J July 2020
BEIS COMMITTEE CALL FOR EVIDENCE: POST CORONAVIRUS-PANDEMIC ECONOMIC GROWTH RESPONSE FROM THE RAILWAY INDUSTRY ASSOCIATION (RIA) 1.
INTRODUCTION
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This submission constitutes the response from the Railway Industry Association (RIA) to the above call for evidence launched on 3 June 2020.
2.
BACKGROUND TO RIA
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RIA is the trade association for UK-based suppliers to the UK and world-wide railways. It has some 300 companies in membership covering all aspects of rolling stock and infrastructure supply and covering a diverse range of products and services. As well as the vast majority of the larger, multinational companies, 60% of RIA’s membership base is comprised of SMEs.
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The Oxford Economics 2018 report shows the UK rail sector contributes annually over £36 billion Gross Value Added (GVA) to the UK economy, employs 600,000 people and generates £11 billion in tax revenues. For every £1 spent on rail, £2.20 of income is generated in the wider economy, meaning rail is not just an important sector in its own right, but it is also crucial for UK plc, its economy and connectivity. Despite the Coronavirus pandemic, the long-term future of rail is positive – rail has been a growing industry since the 1990s and the number of rail journeys are expected to double in the next 25 years, along with significant growth in rail freight traffic. The full report Oxford Economics report can be accessed here.
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RIA provides its members with extensive services, including: • Representation of the supply industry’s interests to Government, Network Rail (NR), Transport for London (TfL), High Speed 2 (HS2), the Office of Rail & Road (ORR) and other key stakeholders • Providing opportunities for dialogue and networking between members, including a number of Special Interest Groups • Supply chain improvement initiatives • Provision of technical, commercial and political information every week • Export promotional activity, through briefings, visits overseas, hosting inwards visits • Organising UK presence at exhibitions overseas. Executive Summary • Restoring passenger confidence in public transport as the safest, cleanest and greenest form of transport is essential and will support sustainable growth. • Rail projects need to be sped up as part of the Government’s plans for the UK’s economic recovery following the Coronavirus outbreak. • In the recovery period, it is even more important for the rail supply chain to have certainty and visibility of upcoming work. • A 30-year plan for rail and funding certainty for devolved transport bodies will support this. • Reducing ‘boom and bust’ in rail infrastructure work banks and rolling stock will give rail supply businesses the confidence to invest in skills and training, innovation and equipment. • This will support the levelling up agenda creating opportunities across the UK. • Rail is the transport mode with the lowest greenhouse gas (GHG) emissions in the UK, achieving full decarbonisation in rail can support significant emission reductions in other transport modes through modal shift. 1 / 11
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The Government should support electrification, hydrogen, batteries and digital rail now in order to meet air quality and zero carbon goals by 2050. RIA is working with the Rail Supply Group, which is leading the industry’s response to Coronavirus, to review how delivery of the Rail Sector Deal can be accelerated to support the economic recovery and growth. Rail can make a significant contribution to exports both with the EU and international trading partners.
