Government urged to end ‘boom and bust’ in rail procurement
Image credit: Network Rail
The head of a trade body representing railway suppliers has warned that current arrangements for funding infrastructure work on Britain’s railways create cycles of boom and bust that are both costly and inefficient.
Darren Caplan, chief executive of the Railway Industry Association (RIA), told visitors to this week’s Infrarail show in London that spending profiles for renewals work are a major hurdle for the industry.
“Funding is a big issue,” he said, adding that it’s a matter of smoothness more than the aggregate figure.
In October 2017, the government announced that £48bn would be available to spend on the railway over the 2019-2024 funding cycle, called Control Period 6 (CP6).
“We support the £48bn in the next Control Period,” said Caplan, but the concern is that spending rises gradually at the start of each five-year cycle and then falls off as it nears its end.
That drop-off in money and work leads to teams being disbanded, recruitment frozen and SMEs put at risk of going out of business, with the effect that projects can end up costing up to 30 per cent more than they would have done otherwise.
RIA is urging the government to work with the rail supply sector, Network Rail, the Office of Rail & Road (the industry regulator) and other bodies to find ways of eliminating ‘boom and bust’. “Let’s have that discussion,” said Caplan.
Elaborating the position, RIA policy spokesman Damian Testa explained that there’s a particular concern around renewals spending. “You can see peaks and troughs right back from CP2 (2001-2004),” he told E&T. “You get a ramp-up in mid-control period, then it ramps down at the end. It’s not efficient. We need a mechanism to smooth the workload.
RIA has developed three possible scenarios for improving the system. It set these out in December 2017 in a submission to the parliamentary Transport Select Committee’s investigation into rail infrastructure funding.
The RIA’s three possible scenarios are:
- Rolling control periods with regular reviews.
- Longer control periods of 7-10 years.
- Baseline levels of work and funding.
Testa said that RIA favours the third of these options, as the first would risk a return to annualised budgets and the second would allow longer periods of stability but not eliminate the rises and falls.
“With a baseline level of renewal, we should be able to say what the minimum budget for renewals will be before the start of the next control period. It will give [businesses] confidence to plan around that envelope.”
The important thing, he added, “is to get all the relevant players around a table” and reach an agreement.
“We like Control Periods - they are much better than annual budgets - but the system needs improvement because there’s no visibility [of future work], no certainty of work and therefore no incentive to innovate.
“If we can achieve this, it can unlock investment, improve efficiency and ultimately keep the network running better.”