RIA Submission to the Transport Committee's IRP inquiry

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RIA Submission: Transport Select Committee Inquiry into the Integrated Rail Plan January 2022 1. INTRODUCTION 1.1. This submission constitutes the response from the Railway Industry Association (RIA) to the Transport Committee’s inquiry into the Integrated Rail Plan (IRP). 1.2. RIA is the trade association for UK-based suppliers to the UK and world-wide railways. It has over 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 most of the Tier 1 contractors and large, multi-national companies, over 60% of RIA’s membership base is comprised of SMEs, based across the UK. 1.3. RIA’s 2021 Oxford Economics report shows that the UK rail sector was growing before the Coronavirus pandemic, with the rail industry supporting £43 billion Gross Value Added in economic growth compared to £36.5 billion in 2016, 710,000 jobs - compared to 600,000 in 2016, and £14 billion in tax revenue compared to £11 billion in 2016. The report also shows that the rail sector is an economic catalyst – for every £1 spent in rail, £2.50 of income is generated in the wider economy.1 1.4. In the submission below, we have set out the main implications for the rail supply chain from the publication of the IRP and have therefore not answered some of the questions set out. 2. EXECUTIVE SUMMARY 2.1 The IRP was published by the Department for Transport in November 2021, setting out the Government’s plans for rail investment in the North and Midlands. This was nearly a year after it was expected. Its publication, in and of itself, at least ended the uncertainty about what it contained. 2.2 It confirmed £96bn of funding, including around £35bn of new funding, for the delivery of HS2 Phase 1, 2a and 2b Western Leg, a revised Northern Powerhouse Rail and full electrification of the Midland Main Line (MML) and Transpennine Route Upgrade (TRU). Upgrades to the East Coast Main Line alongside a number of other smaller schemes, were included. 2.3 Whilst the funding included in the IRP is welcome, RIA and our members were disappointed to see yet further major changes to plans for the railways in the North and Midlands. We highlighted that it is difficult to see the IRP as anything other than a piecemeal approach to national strategic railway planning2 - given it was only in 2020 that Prime Minister Boris Johnson and the Cabinet publicly supported delivering the HS2 and Northern Powerhouse Rail schemes in full, given the capacity, connectivity and economic benefits they bring. 2.4 Even if the Government claims in the IRP it can deliver benefits more quickly with upgrades to the current network, there are questions over how certain the railway industry can be that the IRP will actually be delivered. There is particular uncertainty amongst rail businesses given the changes to past rail investment plans. It was also a concern that the evidence to underpin the Government claims on timings, capacity and pace have not been made available. 2.5 Whatever schemes do proceed, RIA and rail businesses will of course work with the Government to take them forward, yet such changes to investment plans every few years hinders the ability 1 2

The Economic Contribution of UK Rail, Oxford Economics, September 2021 Rail industry responds to 'piecemeal' Integrated Rail Plan, RIA, November 2021

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RIA Submission: Transport Select Committee Inquiry into the Integrated Rail Plan January 2022 of the rail supply sector to prepare for upcoming work, ultimately impacting its ability to deliver effectively, to budget and time. 2.6 The IRP has seen a number of schemes moved to the Rail Network Enhancements Pipeline (RNEP), which has not been updated in more than two years. The IRP’s publication means there is a greater need for the RNEP to be published and for the sector to have visibility of upcoming work. 2.7 Delivery of the IRP will require careful planning to avoid passenger disruption and is unlikely to provide the necessary capacity for freight. It is likely that HS2’s Eastern Leg and the full Northern Powerhouse Rail scheme will be required in future, even with the proposed changes in the IRP. The Government should continue to examine the business case for both these schemes to be delivered in full. Recommendations: • The Government should seek in future to take a more strategic and engaged approach to rail investment, providing the sector with long-term confidence to plan and invest. • The Government should publish the Rail Network Enhancements Pipeline (RNEP) urgently, providing confirmation of the key IRP upgrades it intends to deliver and clear timeframes. • The delivery of key schemes in the Integrated Rail Plan should begin as soon as possible, working with the rail supply sector to ensure work is cost-effective. • The Government should continue examining the case for building the full HS2 Eastern Leg to Leeds and Northern Powerhouse Rail in full. • RIA welcomes progress on electrification, but a sustainable, rolling programme of work is required, alongside fleet orders of battery and hydrogen trains. • RIA calls for the full delivery of Network Rail’s Long Term Deployment Plan for digital signalling, building on the upgrades to the East Coast Main Line. • Accelerate the delivery of the Midlands Rail Hub, working with regional and industry partners to improve connectivity across the Midlands.