RIA SUBMISSION a) What core/ guiding principles should the Government adopt/ prioritise in its recovery package, and why? Government Ministers and rail clients including Network Rail, High Speed 2 Ltd and Crossrail have worked closely with the rail supply sector during the coronavirus response. This principle of close collaboration with the supply chain will remain key to an effective recovery maximizing the benefits of the rail sector for passengers and the wider economy. Long-term investment in rail infrastructure The UK rail industry successfully delivers a huge amount of work, day-in, day-out, to keep the country running and is working hard to manage an aging rail system. The UK rail network was one of the most intensively used in Europe before Coronavirus and past trends show that even though passenger traffic has reduced, numbers will return to past levels or higher in the coming years. The rail network needs sustained long term investment in maintenance, renewals and enhancements, to ensure the asset performs efficiently and delivers value for money for passengers whilst coping with growth. Indeed, the future success of the rail sector will be heavily reliant on this investment, as will overall UK economic prosperity. Economic Growth RIA believes that rail projects need to be sped up as part of the Government’s plans for the UK’s economic recovery following the Coronavirus outbreak. This is because rail projects have a vital role to play in the recovery – they provide green investment across towns, cities, and communities in the UK and can generate economic growth, investment and jobs. A guiding principle the Government should adopt in the recovery is ensuring as much work as possible can continue, including acceleration of rail (infrastructure and rolling stock) investment and major projects. Rail is already playing a key role in supporting the wider economy. Indeed, NR has been the single biggest contributor to UK capital investment (some 25%) during the Coronavirus pandemic. Where work can go ahead safely, it should continue to do so. Crucially, rail suppliers must have certainty and visibility of upcoming work so they can plan for and manage schemes with confidence and invest ahead in a more efficient manner in order to deliver value for money both for taxpayers and passengers. The Oxford Economics 2018 report shows that out of around 600,000 jobs supported by rail, the UK railway supply industry creates 248,900 jobs. Pipeline visibility and smooth work banks are regularly cited as the top priorities of businesses. This means major rail clients (NR, HS2, TfL and Train Operating Companies) must share their commercial pipeline of current and future projects with the supply chain. The Rail Supply Group (RSG) – who, earlier in 2020 were invited by Government to form a Coronavirus Taskforce – recently shared the findings of its independent research, carried out by Savanta ComRes, into the impact of the outbreak on businesses supplying the rail industry. In 2 / 11
total, 442 responses were completed via an online survey between 30 April and 18 May 2020 and 10 in-depth interviews were conducted. The main finding of the survey showed that cashflow and visibility of the pipeline of work across the rail sector are seen as vital, with rail supply businesses wanting sight of what work will be happening, when it will be happening and highlighting where plans have been altered as a result of the crisis. The survey also revealed that there is support for the continuation of the mechanisms NR has put in place to make payments quickly under PPN02/20 (‘suppliers at risk’), with many wanting to see this is replicated across the industry. The acceleration of schemes that are both ‘shovel ready’ (those that are ready to build) and ‘shovel worthy’ (those that are worth accelerating) will also help to ensure a sustained programme of schemes that support wider economic growth and the Government’s levelling-up and connectivity agendas. Decision-making on ‘shovel ready’ schemes needs to be sped up, with bureaucracy reduced, while design work on ‘shovel worthy’ schemes needs to continue in parallel. This will help avoid a hiatus in work for rail suppliers, which risks the loss of skills from the sector and disincentivises investment in people, process and plant. Decarbonisation – the role of rail in modal shift Even though rail is the transport mode with the lowest greenhouse gas (GHG) emissions in the UK (in 2018, GHG emissions from rail – passenger and freight – made up just 1.4% of the UK's domestic transport emissions), achieving full decarbonisation in rail can support significant emission reductions in other transport modes through modal shift. Alternatively, if support for rail is neglected carbon targets are unlikely to be achieved. The Office of Rail and Road (ORR) reported 152 billion net tonnes of freight were moved by road in 2018, compared to 17 billion net tonnes by rail, which means that only 8.9% of all goods were moved by rail in 2018. However, according to the DfT’s Rail Freight Strategy 2016, rail can deliver 76% emission reductions for freight compared with road (the average 25 tonne freight train has an equivalent payload to 70 HGVs). So there is a real opportunity to decarbonise the entire goods route delivery, not just the last mile, by shifting more freight onto rail. The rail industry is innovating with “into the city” concepts, bringing light