RIA Conference – Supplying the railway with projects, equipment and services

The Railway Industry Association (RIA) annual conference is a big event at which the supply chain can hear from government, regulators, Network Rail, and train companies. Over 300 people were in attendance representing suppliers, from the big Tier 1 companies to small and medium enterprises (SMEs), to hear what’s needed and how much finance will be available. Trade stands demonstrated some of the innovative work that is taking place.

Setting the scene

The new Labour government should be giving new confidence to the railway supply industry but companies are anxious to learn what the future holds, so says Darren Caplan, RIA’s chief executive. The HS2 cancellation triggered the worst level of confidence ever experienced. The future railway structure and organisation remains largely unknown. Companies continue to fear boom and bust with 83% predicting a hiatus of work. The rest of the world, which is seeing a 3.5% growth in rail investment, makes the UK position looks precarious.

The ‘difficult times ahead’ prediction has not helped confidence but there are hopeful signs: the TransPennine Route Upgrade, East West Rail, and HS2 extension to Euston are projects that will proceed. Passenger numbers have almost returned to pre-Covid levels and rail freight is also growing.

RIA listed five items it would like to see:

• A long-term strategy for rail.
• The industry reformed into Great British Railways (GBR).
• An acceleration of new train orders.
• Support for sustainable objectives.
• Leveraging of private investment.

The Government position

Rail Minister Lord Peter Hendy was welcomed, knowing his in-depth expertise of the transport industry, rail in particular. His presentation stressed that the railway had to earn confidence and trust by fixing things, as current lateness and cancellations are unacceptable. Running a successful railway needs track, trains, and staff that are fit for purpose. Instead of blaming others there has to be collaboration. The unified system that becomes GBR should provide this and the Government will make it happen.

A procurement plan is essential to provide a steady workload for rolling stock suppliers. The Treasury is currently reviewing capital spend including all infrastructure projects. As well as the projects mentioned earlier, the digital signalling programme will see the Welwyn Hitchin section commissioned in 2025 after which its roll out should accelerate. Government wishes to give the supply chain the necessary confidence and is grateful for the work being done.

Business leaders fear that the railway will contract but the Government spending review in the spring should give more certainty. High on the list for reform is the ticketing system as simplification is essential. Improved WiFi on trains is crucial and innovative plans will include third party investment. Network Rail will be abolished in its present form with GBR having a route-based organisation once it is established. The railway needs effective business cases if the supply chain is to have a consistent order book but in turn, it must give reasonable prices and guarantee of delivery.

National infrastructure

The UK has many planned infrastructure projects, with rail being just one sector on the wish list, said Sir John Armitt who heads up the National Infrastructure Commission. He reiterated his disappointment at the cancellation of HS2 Phase 2A though he welcomed the recent budget announcement that HS2 will be extended to Euston. However, the new station will be a time and cost challenge.

The government has stated an extra £35 billion will be made available for infrastructure projects. However, the current spending rate is only £25 billion annually, so it is questionable whether rail (and others) can spend the extra money.

A continuing problem for rail is that projects cost more than in comparable countries. High speed rail costs are high because Britain does not have enough practice at doing them so is on a constant learning curve. Successful projects need effective governance and competent clients. Determining the outcomes must take into account passenger needs and ticket prices. If the price is too high, people will not travel.

The government is to publish a 10-year infrastructure plan in April. This will include the need for planning reform as regulation must be seen as helping investment, not hindering it. Over this period, infrastructure investment is expected to be £40-50 billion from the private sector and £20-30 billion from public sources. Getting the prime minister and chancellor on side is vital if major projects are to proceed.

Projects must be better planned and costed before approval is given. Change of scope once the project is underway will only lead to cost escalation. Problems encountered must not be allowed to fester. SMEs are often better informed as to what is needed, compared to bigger companies.

