February 2022 Whole Industry Strategic Plan: Call for Evidence 1.
INTRODUCTION
1.1. This submission constitutes the response from the Railway Industry Association (RIA) to the Call for Evidence for the Whole Industry Strategic Plan, launched by the Great British Railways Transition Team. 2.
BACKGROUND TO RIA
2.1. 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 Small and Medium-Sized Enterprises (SMEs). 2.2. RIA provides its members with extensive services, including: • Representation of the supply industry’s interests to Government, regional and national transport bodies , rail clients (eg Network Rail, HS2, TfL), and other key stakeholders; • Providing opportunities for dialogue and networking between members; • Supply chain improvement initiatives; • Supporting innovation through the Unlocking Innovation programme and UKRRIN (UK Rail Research and Innovation Network) • Provision of technical, commercial and political information every week; • Export promotion including organising and creating Great branded UK Pavilions at key rail exhibitions overseas. 3.
SUMMARY OF KEY PRIORITIES FOR GREAT BRITISH RAILWAYS AND THE WHOLE INDUSTRY STRATGIC PLAN RIA has developed Five Key Tests for the success of GBR that should be taken into account as the Whole Industry Strategic Plan is developed. 1. No hiatus: 50% of rail spend is with the private sector – and there cannot be a pause in this work. 2. Transparency: Be clear and open with rail suppliers, to allow them to deliver. 3. Partnership: Bring in the private sector, as an open and accessible client. 4. Productivity: Ensure the rail industry is able to thrive – financial sustainability will ensure rail delivers for UK PLC. 5. Ambition: Leave a positive legacy, including in safety, exports, decarbonisation and the economy.
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RIA’s 2021 ‘Learning from Major Rail Projects’1 report highlights the capabilities of the supply chain to deliver major projects on the railways. To achieve the Strategic Objectives and success in delivering major rail projects GBR must take into account the following six key messages: 1. Collaboration and Leadership: Create strategic partnerships with the contractors and clients that are based on shared goals. 2. Visibility and long-term investment: Once committed do not look back, share pipelines and plan long-term investment. 3. Innovation and SMEs: Support innovation at earliest stages of a project, take full advantage of supply chain capability including international, SME and cross sectoral ideas and expertise. 4. Procurement: Engage suppliers early and publish transparent procurement pipelines and targeted outcome-focussed procurement models. 5. Economic, Environmental and Social Value: Recognise the full economic, environmental and social value that rail brings to the UK. 6. People Trade and Exports: Celebrate the diversity of the supply chain and its people and promote UK rail expertise and capability internationally.
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CONTEXT
4.1. In May 2021, the UK Government’s plans to reform the rail sector were outlined in the Williams-Shapps Plan for Rail. This includes the establishment of a new organisation, Great British Railways (GBR) which will develop a 30-year strategy – the Whole Industry Strategic Plan (WISP). This plan will in turn be framed and driven by strategic objectives (see below). 4.2. To engage stakeholders in the development of the WISP and the objectives, the GBR Transition Team have launched a call for evidence. RIA’s submission is as follows. Strategic Objectives for the Whole Rail Industry
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5.
QUESTION 1 A): How would you apply these objectives to rail in your region or to your area of expertise within the transport sector? Do you have evidence you can share with us of how you have applied similar objectives in relation to rail, and do you consider the objectives to have missed any key areas?
5.1. The creation of GBR presents a major opportunity to enable an outcome-focussed, whole system approach to rail. The purpose of the 30 year Whole Industry Strategic Plan is to unlock the full potential of rail, to ensure value for money and to support an effective public private partnership. However, the scale of change should not be underestimated. Significant change programmes require continued clear focus on delivery and highly effective communication. We strongly recommend that safety should be a stand alone objective. We further recommend that care needs to be taken to retain the skills and capability in the industry needed to oversee the establishment of GBR and the development and implementation of the WISP. Celebration of the full potential of rail will help attract the next generation of rail professionals. In this context we have developed our Five Key Tests for the success of GBR: • Test One: No hiatus: 50% of rail spend is with the private sector – and there cannot be a pause in this work. The UK railway and the UK economy cannot afford to see work stop whilst GBR is set up. Any hiatus in work would see skilled workers leave the industry, meaning a further lack of labour in a sector already suffering from a skills gap. • Test Two: Transparency: Be clear and open with rail suppliers, to allow them to deliver. The process to establish GBR needs to be an open one, with suppliers in the discussions at all stages of GBR’s development. Considering that approximately 50% of the Government’s spend on rail is delivered by private sector companies, with significant invested capital, it is vital that this community is clearly represented in forward plans. The WISP should also be a public document, so all can see the shared and agreed vision for the UK railway system. • Test Three: Partnership: Bring in the private sector, as an open and accessible client. GBR will need to embrace the role of the private sector if it is to deliver successfully, whether in operations, infrastructure or rolling stock. GBR should be transparent over its ‘Make or Buy’ decisions, setting out clearly where the private sector will be involved and where work will be conducted in-house. GBR should aim to be a ‘thin client’, one which seeks to fully utilise the experience, expertise and innovation of rail suppliers and which does not shadow work being done by the private sector. The role of rolling stock leasing, manufacturers and asset management companies should be maintained. • Test Four: Productivity: Ensure the rail industry is able to thrive – financial sustainability will ensure rail delivers for UK PLC. Rail suppliers recognise the imperative, now more than ever for the rail industry to be efficient and cost effective – they stand ready to work with Government and clients to identify opportunities for efficiency, including though the SPEED programme. GBR should seek to develop long term strategic relationships with suppliers, maintaining the benefits of the five yearly funding settlements, known as Control Periods. The ORR should ensure that there are no ‘boom and bust’ profiles in workload between and during these cycles, as it currently does with Network Rail. Government should avoid annual settlements at all costs, given the severe impact on the rail industry’s ability to plan and invest. 3 / 20
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Test Five: Ambition: Leave a positive legacy, including in safety, exports, decarbonisation and the economy. Rail travel has more benefits than simply connecting people and resources. Rail delivers a safe mode of clean mass transport, as well as supporting jobs exports and growth.
