructure supply and a diverse range of products and services. As well as most of the Tier 1 contractors and large, multi-national companies, over 60% of RIA’s membership base is comprised of Small and Medium-Sized Enterprises (SMEs). RIA’s supplier members represent the full range of UK rail disciplines, including working on renewals, enhancements, rolling stock, signalling, electrification, and retail.

RIA’s policy and public affairs teams provide briefings, reports and analysis to support politicians, decision-makers and industry stakeholders on key rail infrastructure and supplier issues. RIA’s export team organises regular trade missions around the world.

The RIA Rail Fellowship Programme helps to educate politicians on the sector’s crucial importance to the UK by placing them at state-of-the-art sites where highly skilled rail professionals showcase the fascinating work they do for the industry.

If you are interested in joining the Fellowship Programme please contact RIA Public Affairs & PR Executive Annabel Parker on Annabel.parker@riagb.org.uk or on 020 7201 0777.