goods to city centres without the use of vans and trucks. Furthermore, high-speed rail offers a viable replacement for some short-haul flights and long car journeys. Short distance commuter trains are also irreplaceable for high capacity passenger transfer in urban areas. This makes rail the only transport mode capable of moving both people and heavy goods using a zero-carbon solution. Rail, as the least carbon intensive mode of transport should therefore be at the heart of the Government’s recovery plans, with the knowledge that one tonne of carbon saved in 2020 translates into 30 tonnes saved by 2050. Connectivity The economic structure of the UK exhibits a wide dispersion in regional productivity levels between the South East, including London, and the rest of the country. Connectivity is widely recognised as a driver for economic growth. Adequate infrastructure provision would be instrumental in lowering regional disparities and balancing economic growth geographically, so that all parts of the UK can prosper in future. This supports the Government’s ‘levelling up’ agenda. Better connected towns and cities have deeper labour markets, greater competition and greater economies of scale, leading to higher growth and living standards. This is why it is right that the Government should support the development of major infrastructure projects like Northern
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Powerhouse Rail and the Midlands Rail Hub – to join up towns and cities more effectively, and enable them to pool their labour markets and economic strengths. To boost connectivity, it is vital that the Government builds on its economic strengths and commits to the funding and financing of Crossrail 2, East West Rail and the Cambridge-OxfordMilton Keynes Growth Corridor, and to connecting Northern Powerhouse Rail and Crossrail with HS2. This would align with the Government’s ‘build, build, build’ infrastructure agenda. The national impact of Transport for London’s (TfL) investment programme means: • Out of every pound spent on its investment programmes, up to 55p is received by workforces located outside of London. • 43,000 UK jobs are supported by TfL’s supply chain: 68% of which are outside of London. Over half of these jobs are related to the investment programme. • By spend, 55% of companies delivering the London Underground investment programme are located outside of London and utilising regional workforces to provide design, engineering and professional services. b) How can the Government borrow and/or invest to help the UK deliver on these principles? Economic Growth As mentioned above, rail can play a key role and help the Government’s ‘build, build, build’ infrastructure agenda and its economic ‘New Deal’. Rail schemes will be particularly effective in generating an economic bounce back because of the three Gs: • Growth: They generate significant investment – for every £1 spent on the rail network, £2.20 is generated in the wider economy. • Geography: They support investment in all regions and nations of the UK, including areas of social deprivation where investment and regeneration is urgently needed – supporting the Government’s ‘levelling up’ agenda. • Green: They promote a green mode of transport, ensuring the economic recovery is also a ‘green’ one. Therefore, rail is crucial in supporting the success of the wider UK economy as it has clearly demonstrated recently, in difficult lockdown conditions enabling key workers to get to workplaces. It has also shown it can continue to safely maintain and build track and train, essential to the UK’s connectivity and levelling-up agenda. Hence RIA suggests that there should be immediate support to invest in major new initiatives to provide solutions for the rail industry post Coronavirus, such as: • Providing grants for investment in rolling stock upgrades; • Supporting British world leading technology to significantly expand exports from the rail supply chain; • Faster automation of train control (ATC). Having left the EU, the UK can readily take world leadership in ATC, as it will not have to comply with the slower plans for introduction by the EU. Only recently, the Prime Minister himself sought the introduction of driverless trains as a condition of a future bailout of Transport for London (TfL); and • Improving productivity and lowering costs by eliminating unnecessary maintenance and inspection by better use of technology that enables live condition monitoring – an area in which the UK has world leading technology. Decarbonisation RIA has been actively lobbying and participating in various rail decarbonisation programmes, including: 4 / 11
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In March 2019, RIA published the Electrification Cost Challenge Report demonstrating that electrification can and is being delivered cost effectively at up to 50% the cost of some past projects; RIA was part of the Rail Industry Decarbonisation Taskforce and contributed to the report, published in July 2019; RIA has contributed to and supported NR’s Traction Decarbonisation Network Strategy, to be published in Summer 2020; and RIA is a founding partner of the UK Rail Research and Innovation Network (UKRRIN), a collaboration between academia and industry, aiming to provide a step-change in innovation in the sector and accelerate new technologies and products from research into market applications globally.