5.2. Throughout this response RIA will highlight the importance of early and transparent engagement and collaborative strategic partnerships. We have not seen the initial draft WISP shared with GBRTT and the Department for Transport. Realisation of the full benefits of the WISP will require effective consultation with the supply chain on the draft plans. 5.3. RIA welcomes the focus in the Strategic Objectives on the wider economic and societal benefits that rail can deliver. More detailed responses are given in later questions but, in summary, and with particular reference to the supply chain contribution we would highlight the following key opportunities for rail against the five strategic objectives: 5.3.1. Meeting customers’ needs The rail supply chain is an entirely private sector employing 710,000 people and contributing £43 bn GVA to the UK economy. To survive suppliers must be customer focussed and therefore recognise the imperative for GBR to meet customer needs. There is latent potential for an increased level of partnership between suppliers and GBR to support our mutual customers needs and create success for all. 5.3.2. Delivering financial sustainability Making rail financially sustainable requires alignment and collaboration between all parties including suppliers. When suppliers understand the long term pipeline, even if it is challenging, they can plan for efficiency. Even better when suppliers understand their customers business imperatives and incentives are aligned then mutual success can be achieved. There are examples from other sectors where long term relationships have driven mutually beneficial revenue growth and cost reduction. Better communication through all levels, from client to SME, can ensure that products and projects are delivered in a timely way and on budget. SMEs also support innovation, agility and efficiency in the supply chain. 5.3.3. Contributing to long term economic growth The rail industry and wider public transport is a key economic enabler. Perhaps the most valuable contribution the rail industry can make is to facilitate modal shift for both passengers and freight. To achieve this rail must be attractive, easy to engage with and affordable. Suppliers are ready for this challenge and have significant innovation to offer.
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5.3.4.Levelling up and connectivity The rail network and its supply chain are distributed throughout the UK and have many facilities and staff in areas of economic disadvantage. The Oxford Economics report The Economic Contribution of UK Rail found that £1 invested in rail delivered £2.50 of further benefit1 in the supply chain there is significant potential to leverage rail investment to support levelling up. This can be supported by the increasing focus on social value considerations at tender stage. 5.3.5.Delivering environmental sustainability Rail has excellent credentials on environmental sustainability and uniquely placed in the transport sector with proven technical solutions (electrification, battery, hydrogen) to operational net zero carbon. Rail suppliers are also very active in reducing embedded carbon, climate change resilience, the circular economy and biodiversity with readily transferable experience from HS2, East West Rail and the wider construction industry. The supply chain recognises the imperative for environmental sustainability and is ready to partner with GBR to maintain the rail industry position as the most sustainable transport mode. 5.3.6. Safety critical Rail is a safety critical industry and we recommend that safety should be a stand alone objective.
5.4. RIA welcomes an outcome-based approach to achieving strategic objectives and recognises that one of the most significant benefits of GBR will be the potential to enable this strategic focus on whole system outcomes. Outcome-based approaches, rather than prescriptive ones that mandate a way in which an outcome must be achieved, allow the private sector to innovate, propose solutions, and effectively respond to objectives set out by GBR. Outcomebased approaches are also more flexible, allowing timely responses to unforeseen issues. They allow for effective competition, driving cost-efficient delivery. RIA has welcomed the recognition of this in recent publications including the Construction Playbook and the Procurement Green Paper. 5.5. Whilst RIA welcomes steering via outcome-based strategic objectives, the metrics which are used to measure progress must be chosen and deployed carefully. It is key that metrics do not cause perverse consequences and misaligned incentives. For instance, metrics measuring productivity must not lead to a strict focus on driving costs down without acknowledging other
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https://riagb.org.uk/RIA/Newsroom/Publications%20Folder/OE_2021.aspx
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considerations such as safety and long-term environmental, social, and economic benefits. Any metrics should be developed in discussion with suppliers. 5.6. RIA would like to note that working together with the private sector will be crucial in delivering objectives. GBR should aim to be a ‘thin client’, one which seeks to fully utilise the experience and expertise of rail suppliers. As will be laid out in more detail further on in this response, the rail industry already contributes to several of the objectives and these approaches should be built on. 5.7. RIA’s ‘Learning from Major Rail Projects’2 highlights the capabilities of the supply chain to deliver major projects on the railways and learning from such success stories will be key to achieving any strategic objective. The key messages from the report are: • Collaboration and Leadership: Create strategic partnerships with the contractors and clients that are based on shared goals. • Visibility and long-term investment: Once committed to not look back, share pipelines and plan long-term investment to drive competition, grow supply chain capability and efficiency and give confidence to the private sector to invest in skills, assets and innovation. • Innovation and SMEs: Support innovation at the earliest stages of a project, take full advantage of supply chain capability including international, SME and cross sectoral ideas and expertise. Harness supply chain skills on system thinking and whole life value. • Procurement: Engage suppliers early. Publishing transparent procurement pipelines and targeted outcome-focussed procurement models, support competition, efficiency, innovation and delivery. Effective procurement enables the development of intellectual property and unlocks collaborative funding and financing models. • Economic, Environmental and Social Value: Recognise the full economic, environmental and social value that rail brings to the UK. • People, Trade and Exports: Celebrate the diversity of the supply chain and its people and promote UK rail expertise and capability internationally.