A Network Rail perspective

Obtaining the best value for money amid tight fiscal constraints is the everyday challenge for Network Rail, so says Chief Executive Andrew Haines. The recent budget contained both good and uncertain news. The rise in national insurance payments will worsen the cost base by £250 million and investment money is lower than had been hoped for. However, it is a secure settlement and a solid programme of work can proceed. Spending in CP7 has already reached £800 million, higher than the same stage in CP6. The TransPennine Upgrade has spent £7 billion so far and a further £3 billion of contracts are about to be let. The HS2 extension to Euston is welcome news.

Network Rail’s relationship with the supply industry needs improved transparency, especially with the SMEs. This varies around the country and by engineering discipline. The next two months will sort out various procurement problems, with more focus on maintenance and renewals. Signalling needs a clearer steer given to established and prospective suppliers. Electrification cost control remains difficult. Money for research will be focussed on UKRRIN. Opportunities for mix and match funding from the private sector have to be explored.

As to the future, Network Rail will cease to exist as the organisation is too fragmented. GBR will provide a simplified structure but territorial thinking is an industry failing with parts of the country being too parochial. The relationship with the big Tier 1 suppliers needs to be more challenging.

As to daily operations, Clive Berrington, group director for rail business services, emphasised that passengers and tax payers should be better aware of the benefits obtained when money is spent. A spend of £11 billion per year, of which £9 billion goes to the supply chain, is a lot of money. Earthwork activities could be better communicated. Different models for delivery in CP7 will be used. Network Rail does try to help the supply industry, but it is not possible to prop it up all the time. A request for some low level work to be offered only to the SMEs is not possible because of procurement rules. The lack of certainty as to when work is going to happen is a constant complaint.

Concern about the epidemic use of blockades was voiced. The trade-off between efficient project delivery and passenger disruption needs to be carefully considered so that Network Rail can keep to its slogan of ‘putting passengers first’.

Network Rail owns the process of timetable compilation, vital work to connect people and businesses. Anit Chandarana, group director for system operations, explained the difficulties of this task. Signalling is key to keeping trains moving, especially during periods of disruption. The management of the Network Rail-owned major stations is also a big responsibility with thousands of people congregating if the trains are disrupted. Bringing rolling stock and infrastructure together will help deliver a more consistent performance. Currently only 61.4% of trains run on time and 4% are cancelled. Recovering from trespass and suicide incidents has to be made easier.

The role of the ORR

The Office of Road and Rail (ORR) is the government agency to ensure the railway (and road system) is safe and fit for purpose. John Larkinson, its CEO, said that improving rail efficiency is an important ORR objective and the supply chain must be part of that. There is encouragement to introduce new ways of working but these can be difficult to track and measure. Measuring the delivery promises made by Network Rail against actual achievements is difficult. Performance and safety will be constantly judged and weak spots will be declared. Recently, the Wales and West TOC performance was well below par but they have responded to the deficiencies.

Concerns were raised on the process and cost of getting approvals. Companies spend a fortune in preparing all the required documentation. Safety approval for new electrification was particularly challenging. Prioritising asset condition is vital but the situation is not yet at the point where enforcement action is needed. The next two-three years will see changes, public ownership of all TOCs being the most significant. A question was asked as to whether the ORR will still be required; this remains to be seen.

Regional views

Just how devolved governments and regions can contribute to the debate on rail reform to ensure that there is integration of transport at a local level was questioned. London’s pioneering work with the Oyster card should be used as the model. The South Wales Metro is integrating local rail services with the future operation of tram trains and local bus networks. Similar things are envisaged for Manchester with its Bee ticketing system. The more spread out East Midlands network covering Leicester, Nottingham, and Derby presents a greater integration challenge. The regionalised ‘islands’ must also be capable of issuing ‘point to point’ tickets for journeys outside their area without passengers having to rebook enroute.

Decision making from central government is often wrong and local devolution should ensure mistakes are avoided. An example is the compatibility between rolling stock and stations. GBR must have an organisation that ensures local accountability but local politicians must be prevented from micro managing railway operations.