3. PUBLICATION OF THE IRP 3.1 The IRP was published by the DfT in November 2021, 11 months after it was first expected. In the months preceding its publication, there were numerous media reports about the HS2 Eastern Leg being scaled back, despite past commitments to delivering the project in full. Similarly, despite promises at the Conservative Party Conference in October 2021 to deliver Northern Powerhouse Rail (NPR) in full, the IRP also cut back on this project. 3.2 Both these projects had been the focus of significant planning by the rail industry, and sub national transport bodies like Transport for the North. These decisions were taken with seemingly little engagement with the industry and not communicated until the plan launched, meaning, whilst there was new investment included in the IRP, the industry felt the Government had taken a ‘piecemeal’ approach to rail investment. 3.3 This is not the most effective way to operate a railway or engage with its key stakeholders. The uncertainty caused by a lack of transparency with decision making harms the supply chain’s 2/7


RIA Submission: Transport Select Committee Inquiry into the Integrated Rail Plan January 2022 ability to deliver at good value to the taxpayer. Rail businesses need the confidence to invest in the skills, training and capability to deliver complex rail projects such as in the IRP. For multinational companies, the uncertainty can mean the difference between their international HQs deciding to invest in the UK, or in moving to different markets or overseas. For small companies, it can be the difference between success and survival. 3.4 These changes in plan, particularly following a review by Sir Douglas Oakervee just three years ago, is incredibly challenging for the companies that build these projects; and it makes it hard for them to retain and upskill labour in a sector that already faces a skills shortage. Recommendation 1: The Government should seek in future to take a more strategic and engaged approach to rail investment, providing the sector with long-term confidence to plan and invest. 4. DELIVERY OF THE IRP AND THE RAIL NETWORK ENHANCEMENTS PIPELINE (RNEP) 4.1 It is welcome to see in the IRP the Government commit to end the typical “boom and bust” in investment in the railway industry - by ensuring schemes are properly developed to provide a sustainable pipeline for the rail supply chain which can be delivered efficiently. They note that the approach to projects will reflect the Construction Playbook, and other lessons learned from major projects, using cost ranges to reflect uncertainty and a portfolio approach to project development. This is positive to see however the reality of the uncertainties described above do not give confidence that this will be delivered. 4.2 The IRP states that all projects will be managed via the Rail Network Enhancements Pipeline (RNEP) process. This means that each project will have to go through a stage gate approach where the business case is evaluated. This may mean that whilst the IRP sets out a significant programme of investment, it is unclear when we can expect to see progress on these rail projects. This also means that each scheme promised in the plan, is still due to go through the final approval process and delivery is not necessarily confirmed. Funding decisions should be aligned to project and programme lifecycles in order to avoid unnecessary costs, uncertainty and delay. The intent of the Government to adopt an ‘adaptive’ approach is understood but does require regular communication with stakeholders to avoid abortive effort and investment. 4.3 The RNEP was last updated and announced in October 2019 - over 800 days ago. RIA and our members have regularly been calling for the RNEP to be published, to provide suppliers with the visibility of upcoming work that they require to plan and invest. In 2020, the Government promised to publish the RNEP annually.3 4.4 Furthermore, the timelines set out for the IRP do not commit to deliver the full plan until 2045, and does not specify timings – only committing to start work on the first phases of electrification on NPR in the mid-2020s, with the rest of MML electrification to start in the late 2020s. The language around these dates is vague, for example: “by around 2030 (at the end of Control Periods 7 and 8), passengers could see” improvements such as MML electrification and the introduction of NPR services.4 4.5 Providing the certainty for the supply chain – through ensuring projects in the IRP are translated to the RNEP and publishing an updated pipeline as soon as possible – will enable businesses to plan and invest in the necessary skills to deliver this plan. Suppliers also must be engaged on 3 4