5.8. As will be laid out in section 14, to achieve the Strategic Objectives GBR must also ensure clarity and a strategic plan for renewals – there must not be a hiatus in renewals whilst GBR is set up. The Government’s programme of investment over the current funding cycle ending in 2024 (Control Period 6) includes £18.8bn in renewals to sustain the network and £9.5bn3 in enhancements planned, alongside a number of rolling stock orders. There is however no clarity about what is planned beyond 2024. It is therefore particularly important that timely decisions on the renewals and enhancements for CP7 (2024-29) are made so that there is no hiatus from 2024.
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https://riagb.org.uk/RIA/Newsroom/Stories/Learning_from_Major_Projects.aspx https://www.orr.gov.uk/sites/default/files/om/pr18-final-determination-overview-and-decisions.pdf
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6.
QUESTION 1 B): How is it possible to make progress against a number of the objectives simultaneously? Do any of the objectives have larger barriers associated with them than others, or do any objectives pose possible barriers to others? Where would you make the trade-offs?
6.1. It is more feasible to make progress against a number of the objectives simultaneously if a long-term outcome focussed perspective is taken and if the whole-life value of investment in rail is recognised. A strict focus on lowest cost in the short-term may in the long-term lead to a missed opportunity to meet objectives including lower whole life costs, environmental and social sustainability, levelling up, and meeting customers’ needs. An outcome-focussed wholelife value approach would be consistent with the refreshed HMT Green Book focus on strategic objectives and Cabinet Office procurement policy including the Sourcing and Construction Playbooks. There are a number of opportunities (decarbonisation, digitalisation, automation) to reduce the long term operational and whole life costs of the railway and improve the offer to our customers which require long term planning and up-front investment. 6.2. RIA notes that for other regulated sectors such as aviation, water and energy, Government sets strategic objectives and leaves the industry to deliver. These sectors have moved from separate Opex (Operational Expenditure) and Capex (Capital Expenditure) accounts to a Totex (Total Expenditure) approach, and this has supported better portfolio management and efficient spend. For rail, however, Capital budgets have been separated into operations, maintenance and renewals spend, where Network Rail has delegated authority overseen by the Office of Rail and Road (ORR), and enhancement funding decisions overseen by the Department for Transport and HM Treasury. Delegation of funding authority to GBR would enable a more efficient spend including a Totex approach to investment. 6.3. One significant trade-off is that between extending asset life and building new assets. Whilst extending asset life can in some instances deliver financial and environmental sustainability, in other instances it might not be suitable. Sometimes a new asset may require less costly maintenance over time and will ultimately deliver greater financial sustainability and ensure higher standards of safety. Here, consultation and open communication with asset owners and suppliers can help identify how to get this whole life balance right. 7.
QUESTION 1 C): What long-term trends in wider society, the economy, and the environment will affect these five objectives over the next 5, 10, and 30 years? Please give evidence to support your response.
7.1. The objectives are well-aligned with expected trends including decarbonisation, levelling up plans, and an increasing focus on environmental and social sustainability. They have strong potential to be useful in anticipating challenges and changes such as an ageing population, skills shortage, and increasing automation. Creating and using scenarios based on these trends will help inform the policy and investment choices for Government.
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7.2. In terms of taking account of trends, demand forecasts should not be confused with scenarios as GBR develops its strategic plan. Scenarios take into account both qualitative and quantitative evidence, putting numbers into context and including key societal trends and policy goals. Demand forecasting, on the other hand, is quantitative in nature and on its own, a demand forecast may not stand as a reliable indicator of trends to come. 7.3. For instance, passenger numbers are currently below pre-COVID levels, but it is not wise to extrapolate these numbers into the future and assume this is a long-term trend. Taking a wider perspective, and considering future scenarios such as a modal shift to rail, reaching net-zero, and an increased focus on liveable cities, rail will feature as the backbone of the low-carbon economy and in the medium- and long-term passenger numbers will continue to grow as they have done historically. The WISP should assume that Government will deliver the Transport Decarbonisation Plan and the Williams Shapps Plan for rail aspirations for accessible and integrated transport – it should be ambitious about ensuring rail is the best it can be in order to support maximum value for money. 8.
QUESTION 1 D): What are the key uncertainties you consider that the Strategic Plan must be resilient to in order to be effective over the next 5, 10 and 30 years?
8.1. Key uncertainties include passenger demand, climate change and technological change. However, uncertainty should not be an excuse for delaying decisions – as above, a scenariobased approach should seek to ensure maximum value (in terms of cost, carbon reduction and environmental benefits, and congestion management) from the embedded and new investment in the rail system and to unlock future potential, revenue and modal share increase through making rail more attractive and easy to use for both passengers and freight. An outcome-focussed strategic plan can adapt to change. In constrained financial situations, working collaboratively with the supply chain can mitigate uncertainties and risks and avoid driving up costs. Indeed, UK suppliers have global expertise and are highly innovative and this can be drawn upon to overcome uncertainties. RIA believes a outcome focussed, scenario based approach considering, revenue, cost and long term sustainability is essential. 9.
QUESTION 1 E): Over the next 5, 10 and 30 years, which steps should the sector take to improve integration of rail with the wider transport system (including walking and cycling) in pursuit of these objectives?