RIA is clear that decarbonisation will require a significant amount of rail electrification and zero carbon self-powered trains (e.g. battery and hydrogen fuel cell) for those parts of the network where electrification is not appropriate. RIA believes that electrification remains the optimum form of traction for an intensely used railway. Around 40% of the UK rail network is electrified - much less than comparable European countries which are typically 60% or more electrified. Electrification has a number of benefits, including costing less in the long term, reducing journey times, having less wear on the track, and being more environmentally friendly. RIA is calling for an immediate start to a rolling programme of rail electrification to enable the industry to deliver schemes at significantly lower cost, retain learning and skills, and incentivise investment to prepare for the level of activity that will be required from c2024 onwards to achieve net-zero carbon by 2050. Such a rolling programme of electrification would progressively lower the long-term operating costs of the railway towards European norms, while reducing further emissions from rail. RIA are also calling for fleet orders of zero-carbon trains to stimulate a UK capability in battery and hydrogen technology for both new and remanufactured trains and so that the industry can make the operational adaptations that only fleet level operation will allow. Traction Decarbonisation Network Strategy The Government should also welcome Network Rail’s Traction Decarbonisation Network Strategy (TDNS), which is due to be published later this year. This will address which of three technologies (battery, electric and hydrogen) should be deployed on the rail network, providing a map showing where they should be deployed on the UK network and a programme showing when these should be done. Green Growth RIA supports the Chancellor’s call for ‘shovel ready’ projects to help reboot a green economy post Coronavirus. We recommend the Government accelerate the 58 projects in its Rail Network Enhancements Pipeline (RNEP) and adopt the following approach to deliver on green growth and help achieve net zero emissions. • Procure zero carbon: include embodied carbon considerations in procurement specifications to leverage zero carbon rail fleet and infrastructure manufacturing and building capabilities; • Plan for zero carbon: start a rolling programme of rail electrification now; and • Support zero carbon innovation: support early introduction of hydrogen and battery powered train fleets as part of wider UK place, innovation, technology, and export strategies. Greater consideration of social value as part of public procurement would also provide a useful mechanism to emphasis social and environmental goals. 5 / 11
Public procurement and rolling stock RIA recommends that the Government review public procurement policy to ensure it remains relevant in a post-EU world, with a view to considering how it can incentivise local sourcing for rail procurement, including rolling stock procurement. This approach would support investment in skills, UK capability and rail supply chain growth. We also support reforming UK rolling stock (and infrastructure) procurement to ensure more weight is given to socio-economic criteria, by adopting ‘life-cycle’ costing, or ‘Best Price-Quality Ratio’ in all future rail procurements, with appropriate due diligence on ‘Value for Taxpayer’. This would help prioritise the UK supply chain and ensure rolling stock manufacturing delivers its true economic potential for the UK. This approach would align with the work being progressed through the Rail Sector Deal, which is looking at how to drive value, including social value, in rail procurement. This has identified key success factors, including solution quality, outcome-based specifications, whole life costing, employment and skills and community and legacy benefits. Delays to the Williams Review and franchising could further exacerbate ‘boom and bust’ in rolling stock manufacturing. We await clarity on the responsibilities of the expected new ‘guiding mind’ for rail, expected as part of the Williams Review, and recommend its remit includes development of a national rolling stock renewal plan, which is tied to the lifetime of fleets, rather than franchise renewal. This would help create stable, forecastable procurement, enabling rolling stock manufacturers to better prepare their investment and assess supply chain options. This approach would also provide more visibility and certainty to suppliers in the rolling stock refurbishment market, which has been significantly impacted by the substantial increase in new train order in recent years. c) What measures and support will businesses need to rebuild consumer confidence and stimulate growth that is sustainable, both economically and environmentally? For rail supply businesses, and indeed the wider rail industry, restoring passenger confidence in public transport as a safe, clean and green form of transport is essential – this will support sustainable growth, both economic and environmental. With an easing of lockdown restrictions, and pubs, restaurants, cinemas and more shops beginning to open from 4 July, it is important that train companies and the Government provide confidence to the travelling public that they can travel safely. For example, train companies are preparing for more people to start returning to the railways by publishing their Safer Travel Pledge to maximise space, boost cleaning, help with hygiene and improve information to ensure passengers can travel safely. For rail