Parliamentary Question UIN 88859, September 2020 Integrated Rail Plan, Page 135, November 2021

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RIA Submission: Transport Select Committee Inquiry into the Integrated Rail Plan January 2022 these projects as early as possible in the processes, bringing their expertise and innovation to provide better value for money to Government, and ultimately the taxpayer. Recommendation 2: The Government should publish the Rail Network Enhancements Pipeline (RNEP) urgently, providing confirmation of the key IRP upgrades it intends to deliver and clear timeframes. It should then be updated at least annually as previously committed. 4.6 By working with the sector, the Government can ensure the projects within the IRP are delivered cost effectively, to time and to budget. The delivery of these schemes should utilise the learnings of Rail Project SPEED, developed by Network Rail and the Department for Transport, including recognising that unnecessarily prolonged development processes can add significantly to both time and cost . The Government should seek to ensure the projects utilise early contractor involvement and promote a partnership approach between suppliers and clients. Recommendation 3: The delivery of key schemes in the Integrated Rail Plan should begin as soon as possible, working with the rail supply sector to ensure work is cost-effective. 5. THE IMPACT OF THE IRP ON THE UK’S RAILWAYS 5.1 Upgrading the rail links between the major cities in the UK remains vital, despite the short-term fall in passenger numbers due to Coronavirus. RIA believes that passenger numbers are likely to rebound in the coming years as people seek to travel for business and leisure. The strong return of passengers, reaching roughly 70% of pre-pandemic levels in November 2021, showed that passengers were returning to rail services only a few months after all restrictions were eased in July 2021. It is noticeable that the recovery was stronger in the North. Whilst Omicron has since seen restrictions reintroduced from December 2021 to January 2022, it is likely we will see a similar return once the pandemic ends. 5.2 In the IRP, HS2, which will be the first major new railway north of London for over a century, has been scaled back with the Phase 2B Eastern Leg to Leeds scrapped. Instead, HS2 will run from Crewe to East Midlands Parkway, before HS2 trains join the existing network. The proposals for NPR have also been scaled back, with a new high speed line connecting Warrington to the HS2 line into Manchester, and a new line from Manchester Piccadilly to near Standedge almost 30 miles short of Leeds. This is instead of a full new line from Manchester to Leeds city centres, as well as less ambitious upgrades for cities including Bradford and Sheffield. 5.3 The Government claims the new IRP will deliver faster or similar journeys to the original HS2 and Leeds-Manchester proposals. In the Plan, it is stated that “to most destinations, journey times under the IRP to London and across the NPR core network will be similar to or faster than the original HS2 and NPR plans, with significant improvements also for Birmingham”. The Plan also states that the IRP “is designed to deliver increased capacity”. 5.4 It is not clear whether detailed network and timetable modelling has been undertaken to validate the journey time and capacity claims. There are concerns in the industry about whether the necessary paths can be made available on a mixed traffic (passenger and freight services) railway to deliver these benefits. To increase industry confidence, it is recommended that such modelling is released. 5.5 If the journey times savings are correct, future rail services will see significant time-saving improvements compared to the current network. However, these improvements are still less 4/7