9.1. In order to achieve integration, it is important to recognise the right between central planning and funding and devolved planning and funding. Central planning will be needed to ensure that rail remains an effective national network, to maximise competition and economies of scale, avoid unnecessary costs and to enable consistency and certainty for the supply chain. This is particularly critical for safety and standards. However devolution is essential to ensure an effective focus on passenger and local community priorities. Integration requires support for multi-year funding settlements for devolved Government transport bodies. This helps them to work with the supply chain to deliver local and integrated priorities effectively. Allowing
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regional autonomy, within a national framework, should support innovation, integration and best practice development. Meeting customers’ needs 10.
QUESTION 2 A): Passenger: how will rail passenger expectations, including accessibility requirements, evolve over the coming 5, 10 and 30 years, what will be the driving causes of these changing expectations, and how can they be most effectively met by the rail sector?
10.1. GBR should anticipate high passenger expectations so that rail can deliver Government and societal expectations on quality of service, accessible travel and the environment, acting as the backbone of an efficient low carbon transport system. Recovery from previous economic shocks and pandemics have shown people like to travel – whether for work or leisure. Cities support innovation and effective land use so although travel patterns may change, GBR should avoid the risk of a hiatus of spending or lack of ambition. Indeed, a key differentiator for GBR would be an ability to make the case for investment in anticipation of need and to stimulate economic growth rather than presiding over disruption once the need has become obvious. Passenger numbers were at a record high before the pandemic, with long-term demand steadily increasing, and GBR should seek to grow passenger numbers in line with the shift to low-carbon transport and the need to reduce congestion.4 This said, with a greater shift to rail, there is a need for rail, including fares and ticketing policies, to be competitive with other modes of transport. This will require rail to be green, accessible, integrated, and on time. The most valuable contribution rail can make to UK PLC is to create economic opportunity particularly for areas of social deprivation and to support dramatic modal shift to public transport. This will require GBR to have significant ambition. 10.2. GBR should harness the innovative efforts already being made by the supply chain to improve passenger experience. For instance, Arcadis designed Whitechapel Station with a strong focus on the customer experience – given that the station is the most complex of the Elizabeth Line stations with a single combined entrance for Crossrail, London Underground and London Overground services. Arcadis borrowed design concepts from their experience in the aviation industry, with the creation of ‘waiting areas’ for passengers. The design also led to improved passenger experience by shorter journey times and journeys requiring less time underground, resulting in passengers experiencing more daylight and fewer turns. Another example is BAM Nuttall’s Denmark Hill Station enhancement project – creating a new station entrance, installing canopies, and building a new secure cycle hub. Not only did this significantly improve the passenger experience – it was also the first carbon positive upgrade of its kind in Europe and was completed in only two and a half years, rather than the 4-5 years usually expected for this type of project.
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https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1049929 /rail-factsheet-2021.pdf
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10.3. Increased customer experience expectations and awareness of environmental impacts, as well as shifting public transport usage patterns, creates an opportunity for the rail sector to be innovative, as demonstrated above. Here the industry agrees – RIA’s 2021 Innovation Perception Survey shows 80% of respondents agreeing that it is very important for the GB rail industry to be innovative.5 11.
QUESTION 2 B): Passenger: in your experience, how can we most effectively monitor and assess customer satisfaction? What is a stretching yet realistic ambition for this objective and what measures can we most effectively use to consider success over the coming 5, 10 and 30 years? What evidence can you share to support your view?
11.1. As outlined in section 10.1 rail needs to remain competitive with other transport sectors – the key measure of satisfaction will be attracting passengers back to rail then going beyond prepandemic levels to support modal shift. Suppliers can help by supporting innovation – including effective use of data such as that proposed by the Rail Delivery Group rail data market place,6 supporting a high performance industry. Many RIA members have experience from other sectors as well as rail in designing attractive customer environments and services. 12.
QUESTION 2 C): Freight: what evidence can you provide regarding the advantage(s) of transporting goods by rail and what evidence can you share for how that could develop in the next 5, 10 and 30 years? What do you consider to be the most effective role for rail freight in the existing supply chains served and those that it doesn’t? How could this change over that period? In answering, please explain and take account of likely developments in technology and in the wider economy.
12.1. RIA supports GBR ambitions to grow rail freight. Rail freight provides a wide range of benefits, showcasing its potential to support environmental, social, and economic objectives. A 2021 report produced by Deloitte, and commissioned by the Rail Delivery Group,7 finds that rail freight delivers £2.45bn in benefits to the UK economy each year. Out of this, £31.65m are benefits to customers including cost savings, time savings, and reliability benefits. The remaining benefits of £800m are social benefits including congestion relief, environmental benefits, and improved safety. Indeed, each freight train removes up to 76 lorries from the roads, resulting in 1.6 billion fewer HGV kilometres every year.8 12.2. In order to maximise both passenger and freight benefits GBR will need to modernise the approach to capacity allocation – this will require investment in timetabling technologies as well as a clear understanding of investment priorities. For example, investment in the full HS2 scheme is likely to be needed to create capacity for freight growth and manage passenger
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https://riagb.org.uk/RIA/Newsroom/Publications%20Folder/Rail_Innovation_Survey.aspx https://www.raildeliverygroup.com/our-services/rail-data/rail-data-marketplace.html 7 https://www.raildeliverygroup.com/media-centre-docman/12807-2021-04-role-and-value-of-railfreight/file.html 8 http://www.rfg.org.uk/rail-freight/why-use-rail-freight/ 6
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disruption as lines are upgraded. GBR should consider where investment in rail freight capacity and logistics hubs can best support zero carbon and congestion reduction – including routes from the UK ports. This understanding of rail capacity will inform ambitions for freight growth. This should be linked with greater collaboration with logistics specialists to provide the ‘last mile’ of the service both for heavy and light freight. 12.3. To ensure further freight capacity, a rolling programme on electrification is crucial, as outlined in RIA’s ‘Why Rail Electrification?’ report.9 Here, the UK risks falling behind – electricity currently provides only 4% of UK rail freight’s energy requirement, compared with 56% in continental Europe. A rolling programme of electrification, and capacity enhancement of existing networks, would therefore enable the rail freight network to serve supply chains in the greenest and most efficient way. Studies have shown that a small amount (320 miles) of infill electrification would mean approximately 66% of rail freight could be electric. This could be done quickly and economically as a priority in advance of the further 400 miles that would allow 95% of rail freight to be electrified.10 12.4. RIA supports the best and most efficient use of the whole transport system. The Union Connectivity review recommendation that there should be a UK strategic transport network (UKNET) presents opportunities to ensure effective rail connectivity to ports and airports for people and freight. Rail is a highly efficient form of transport both in terms of land use and power and there is an opportunity to ensure the benefits and capacities of the rail system are maximised. RIA welcomes assessments of whether, for instance, the commitments laid out in the Integrated Rail Plan go far enough in terms of having appropriate capacity for freight and passengers. 13.
