Briefing: RNEP August 2023

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Rail Network Enhancements Pipeline

Briefing: 21 August 2023

Created in 2019, the RNEP was billed as a ‘new approach for rail proposals’, which would provide certainty and transparency through the annual publication of a pipeline of enhancement projects in England and Wales. When released it was expected that the RNEP would then be updated annually, but so far there has been no update published.

Since 2019, RIA has continued to raise the issue of the unpublished Rail Network Enhancements Pipeline with Network Rail and the Government. Following recent updates regarding the RNEP, we can now share this short briefing with RIA members.

• We understand Network Rail is currently undertaking an exercise to re-baseline enhancements spending, against a funding assumption of £10.75bn (cash) for rail enhancements up to 2027/28. The implication of flat cash’ is that in real terms a £3.3Bn saving is needed over the next 5 years to deliver the same volume. Some Network Rail regions, e.g. Eastern, have shared brief information about this exercise with suppliers.

• This funding visibility is welcome; however it also implies difficult prioritisation decisions.

• Enhancements are funded separately from the Control Period 7 (CP7) funding settlement.

o At the last spending review, Government had announced capital spending was to be held flat in cash terms for all government departments. For rail enhancements this currently equates to £2.1bn for Network Rail annually

o We understand DfT has been working out what this position means for future capital forecasts, and asked Network Rail to update its plans for an enhancements budget of £10.75bn which runs up to the fourth year of CP7 (i.e. 2027/28)

o This budget allocation is of course subject to future government budgets/spending reviews, particularly as a result of the upcoming general election

• Through the current exercise both DfT and Network Rail are trying to align the spending plans with expected funding. They will be looking at a range of solutions including:

o Reducing scope / output

o Deferring expenditure

o Efficiency challenge

o Pausing or cancelling schemes.

• DfT will also be reviewing the updated pipeline in terms of factors such as the lifecycle stage that projects are at (currently the vast majority of portfolio spend is in delivery whereas some new schemes will be in the less expensive design phase).

• The current exercise should be complete by end August, meaning Government could be able to publish an updated enhancements pipeline if it chose to.

• Whilst DfT is still intending to publish the RNEP, it is the political announcement at a portfolio level which has always proved tricky (as there will be winners and losers). Politically, the risk of publishing a pipeline and then seeing significant changes (reductions) in scope appears to be the key risk. The closer we get to a general election the more challenging this will be. We also understand that the number of projects included will be reduced, with the preference going to projects with business plans already progressing.

• We understand that the RNEP may be published under a new name, although this remains to be confirmed.

• RIA will continue to champion certainty and visibility of rail spending plans.

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