The UK government has announced that it is investing £48bn into the rail network over the next funding cycle, Control Period 6 (CP6), which runs from 2019 to 2024.
This is up £10bn on CP5 – an increase of around 25 per cent. The Railway Industry Association (RIA), along with other sector bodies, welcomes this settlement and applauds the Department for Transport and the Treasury for listening to and engaging with industry on this.
Although the DfT’s Statement of Funds Available (SoFA) – which sets out Network Rail’s budgets for operation, maintenance and renewal work in CP6 – was short and concise, it will have very significant implications for the industry over the next seven years.
While it does not give information on the efficiency savings expected by the Office of Rail & Road regulator, the funding level does mean that renewal volumes are likely to rise and the government is committing to maintaining and improving the UK’s rail system in the years ahead. Not only does this bring a real benefit to passengers and freight services, it will also provide a welcome boost to the rail supply chain, boosting jobs – direct and indirect – and growth around the country.
Private cash potential
The CP6 funding will go even further because, apart from some of the schemes held back as part of the Hendy Review, the SoFA does not include future enhancements, such as major projects and upgrades – in contrast to previous years.
Instead, the proposed arrangements for the future treatment of these enhancements will be announced separately later this year, possibly as early as November, around the time of the Budget. RIA eagerly awaits that announcement too, with the hope that it will utilise private investment to deliver even more improvements, and allow suppliers to plan in confidence for the future.
“The Treasury must bridge the renewals shortfall otherwise the industry will further contract, lose skilled employees and reduce capability”
For the supply chain, the SoFA means our sector can continue to press towards more efficient delivery, and the government will be keen for the railway industry to step up to the challenge.
The announcement for more funding for the early stages of developing new rail schemes will help drive these efficiencies. It will also ensure the mistake of underestimating the price of a scheme and then subsequently raising it once the actual price becomes apparent will not be repeated.
Bridge the shortfall
However, RIA’s optimism also comes with a note of caution. Currently, the industry is seeing in CP5 an even greater slowdown in renewals work than is usual during the transition between Control Periods.
The Treasury must ensure we have the funds required to bridge the renewals shortfall – estimated to be £500m – otherwise the industry will further contract, lose skilled employees and reduce capability before being asked to ramp up again for CP6. This also makes renewals more expensive, adding to costs ultimately borne by passengers and taxpayers.
RIA very much values the government’s commitment to our rail system in CP6. Smoothing the investment pipeline between Control Periods will help the supply chain deliver greater improvements more efficiently and ultimately an even more cost-effective-class rail system.
Now that really would be applauded by all who use or fund the UK’s railways.
Darren Caplan is chief executive at the Railway Industry Association