QUESTION 2 D): What is a stretching yet realistic ambition for this objective and what measures can we most effectively use to consider success over the coming 5, 10 and 30 years? What are the interventions over that period which will be the maximum value for money, and what evidence can you share to support your claim?
Delivering financial sustainability 14.
QUESTION 3: Where are the most significant opportunities and barriers to delivering financial sustainability in the rail sector over 5, 10, and 30 years and how do we achieve/overcome them? How can we most effectively monitor and assess this? What is a stretching yet realistic ambition for this objective and what measures can we most effectively use to consider success over the coming 5, 10 and 30 years? What are the interventions over that period which will be the maximum value for money?
14.1. Efficiency and financial sustainability can be supported by providing the supply chain with a profile of consistent work. This allows suppliers to plan, invest, and innovate and can be 9
https://riagb.org.uk/RIA/Newsroom/Publications%20Folder/Why_Rail_Electrification_Report.aspx https://www.modernrailways.com/article/charting-electric-freight-future
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achieved by avoiding a ‘boom and bust’ profile of work. The fact that renewals work is usually concentrated into the middle years of the five-year funding cycle, known as a Control Period, means that the industry has to prepare for a significant ramp up in work for the ‘boom’, and then, when the ‘bust’ approaches, having to close facilities and disband teams . Multi-national companies move to other non-rail sectors or overseas, and SMEs struggle to find work and some go out of business altogether – creating major inefficiencies. Although this issue is now more widely recognised and we are seeing mitigation measures being put in place, GBR has a real opportunity to place the ‘boom and bust’ profile firmly in the past to ensure a financially sustainable and efficient industry. 14.2. GBR should encourage efficiency and financial sustainability with effective procurement and engagement strategies.. As recognised by the Sourcing Playbook, publishing transparent procurement pipelines and targeted outcome-focussed procurement models supports competition, efficiency, innovation and delivery. Effective procurement enables the development of intellectual property and unlocks collaborative funding and financing models. Early supplier engagement and understanding of the outcome requirements allows suppliers to support the client in developing the best delivery solution and examining alternatives and considering the trade-offs. This could, for example, include staged delivery with an initial ‘minimum viable product’ designed to anticipate and support unlocking future potential. Additionally, as referenced earlier, a shift to a Totex system of accounting could help ensure efficient delivery of the full benefits of rail over the longer term. 14.3. RIA has welcomed initiatives such as The Construction, Sourcing and Consultants Playbooks, which set out best practice framework for sourcing and contracting public works, projects and programmes. Additionally, RIA has supported Network Rail’s Project SPEED which has removed layers of process and bureaucracy to cut the costs and time of project delivery. 14.4. Importantly, to achieve financial sustainability, GBR should aim to be a ‘thin client’, one which seeks to fully utilise the experience and expertise of rail suppliers and allocates risk effectively which doesn’t shadow work being done by the private sector to avoid undermining efficiencies. GBR should learn from Cabinet Office best practice on procurement including by considering a Rail Playbook to ensure that GBR uses its procurement powers to support innovation and a vibrant and sustainable supply chain. 14.5. A significant contribution to financial sustainability would be enhancing the rail sector’s ability to attract private investment and financing. Pipeline visibility and long-term strategic planning creates certainty and will therefore allow rail to attract private investment. The Williams Shapps Plan for Rail commits GBR to unleashing the benefits of the private sector including alignment of contracts and investments with asset life cycles. Project Reach is name checked in the Plan and is being seen by the supply chain as an important case study demonstrating Government appetite for new models for private funding and financing. There may be opportunities for a similar approach to other key aspects of rail such as digital signalling, electrification and electric vehicle charging. The creation of the Infrastructure Bank and increasing levels of local and devolved funding also present opportunities for rail. There is 12 / 20
significant expertise in the supply chain based on experience with UK (HS1, Tubelines etc) and global PPP projects and the opportunity to learn lessons from this. Well-designed private funding and finance models help align incentives for efficiency and unlock innovation. Innovation will be discussed in more detail later on in this response. 14.6. GBR will be well-positioned to review track access schemes in order to improve efficiency and financial sustainability. However, to optimise this opportunity, it remains important for suppliers to be involved in any initatives to improve speed and pace of delivery, including Project SPEED and other intiatives for track access. This will enable the most optimal solutions to be identified. 14.7. In order to unlock the full potential of SMEs within rail, more transparency and communication is needed through all levels. Procurements need to be open to the innovation SMEs can provide. SMEs have the benefit of being more agile and innovative, and are able to adapt to change faster, if they are given good visibility of incoming works and orders. They help grow capacity and capability in the supply chain. Clear delivery timelines and prompt payment are also important for financial sustainability for SMEs, who often rely on contracts being fulfilled in order to fulfil material orders or workforce costs. Without prompt payment, some SMEs could risk financial difficulty, which would then have knock-on effects for projects and the wider supply chain. Start-up SMEs in particular, cannot wait around for years for projects to come to fruition. 14.8. To date, there has been limited dialogue with the supply chain on future business models. The supply chain is open to exploring new funding and finance models drawing on private sector expertise. Contributing to long-term economic growth 15.