RIA Submission: Transport Select Committee Inquiry into the Integrated Rail Plan January 2022 that the speeds that would have been achieved under original plans for the full HS2 network and NPR. Out of the 28 journeys listed in the Plan, journey times would only be improved for five of these routes, they would remain similar four, and would be worsened for 19 routes, albeit only marginally for journeys from Manchester and Leeds. 5.6 Similarly, the “significant improvements for Birmingham” are difficult to identify, as journey times would increase and sometimes almost double on four Birmingham routes under the IRP. If we analyse London only, out of the nine routes listed on the plan, three journey times would improve, two would remain the same, and four would worsen. 5.7 On capacity, there would have been significant improvements under previous HS2 plans. It appears in the IRP that at least some of the capacity increases relate to increased numbers of seats per train rather than an increased number of trains being able to run on improved infrastructure. 5.8 Ultimately, the IRP shows that there is still a case for the full delivery of HS2 and NPR, both of which will provide journey time benefits and capacity improvements across the network. 5.9 On rail freight, electrifying key lines such as MML and TRU will clearly benefit rail freight operators, helping to improve journey times and decarbonise the sector. 5.10 On the upgrading of the East Coast Mainline (ECML), the IRP says that digital signalling, other upgrades and changes to the current speed restrictions will allow trains to run up to 140mph and add capacity. However, the risk is that this will only see some passenger trains run faster, without a corresponding increase in speed for freight trains which travel slower, meaning the capacity returns may not materialise. Indeed, the IRP even states: ‘Rail capacity is used inefficiently when a wide mix of different services – long distance passenger, commuter and freight – with different speeds, accelerations and stopping patterns use the same lines over long distances’5. RIA would like to see the Department for Transport publish the full modelling for the promised capacity increase on the ECML. 5.11 As RIA’s Why Rail Electrification Report6 highlighted, a study by the Chartered Institute of Logistics and Transport’s Rail Freight Forum concluded that just 500 route miles of electrification would enable about 70% of UK rail freight to be electrically hauled. Several of these proposed lines run through the North and the Midlands, including for example connecting Felixstowe to Birmingham and Hare Park to Leeds Stourton freight terminal. Given the importance of rail to help decarbonise freight in the UK, such types of infill electrification projects would both increase the capacity of freight that could be hauled by train and provide even greener freight options. 5.12 In the Midlands, RIA and our Members were pleased to see the Government acknowledge the importance of the Midlands Rail Hub to the region. Midlands Connect has set out and promoted the benefits to the region of the project, both to passengers in improving connectivity, but also the economy of the Midlands. Therefore, RIA welcomed £100million allocated to further the proposals for the Midlands Rail Hub. This funding however, is also subject to the final business case and not fully confirmed.

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Pg.37, Integrated Rail Plan, Department for Transport, November 2021 RIA, Why Rail Electrification? Report, April 2020

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RIA Submission: Transport Select Committee Inquiry into the Integrated Rail Plan January 2022 Recommendation 4: The Government should continue examining the case for building the full HS2 Eastern Leg to Leeds and Northern Powerhouse Rail full. Recommendation 7: Accelerate the delivery of the Midlands Rail Hub, which will improve connectivity across the West Midlands. 6. IRP’S CONTRIBUTION TO THE ECONOMY AND “LEVELLING UP” 6.1 Building, maintain and upgrading the UK’s railways supports a huge range of jobs, supports social mobility and boosts economic growth in every region of the country. Wherever a rail project is located, the economic impact is felt on a national level. Oxford Economics data showed that for every £1 invested in the railway, a further £2.50 is generated in economic activity, including the supply chain. It also showed that the railway industry across the North generates £7.74bn in GVA to the economy and supports 154,156 jobs, and in the Midlands over £5.3bn in GVA to the economy and supports 103,073 jobs.7 6.2 Many of the roles in the sector are skilled, well-paid and green jobs which benefit regional economies. Oxford Economics showed that the average economic contribution per job in the rail system each in the North (incl. Yorkshire and the Humber) is over £55,500 GVA - above the average for the North’s economy of £42,800. In the Midlands, each job in rail contributes £58,000 in GVA to the economy, compared to the regional average of £44,6008. 6.3 Greater certainty for the supply chain over confirmed projects encourages further investment in upskilling existing, and hiring new, staff, as well as for supporting apprenticeship and graduate schemes. The IRP provides a useful first step for this, but it is crucial the projects within it are delivered in full. 6.4 Improving railway links in any region will support the economy through providing better links to larger job markets and key services in towns and cities and attracting investment from companies – all of which are vital to improving social mobility in any given region. For example, since the HS2 link to Birmingham was confirmed in the Oakervee Review in 2020, several major companies have announced major investments and expansion plans in the city. 6.5 However, whilst the economic case for major railway upgrades remains strong, the IRP risks reducing the economic benefits the previous plans for HS2 and NPR in full would have brought. This is particularly the case for regions such as Yorkshire, which will not see the Eastern Leg built to Leeds. According to a poll of rail suppliers by RIA and the High Speed Rail Group (HSRG) in 2021, 80% of rail SMEs would anticipate significant falls in revenue and almost half would cut staff, if full the scheme is not delivered. 7. IRP’S ROLE IN DECARBONISATION & DIGITALISATION OF THE UK RAIL SYSTEM 7.1 The IRP sets out the electrification and/or upgrade of three existing main lines, totalling 180 miles of electrified lines and 400 miles of upgraded lines in total.9 7.2 It is welcome to see this commitment to electrification from Government. It is assumed this is 180 route miles, whereas electrification is normally measured in single track kilometres (stk). 7