safety will always be paramount - building on rail’s record as the safest form of transport. As and when the time is right for the Government to ease lockdown restrictions further, and start to actively encourage more people to travel by rail, communications need to be clear and simple so they are easily understood by rail passengers. d) Whether the government should give a higher priority to environmental goals in future support? The UK is the first major economy to pass a net zero emissions law, which will require the UK to bring all greenhouse gas emissions to net zero by 2050. If the Government is serious about meeting this target, it should give environmental goals a higher priority in public investment and in its Green Book appraisal of proposed rail schemes, in particular on rail electrification (see Q2 above). Policy uncertainty is one of the major risk factors that currently hamper private infrastructure investment. 6 / 11
An overlay/timeline of complementary policy and investment decisions needed to achieve environmental goals is missing, e.g. the Government has set a target of 2040 for the removal of all diesel-only trains from the rail network with remaining part-diesel trains removed completely by 2050. Yet in recent years, there have been substantial orders for new and part diesel powered passenger trains, which have a 30-35-year asset life and hence takes their operational life beyond 2040. Similarly, there may be opportunities to repurpose/modernise diesel powered trains to run on other traction sources of energy such as battery, hydrogen, or dual fuel. This will require a 30 year plan supported by Government investment, particularly as this work needs to be accelerated to meet decarbonisation targets. A joined-up approach to Government policy and investment is essential, e.g. a programme of more rail infrastructure electrification would mean more trains powered by electric traction are needed. Similarly, where Government policy favours a move to greater use of alternative traction sources for some journeys, the green energy infrastructure required to support battery and hydrogen powered trains will need to be part of a wider Government strategy for a zero carbon economy. e) Whether the Government should prioritise certain sectors within its recovery package, and if so, what criteria should it use when making such decisions? What conditions, if any, should it attach to future support? Rail remains a key vehicle for Government investment; for every £1 spent on the rail network, £2.20 is generated in the wider economy. Rail projects including enhancements and renewals, are an essential part of the day-to-day work completed by the rail supply industry. Everything from upgrading stations, replacing track, introducing new signalling systems and installing digital technology to improving mainline travel and freight services. These works contribute to the delivery of a safe, efficient and reliable railway for passengers and freight services. This will support the supply chain through the current crisis and ensure the supply chain can deliver efficiently. The Government should therefore support rail investment projects by bringing forward renewals from the planned peak in 2022/23 to 2020/21 and committing to accelerate the 58 projects within the RNEP. One of the Government’s strategic priorities is to accelerate modal shift to public and active travel. Indeed, the Government wants public transport and active travel to be the natural first choice for daily activities. Encouraging modal shift from road to rail for everyday journeys commuting, leisure, and shopping - requires reliable and easily accessible rail services in cities and regions. This also allows for increase in active travel as people are more likely walk and cycle to a rail station. For that to happen investment in rail renewal and enhancement programmes need to be done in a timely and consistent manner. The Government is also keen to see greater delivery of passenger benefits. Greater political ambition for digital rail, including digital signalling and smart ticketing would accelerate the pace of benefits delivery. Both these digital solutions are proven and transforming rail journeys across the globe. The issue is not technological. A stronger top-down approach with the appropriate legislation and regulatory power to ensure operators adopt existing digital solutions to improve passengers’ journeys, across different modes of transport. The Digital Railway Pillar of the Rail Sector Deal is an excellent example of government and industry working together to address shared challenges, in this case how to affordably address the backlog of signalling renewals. In 2019 Network Rail developed a long term plan and in 2020 industry responded with a strategy and plan to achieve European benchmark costs or better. The 7 / 11
opportunity now is for government to ensure the necessary pilot projects are in place to support the industy to build up its capability and demonstrate its efficiency. SME support for innovation and product development RIA believes that part of the recovery support could be in funding of innovation and product development for the lower tiers of the rail industry, in support of the SME and smaller non-SME companies who have struggled the most during the pandemic. Having such funding would help ‘ideas’ get over the ‘valley of death’ (the phase between research and commercialisation), which would help speed products to market. f)
How can the Government best retain key skills and reskill and upskill the UK workforce to support the recovery and sustainable growth?