QUESTION 4 A): As Britain recovers from the effects of the COVID-19 pandemic, what evidence do you have for how rail can contribute to wider economic growth over the next 5, 10, and 30 years? What is a stretching yet realistic ambition for this objective and what measures can we most effectively use to consider success over the coming 5, 10 and 30 years? What type of interventions over that period will provide maximum value for money from rail’s economic contribution, and what evidence can you share to support your views?
15.1. Rail is a strong contributor to economic growth in the UK. A 2021 report produced by Oxford Economics sets out the economic ‘footprint’ of the UK rail sector in 2019. The report finds that in 2019, the rail sector contributed £42.9 billion of Gross Value Added to the UK economy. This includes the knock-on effects of wage payments and purchases of business supplies. This has also increased compared to 2016, when the contribution was £36.5 billion. In addition, the rail sector supported 710,000 jobs across the UK and for every £1 worth of work on the network itself, a further £2.50 of income is generated in associated industries, their suppliers, and firms supported by railway workers’ wage-funded spending. These numbers also represent an increase compared to 2016 – when 600,000 jobs were supported and every £1 generated 13 / 20
£2.20 elsewhere. The rail industry also offers significant export opportunities for UK suppliers – creating another pathway for strong economic growth. 15.2. These benefits are in addition to the so-called ‘consumer surplus’ to travellers, as the total value of rail services to rail travellers will be greater than the monetary cost to them (partly as a result of time savings compared with alternative travel means). These benefits are also in addition to benefits from the environment, from the way in which travel draws individuals away from higher-polluting travel, and social benefits resulting from connectivity and economic agglomeration. 15.3. In terms of providing maximum value for money, RIA’s 2021 ‘Learning from Major Rail Projects’11 report examines successful delivery of major rail projects and highlights the key lessons learned. Here too, visibility and long-term investment (including shared pipelines) as well as early engagement with suppliers drives efficiency and gives confidence to the private sector to invest in skills, assets and innovation. Innovation also provides opportunities for economic growth and value for money – but innovation must be supported at the earliest stages of a project. Other key lessons were to create collaborative and strategic partnerships; recognise the full economic, environmental and social value that rail brings to the UK; and to celebrate the diversity of the supply chain and its people and promote UK rail expertise and capability internationally. All of this will serve to provide maximum value for money. 16.
QUESTION 4 B): In the context of enabling development and regeneration opportunities both in the immediate vicinity of stations and within the surrounding area, how can rail best facilitate improvements to places and local growth, through improved connectivity and unlocking commercial activity, housing, and employment over the next 5, 10 and 30 years?
16.1. In addition to their role as a transport hub, stations can be a significant catalyst to economic development. One example of a successful project which has enabled regeneration and positive benefits to surrounding communities is Network Rail’s Meridian Water Railway Station, designed and constructed by VolkerFitzpatrick. Meridian Water is at the heart of a £6 billion development of the area being led by Enfield Council, and the station will service the proposed 10,000 new homes and 6,700 jobs at Meridian Water, as well as existing residents in the area. As highlighted in RIA’s ‘Learning From Major Rail Projects’ report, such successful projects are enabled by collaboration between clients and contractors. 16.2. Indeed, as highlighted in a 2018 report produced by the Rail Delivery Group, the more than 2500 railway stations around the UK “represent civic amenities which offer benefits to the wider community beyond the rail passenger.”12 Stations don’t only contribute to creating more reliable, less congested and better-connected transport networks, they also enhance local productivity and support the creation of new housing. For instance, the Value of Station 11
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Investment report from 2011 found that £74m of inward investment was generated by the Sheffield Station Gateway programme – producing £3.4m of economic growth in Sheffield city per year.13 16.3. Arup and Go Ahead published their ‘Future Mobility Hubs’ report in September 2021, outlining how to develop hubs around existing transport nodes, such as railway stations, which will improve the provision of active travel in and around towns and cities.14 Increased throughput of people through such hubs will also strengthen local neighbourhoods and create new revenue streams. Hubs will account for diverse user needs and serve to contribute to local pride and the provision of public services – two of the four levelling up outcomes. 17.
QUESTION 4 C): What innovative and modernising ideas do you have which would benefit the railway while supporting the strategic objectives? Please give evidence and make reference to how they would maintain or enhance the railway’s safety record.