The Economic Contribution of UK Rail, Oxford Economics, September 2021 Ibid 9 Integrated Rail Plan, Page 6, November 2021 8

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RIA Submission: Transport Select Committee Inquiry into the Integrated Rail Plan January 2022 Based on the Network Rail Traction Decarbonisation Network Study, 450stk a year would be required to meet the legal target of Net Zero carbon by 2050. The 180 route miles committed is equivalent to around 750stk and therefore less than two years of the required rate of progress.10 So, whilst positive, the rate of electrification will continue to fall behind that necessary to achieve the Government’s legally binding Net Zero goal. The Wigan to Bolton electrification contained in the IRP was also announced prior to the Plan, and constitutes just 13 miles of electrified line. 7.3 There is further no confirmation in the paper where the Government intends to roll out battery and hydrogen trains, which will inevitably be needed in the regions on less intensively used lines. The Government has made commitments to fleet orders of battery and hydrogen trains in the Transport Decarbonisation Plan, the Net Zero Strategy and Williams-Shapps Plan for Rail. Recommendation 5: RIA welcomes progress on electrification, but a sustainable, rolling programme of work is required, alongside fleet orders of battery and hydrogen trains. 7.4 It is positive to see the IRP set out the upgrading of the ECML through digital signalling. 65% of signalling equipment across the UK rail network needs replacing over the next 15 years. This will require a shift to digital, in cab signalling that reduces the need for signalling equipment on the railway network and facilitates a modern approach to delivery thus helping to reduce costs. 7.5 A recent report by RIA, titled ‘Signalling Change’, showed that the East Coast Digital Programme, to deliver digital signalling on the ECML, is being delivered effectively, with a new partnership model established between Network Rail, suppliers and operators. This could be the model not just for future signalling projects, but for major schemes across the UK rail network. 7.6 The Government should continue to support the roll out of digital signalling by committing to Network Rail’s Long Term Deployment Plan, which sets out a strategy to tackle the backlog of signalling renewals required on the UK rail network under Great British Railways. Recommendation 6: RIA calls for the full delivery of Network Rail’s Long Term Deployment Plan for digital signalling, building on the upgrades to the East Coast Main Line. 8. IRP AND THE RESTRUCTURE TO GREAT BRITISH RAILWAYS (GBR) 8.1 The rail industry is undergoing a period of significant change with the restructure to GBR. RIA and our Members have urged that there can not be a hiatus in work whilst the restructure takes place and that projects, including those set out in the IRP, need to continue to be delivered at pace. This includes upcoming infrastructure projects and rolling stock procurement.

For further information, please contact RIA PR & Communications Executive Alexis King at Alexis.king@riagb.orguk or on 020 7201 0777. Railway Industry Association January 2022

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RIA: The UK is electrifying its railway at less than half the rate needed to decarbonise by 2050, October 2021

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