During coronavirus rail workers were rightly recognised as key workers. Rail offers a wide range of skilled career opportunities across the country and RIA believes that this should be more widely recognised and celebrated. However, the current system of rail investment creates periods of ‘boom and bust’ in infrastructure investment, which manifests itself in a see-saw profile in the way work comes to market, often requiring suppliers to increase their capacity at the start of the funding period, only to reduce it when they see a sharp drop-off in workload near the end. This creates uncertainty for the supply chain, impacting on recruitment, investment in skills and training, and in research and development. The rail supply chain needs consistency in rail investment, with visibility of a stable and smooth workload pipeline coming to market to give it the confidence to invest in plant, machinery, skills and training and innovation, all of which will deliver better services for passengers and freight users. While Government policy and planning cycles for rail focuses on five-year time horizons, the commercial reality is that business confidence in forward orders is low. A study by the National Skills Academy Rail (NSAR) found the average forward confidence of a rail supplier was between 11 and 24 months. The return on investment spending on skills and kit will be around three years plus. Hence the ‘boom and bust’ in work coming to the market makes it harder for rail supply businesses to justify investing in a three-year apprenticeship when there is no guarantee of work beyond year one. This dampens short-medium term investment in skills. Yet greater levels of investment in skills would help the industry drive efficiency and innovation, mitigate wage inflation arising from skills shortages, thereby achieving a longer-term financial benefit. The Government and the industry need to work together to ensure rail maintains and develops the number of engineers, technicians, and operational staff it needs to function successfully. Additionally, RIA would like to see more engineering/integration resource in the areas of signalling and mechanical and electrical equipment, vital to the successful delivery of major investment programmes such as HS2, London Underground and the Digital Railway. NSAR has identified the industry’s key skills areas are digital skills, cyber security’ systems engineering and leadership and management. The rail industry also needs to promote and attract more workers to help mitigate the impact of its ageing workforce. g) Is the Industrial Strategy still a relevant and appropriate vehicle through which to deliver post pandemic growth? Earlier this year, The Rail Supply Group, the joint Government-Industry leadership body for the UK rail supply sector, formed a Coronavirus Taskforce to spearhead and aid the recovery of the industry 8 / 11
from the effects of the Coronavirus crisis. The Taskforce is currently reviewing how delivery of the Rail Sector Deal (RSD) can be accelerated to support economic recovery and growth. In response to the findings of its recent survey on the impact of Coronavirus on the rail supply chain, the RSG has agreed three Act Now priorities: • Improve work pipeline visibility across the whole supply chain; • Increase access to rail performance data to allow better decision making and new services to be developed including improved customer information; and • Enhance railway access arrangements (known as possessions and blockades) to increase working hours and maximise productivity The RSD, launched in December 2018, sets out a new approach to the rail industry and the Government working in partnership to transform the rail sector by taking actions to increase the use of digital technology, boost productivity, double exports, improve the service received by those who use the railways and build the skills of the UK workforce to capitalise on these opportunities. The delivery of this RSD will equip the railway for its strategic role as a driver of economic growth and to provide a positive experience for passengers and freight users through this century and beyond. It will continue to provide a focus and impetus for the rail industry and Government, to work together and improve the rail infrastructure for the country, while supporting a faster recovery. The Digital Railway Pillar of the Rail Sector Deal is an excellent example of Government and industry working together to address shared challenges, in this case how to affordably address the backlog of signalling renewals. In 2019, Network Rail developed a long-term plan and in 2020 industry responded with a strategy and plan to achieve European benchmark costs or better. h) How should regional and local government in England, (including the role of powerhouses, LEPs and growth hubs, mayoralties, and councils) be reformed and better equipped to deliver growth locally? RIA recognises the move towards devolution of funding can be an effective way of prioritising transport asks and ensuring efficient delivery which reflects local interests. Sub-national and regional strategic transport bodies, such as Transport for the North, Transport for Wales and Midlands Connect, can help to ensure that transport projects are more closely linked with economic priorities. To be effective, however, it would be helpful if these bodies, including Transport for London, had longer term funding certainty. Coronavirus has hit local transport revenues and devolved budgets significantly. So, in order to support the levelling up agenda, including a sustainable rail sector, the Government needs to create funding certainty. For example, both NR regulatory settlements and franchise terms create periods of planning certainty: to unlock full growth and productivity potential Government needs to develop 30-year investment plans underpinned by clear, and democratically accountable funding settlements. It should start by publishing the delayed National Infrastructure Strategy and the Integrated Plan for the North as soon as possible – and by committing to bring forward schemes which have the greatest potential to benefit local passengers and regional economies. i)
What lessons should the Government learn from the pandemic about actions required to improve the UK’s resilience to future external shocks (including – but not limited to – health, financial, domestic and global supply chains and climate crises)?
The National Infrastructure Commission (NIC) published its report on resilience in May this year. The NIC considered events over the past few years that have exposed vulnerabilities, including the ‘beast from the east’ in 2018 and the rail timetable change in May 2018. The Anticipate-React9 / 11
Recover1 report sets out a new framework for resilience, including recommended changes to the system architecture, which needs to: • Anticipate – face uncomfortable truths; • Resist, absorb, recover – test for and address vulnerabilities; and • Adapt/ transform – drive adaptation and value resilience properly. The Commission consequently recommend that: • Government sets resilience standards; • Regulators oversee regular stress testing; • Infrastructure operators address vulnerabilities; • Infrastructure operators produce long-term resilience strategies; and • Regulators value resilience in decisions to support investment. These recommendations apply equally to rail as other economic sectors and RIA suggest that both NR, as the national rail infrastructure manager, and the ORR, as the regulator, give due consideration to the report findings. j)
What opportunities exist for the UK economy post Brexit and the pandemic for export growth?