All this is a major challenge and will need a strong voice in the general reform of the fares structure.

Project analysis 1: HS2

High Speed 2 is constantly in the news, mostly for the wrong reasons. The chair of HS2, Sir Jon Thompson, gave a frank update on what has happened and a pathway for the future. The political decision to cancel Phase 2A, which would have taken HS2 services to Crewe, will cause massive ongoing problems for the WCML. Although HS2 was not a fit-for-purpose company, Government needed to be a better client. No sale of land acquired for Phase 2A has yet happened and this might be fortuitous.

HS2 is a monster project where costs constantly escalated. It needed 8,276 consents to get the railway from Euston to Birmingham to accommodate objections from locals who do not benefit from the project. An example is the protection of Bechstein bats in Buckinghamshire which required a 1km long structure costing £100 million, with the local planning authority disagreeing to this until it was overruled. Sixty percent of the earthworks are completed with the opening expected to be in the 2029-2033 window. Options for Euston station are still being considered.

Lessons learned for the future are:

• Don’t put new lines in tunnels unless absolutely unavoidable. This had been taken on board for Phase 2.
• Align the design to the European high speed standards, don’t invent new ones.
• Split the design from the build. The budget was set too early and was unrealistic. Get the design right, then contract to build it.
• Start the location of the project from where you want it to go. Treating Euston as an add on was a big mistake.

Quite how the line will proceed northwards from Handsacre remains uncertain and all eyes are watching as to what will finally be decided.

Project analysis 2: East West Rail

The proposed EWR line from Oxford to Cambridge is getting favourable press and making good progress according to David Hughes, the project’s CEO . Except for the Bletchley to Bedford section, the original line was closed in 1968. Since then, the line from Oxford to icester has reopened.

A new spur connecting it to the Birmingham to Marylebone line opened in 2016 to create a new route from London to Oxford. EWR is reopening the line from Bicester to Bletchley with a new station at Winslow. During a partial rebuild of the flyover at Bletchley, new platforms are cantilevered off this structure. This will provide an Oxford to Milton Keynes service in 2025.

The Bletchley to Bedford line provides a local service which EWR has already diverted into Bedford Midland station. The line has a recently modernised signalling system but East West services are not projected to reach Bedford until 2030. This is disappointing as this line is already an operational railway and connectivity between EWR and the Midland Main Line would offer significant benefit. Surely a way can be found to extend the service in a quicker timeframe? Disappointing also is not to progress the extension from Aylesbury to Calvert which should be another quick win.

Extending from Bedford to Cambridge requires a brand-new railway as the old formation was not safeguarded. The new route will cross the ECML at Tempsford to support new housing developments and will approach Cambridge from a southerly direction to serve the new Cambridge South station. The anticipated cost is £5-6 billion.

The project has Government and, more importantly, Treasury blessing since it will link two main science centres which attract investment into high tech industries. Although it will commence with diesel traction, discontinuous electrification is being proposed despite EWR providing a strategic rail freight route between Southampton and the West Coast Main Line. David advised that the new EWR line will offer two freight paths per day.

A view from the old guard

Lessons from the past should always be taken on board. These were offered in a live ‘Green Signals’ podcast from the conference in which Nigel Harris, former editor of RAIL magazine and Richard Bowker, former CEO of the Strategic Rail Authority, interviewed Chris Green who once led British Rail’s Network South East and Inter City sectors.

In this interview Chris Green’s key message was that if the railway wanted investment it had to earn the respect of politicians by improving performance.

When Network South East was first formed, its services had a reputation for poor performance and tatty trains. Chris, who had transformed train services in Scotland, was given the remit ‘Do a Scotrail in London’. The result was the creation of six sub-sectors empowered to delegate downwards, 1,700 staff were recruited and/or retrained with full concentration for six months on improving performance. A net subsidy was essential but equally it was vital to keep within it. Too much control from the Treasury was an ever-present threat.