17.1. The rail supply chain is highly innovative – and this has strong potential to contribute to longterm economic growth and development as well as the Government’s aim to cement the UK as a global science and technology superpower, as announced in the 2021 Autumn Budget and Spending Review.15 Innovation will not only serve to contribute to economic growth, but also several other objectives including improving passenger expectations and achieving environmental sustainability. A focus on innovation can also contribute to levelling up by supporting the development of skills, associated with both the development and rollout of innovations. 17.2. Current rail innovation funding (including the Network Rail R&D Fund and DfT innovation funding) is very valuable and should not be reduced and ideally increased but is not yet delivering its full potential as it tends to be input based, is not always whole system and is not harnessing the full potential of private sector and successful innovation activities does not consistently lead to procurement which is a disincentive to innovators. There are opportunities to improve the success rate and scale of innovation and UKRRIN is already positioned to support industry with its unique blend of academic and industry members. Innovation in the rail sector can be supported by more effective use of available innovation funding – including more proactive consideration of how best to attract private sector match funding. Innovation funding also needs to be bold and focus portions of innovation portfolios on radical innovations, which have a chance to contribute to major change – with GBR finding ways to adopt new technologies at pace. 17.3. GBR has a real opportunity to take a whole-system perspective on innovation and to support skills, productivity and exports. GBR should also represent rail interests in national innovation
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strategies including hydrogen, digital and power. For example, rail electrification enables efficient use of limited energy supply and creates opportunities to support the UK hydrogen economy – but unlocking these benefits will require rail to be factored into national investment strategies. The UK has strong research capability including through the UKRRIN network to which the supply chain have committed £60m and unique test track facilities including those under development at the new Global Centre for Excellence in Wales. Making effective use of this capability will enable the rail sector to meet changing customer expectations while also making sure the UK remains at the forefront of global rail innovation. Getting this right will unlock private investment opportunities. We therefore recommend the development of an outcome led innovation strategy for rail to create an ‘innovation friendly’ environment with appropriate support for early stage high risk innovation and which is attractive to investors to commercialise successful innovation GBR has a key role to make the rail industry attractive to innovators to support both improving the UK rail offering and rebuilding UK rail exports. 17.4. SMEs can bring new innovation to market in the UK. They also have the potential to export, especially if given adequate support. One example of a successful project is DIGI-RAIL Sheffield City Region, an SME-focused project in partnership with the University of Birmingham Centre for Railway Research and Education, drawing on European Regional Development Funding. The project delivers support to SMEs in the Sheffield City region and offers free coaching to businesses with technologically advanced products that are seeking to enter the rail market, but require support and guidance to access it. This is yet another example, alongside UKRRIN and its Technology and Innovation Hub, of successful collaboration between industry and academia to drive innovation. 17.5. RIA is working on a report on rail innovation to be published in March 2022 and would want to engage further with GBR at that point. The report will use evidence from the 2021 Innovation Perception Survey16 and will focus on the following themes: 1. 2. 3. 4. 5. 6.
Innovation Funding Bringing Innovations to Market Overcoming the Barriers to Innovation Enabling Radical Innovation Whole System Innovation Skills and Culture of Continuous Learning
Levelling up and connectivity 18.
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QUESTION 5 A): What evidence can you provide for how the rail sector contributes to the four levelling up outcomes and to improving connectivity in across Great Britain, including through cross-border services? How does this change depending on the type of place where
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the sector operates (including in cities, towns and rural areas), and what are the most costeffective ways at the sector’s disposal to improve that further during the next 5, 10, and 30 years? 18.1. As set out above, rail contributes to economic growth in the UK and has strong potential to contribute to the four levelling up outcomes – local leadership, living standards, public services pride of place. In addition to economic growth, rail creates high-skilled jobs – Oxford Economics found that the average Gross Value Added of £62,000 per job in rail was 38% above the average across activities of all kinds.17 Additionally, given the national extent of the rail network, Oxford Economics also found that GVA per job and wages per employee job are above the equivalent economy-wide wages in every one of the UK’s 12 regions and countries examined in the report. Therefore, investment in rail has a strong case for enabling levelling up, improving not only connectivity but also the development of skills, both of which have long-lasting positive impacts. 18.2. However, to enable rail to support levelling up, sufficient investments must be made and there needs to be clear longer-term strategic thinking. For instance, the announcement in the Integrated Rail Plan that the Eastern Leg of HS2 between Birmingham and Leeds will not be built is worrying as this may undermine levelling up ambitions as well as longer-term environmental, social, and economic objectives. Major projects such as HS2 not only provide jobs during the construction phase of the project, but also upskills workers to keep performing in high-skill jobs for years to come and as detailed above in the answer to Question 4 A), every £1 spent on rail investment generates as further £2.50 in the wider supply chain in addition to the economic benefit of the transport investment . Here, GBR can play an important role in furthering long-term strategic thinking, recognising the full value of rail projects and enabling sufficient investments and funding to achieve strategic objectives. 18.3. RIA welcomes Government policy supporting SMEs and UK content. Given that we know that £1 of investment drives £2.50 of wider economic benefit GBR should recognise how local investment can support retention and growth of skills and rail supplier capability, unlocking local community and potential future export benefits. International suppliers can also bring innovation including research and development and inward investment to the UK rail market, as competition supports efficiency and drives future productivity. GBR should therefore have a strategy which balances competition with ensuring a sustainable level of UK supply chain capability to support the network and the UK economy in the longer term. 19.
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QUESTION 5 B): How could the rail industry, over the next 5, 10, and 30 years, become more responsive to, and more accountable to, local communities and passengers? Please give evidence and examples in your response.
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20.
QUESTION 5 A): What is a stretching yet realistic ambition for this objective and what measures can we most effectively use to consider success over the coming 5, 10 and 30 years? What are the interventions over that period which will be the maximum value for money, and what evidence can you share to support your views?