RIA and its members have four key asks to help shape current and future UK trade negotiations: • Rail to continue to be included in the negotiation of free trade deals – UK rail exports are a real growth opportunity; • Access to an appropriately skilled workforce and mobility for skilled UK workers – the industry needs workers at all skills levels to support its ability to compete globally. Mobility supports UK exports of world class rail goods and services; • Consistent application of standards - RIA would want to see mutual recognition/ equivalence and non-discrimination as core principles in all our trade agreements. This would support the competitiveness of the UK rail supply sector and ensure economies of scale; and • Smooth cross border trade rules – which minimise cost and delay, which avoid trade distortionary tariffs. There will be opportunities to enhance existing and grow future UK rail exports post Exiting the EU Transition period and post pandemic, as the Government negotiates Free Trade Agreements with international trading partners, such as the US, Australia, New Zealand and Japan. RIA asks that the Government continues to recognise the important contribution rail can make to trade deals, both with the EU and international trading partners; and to recognise that rail supply companies would like access to markets so they can export their expertise, to the benefit of UK plc. According to the Oxford Economics Report, the total amount of rail-related exports goods and services amounts to £800 million a year – investment in rail both enables and helps suppliers to develop goods and services to be exported to markets around the world. This is a significant opportunity, with the global rail market estimated to be worth €163bn and expected to grow by over 2% each year until 2023. The Government and rail industry are already working closely together on the RSD, in which increasing rail exports is an important objective as part of the deal, with an aim of doubling exports by 2025. Some of the initiatives in the RSD to enhance rail exports are being offered by Government organisations, such as supplier references provided by NR for UK companies to include in their tender pitches, which is why RIA values continued support from the Department for International Trade (DIT). The DIT recognises and assists the rail sector in achieving these goals, using the full might of the UK’s diplomatic networks to promote sectors skills and expertise.
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See https://www.nic.org.uk/wp-content/uploads/Anticipate-React-Recover-28-May-2020.pdf
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The legacy of the UK’s railway engineering expertise can be seen around the world with many examples of world class innovation led by companies in the UK. These companies have the skills and experience to meet the design, equipment, operational and service needs of existing and future rail systems worldwide; and there are opportunities to do more. UK company involvement in UK infrastructure projects should act as a catalyst for export activity, helping demonstrate products, services, skills and innovation in current and new projects. Additionally, RIA’s ‘Unlocking Innovation’ programme aims to improve the railway supply chain’s capability to innovate with new technology, processes and business models to benefit the UK’s railways and grow exports. There are likely to be increasing exports opportunities around low/zero carbon expertise and the UK is recognised as a leader in this field. Moreover, the Government wants to harness the UK as a centre of expertise to drive low carbon innovation and travel behaviour. RIA therefore recommends the Government promote the UK’s zero carbon rail expertise and looks for opportunities to support UK rail companies to develop and export zero carbon ideas and initiatives. Since lockdown began in March, RIA has run a series of rail outreach webinars with trade advisers from the Department for International Trade covering key overseas markets, including Australia, New Zealand, Canada, Spain, Portugal, Austria, Switzerland, Finland, Sweden, Norway, Denmark and the Baltic States. We have also held a trade webinar with Department for International Trade Minister, Graham Stuart MP. This level of engagement shows the keen interest the rail supply industry has in accessing new overseas markets and growing existing ones. The Government should continue to provide financial support for trade promotion, to support export guarantees and look for opportunities to link UK aid to export opportunities where the UK can share its expertise with emerging economies. It is also worth considering that good connectivity also supports foreign direct investment in the UK, as well as additional inward investment from businesses already located here. This is because transport links are a key component of business location decisions (along with access to a skilled workforce). A successful inward investor can also become a successful UK exporter. If you would like further information, please email RIA’s Policy Director, Kate Jennings (kate.jennings@riagb.org.uk) or Senior Policy Manager, Damian Testa (damian.testa@riagb.org.uk).
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