The introduction of the business sectors was a learning curve about commercial realities and led to the recruiting of experienced business managers.

For the future, Chris acknowledged that the Secretary of State appeared passionate about passengers and freight growth. His advice to her and Peter Hendy is that managers must have the necessary powers to achieve their set objectives. In turn, they must prove they can deliver before the DfT will begin releasing control. GBR will need a high profile leader. The cost of the railway is today much greater than in British Rail days and to have any hope of getting back to the former situation, stopping cost escalation and attacking overheads has to be key.

In short, the ‘new’ railway must restore the freedom to manage and, as costs are largely fixed, have revenue growth as its main objective

Fares and ticketing

A ‘fireside chat’ with a group representing rail retailers also emphasised that the current structure, with its numerous types of fares, has to be simplified. Getting the right ticket at the cheapest price into the passenger’s hand is the challenge. That said, fares reform will take time and might mean some ticket prices increasing. Passenger needs have not changed enormously but the means of obtaining a journey is far too complicated. This was not considered to be a technical problem but a solvable commercial challenge.

Rail tickets can be obtained from many sources. Currently, TOCs are dominant but several independent retailers offer nationwide ticket agencies which give 95% of their revenue to the TOCs. It is not yet decided whether GBR will sell its own tickets but whatever happens, it must not stifle competition. Customers have a choice, passengers have no choice.

With the ever increasing use of online opportunities, making rail travel more attractive will be part of any new initiatives. However, there is a decreasing but still significant customer group who are not computer literate. Dependence on mobile phones is also risky. Mobility problems must be catered for and having rail staff on hand must not be forgotten. The proposal to shut most ticket offices was clumsily handled and caused an enormous backlash. Yet maintaining revenue is important as shown by the ScotRail experiment to abolish peak time fares which ceased due to lost income.

Promoting rail travel to future passengers must be considered. One suggestion was making public transport free to all under-18s which would cost less than OAP bus passes and would encourage youngsters to travel by train before passing their driving test.
Skills and resources

The country faces skill shortages, particularly in engineering. For rail this is a real problem as it is losing people at an increasing rate. Neil Robertson from the National Skills Academy for Rail, led a discussion with a group of experts in this field. Companies that poach people from other companies are not helpful. Retention is the big challenge, especially as everyone is fishing in the same pond. So how can this be reversed?

Apprenticeships are seen as the way forward covering Levels 3, 4, and 5. These will be preferred to university courses for the majority of youngsters. Engaging the ‘blue collar’ workforce is important as there are six of these to every one white collar.

Targeting schools and establishing roots in the rail industry with enjoyable work experience should make for career minded railway people into the future. Once GBR is established, the scope of training on offer within the company should be much wider and could cover all engineering disciplines including rolling stock. Arrangements for periods of training in other companies on an exchange basis should be progressed. Effective mentoring would all be part of this.

Making infrastructure work more attractive to women remains a challenge as the work often involves shift patterns and nighttime operations. The LGBT+ diversity norms of today should provide suitable encouragement for all.

Previous policy and a summary

Many issues were covered in this conference with lots of questions tabled for what will happen in rail under the new Labour government. While the great and the good gave their opinions, there remains considerable uncertainty about future levels of investment and the continuity of work for the supply chain.

It was good to hear Huw Merriman, the Rail Minister in the previous government, state his disappointment about the HS2 situation. Not upsetting local MPs was a factor but the cost of the railway must not be increased by ecology factors. Politicians need to be braver in resisting ‘over green’ demands.

There remains a risk of ‘gold plating’ projects and a review of how the rail industry contracts out work is needed. Rolling stock orders to the principal four contractors needs a regularised pipeline.

Much will happen in the next year and one can only hope that GBR will become established with the predicted improvements coming to fruition for the industry in general and the supply chain in particular.

Image credit: RIA