20.1. The rail industry can be innovative in how it goes about engaging with local communities and passengers. One such example is the Feltham depot project, which VolkerFitzpatrick was appointed to as the design and build contractor in 2019. As part of this project’s objective to better engage with the local community, the project team launched VolkerWessels UK’s first community engagement app, providing the local community with an easier way to keep up-to date on the project’s development. The app allowed people to submit queries and concerns, which can be reviewed in real time. In June 2021, the app has had over 200 downloads and is now used on other sites across VolkerWessels UK. 20.2. Another positive example is the Community Changemakers Fund, delivered by the South West Wales Community Rail Partnership with support from Siemens Mobility, Transport for Wales, and Great Western Railway. This fund was open for initiatives to improve community wellbeing near the rail network.18 Community Rail Network is an organisation dedicated to supporting community-based groups and partnerships that connect their community with their railway and deliver social benefit. They have organised over 70 community rail partnerships, plus hundreds of station friends and other groups and social enterprises – delivering significant social value.19 20.3. Rail also contributes to creating social value through apprenticeships and job creation. For instance, Crossrail Limited, Network Rail, Bombardier Transportation and MTR Crossrail have created more than 1,000 apprenticeships during delivery of the Crossrail project. Crossrail contractors and Jobcentre Plus partnered to employ more than 5,000 unemployed and local people.20 Rail has made good progress on improving the diversity of its workforce and supply chain, and GBR should continue to build on this success. Greater diversity can lead to more innovative products and solutions, and rail as a customer service should work to represent the communities it serves. 20.4. With regard to measuring success GBR should build on HMT Green Book policy that strategic business cases should reflect Government strategic objectives and outcomes. Measurement can then be tracked at both the macro-economic and project and programme level. Delivering environmental sustainability 21.
QUESTION 6 A): What is a stretching yet realistic ambition for this objective and what measures can we most effectively use to consider success over the coming 5, 10 and 30
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years? What are the interventions over that period which will be the maximum value for money, and what evidence can you share to support your views? 22.
QUESTION 6 B): What use can the rail sector make of emerging or existing technologies to reduce its impact on the environment and enhance biodiversity over the next 5, 10, and 30 years, and, in a proportionate and cost-effective way, help national and regional authorities to meet their environmental objectives?
22.1. GBR’s objective should be to deliver the Government’s environmental and climate change ambitions including the Transport Decarbonisation Plan. Innovation will be key to further reducing impacts on the environment and to enhance biodiversity. If given the right support, as laid out above, rail innovation can support transformational change in these areas. 22.2. RIA and its members welcome initiatives such as Cabinet Office requirements that procurements support zero carbon goals and commitments to Science Based Targets, and net biodiversity gain which Network Rail are increasingly mandating in tenders, as a way to further biodiversity and lessen environmental impacts. These requirements complement the increasing focus on environmental investments by financial institutions and create certainty needed for the supply chain to invest in appropriate skills and technologies. 22.3. The rail supply sector has already provided a multitude of innovative technologies and solutions to reduce its impact on the environment in a cost-effective way. For instance, for works at Bristol East, Colas Rail installed Getzner’s recyclable under sleeper pads made from resin-bonded-rubber and sourced from the circular economy. Another example is Laing O’Rourke’s delivery of four bridges as part of the Enabling Works (North) programme for HS2. Due to a reduction in embodied carbon in concrete mixes and the use of recycled steel in the bridges, approximately 100t CO2 was saved. Suppliers such as Unipart Group, Hitachi, Balfour Beatty, Amey, Costain, Morgan Sindall, Kier, Babcock and Arup have already expressed strong ambitions by signing up to the UNFCCC Race To Zero campaign. Further, HS2’s Net Zero Carbon Plan is an ambition plan setting out how HS2’s overall operations will be net zero from 2035.21 HS2 are working with supply chain partners and industry peers to hit a number of key net zero targets and RIA would welcome the same level of ambition and leadership from GBR. 22.4. However, the scale of change required should not be underestimated. In many cases the solutions are available such as electrification of the networks trunk routes what is now needed is the commitment to a programme to allow this to be delivered efficiently and realise the carbon reduction benefits as soon as possible. In terms of the wider agenda, targets and policies need to be designed appropriately and care needs to be taken to avoid any unintended consequences and unnecessary costs related to the bureaucracy and administration of targets rather than the environmental benefits themselves. This is particularly important for SMEs. Business cases need to reflect the environmental outcomes that Government requires.
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https://www.hs2.org.uk/about-us/documents/net-zero-carbon-plan/
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23.
QUESTION 6 C): How can rail best invest in climate resilience, supported by smarter forecasting, planning and technology, over the next 5, 10, and 30 years and what evidence do you have to support your view?
23.1. Climate resilience needs to be reflected in all processes, including the Periodic Reviews conducted by ORR, to ensure sufficient and sound measures are taken. RIA therefore welcomes the fact that climate change and resilience is one of ORR’s key areas of focus in reviewing Network Rail’s CP7 plans. 23.2. RIA has called for the Government to make a specific commitment to decarbonise the rail network, through further electrification work and fleet orders for production runs of low carbon, self-powered rolling stock. GBR can play an important role in long-term strategic thinking to meet environmental objectives as both infrastructure and rolling stock projects take time to deliver – trains have an average 30-year life, meaning rolling stock we commission today may still be on the network in 2050. A fleet order of new rolling stock would stimulate a new industrial sector, creating and retaining jobs and intellectual property in the UK whilst accelerating the decarbonisation of the network and supporting future exports.22 23.3. RIA sees investments in climate resilience as an opportunity for the rail industry to develop and be innovative. We note that Cabinet Office require client bodies such as Network Rail and HS2’s support for Science Based Targets and ambitions to be biodiversity net positive.
Railway Industry Association February 2022 If you would like further information, please contact Policy Director Kate Jennings at kate.jennings@riagb.org.uk and 07771 944135
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