Comment

01.05.18

Rail: significantly larger than previously thought

Source: RTM April/May 2018

Darren Caplan, chief executive at the Railway Industry Association (RIA), reports on a recent study which revealed that the rail industry contributes significantly more to UK plc than previously imagined.

The RIA and a number of its members recently published ‘The Economic Contribution of UK Rail,’ a new report written by independent researcher Oxford Economics. Our reason for commissioning the report was simple: we believed the economic value of UK rail was underestimated, and therefore government, policymakers and influencers were unaware of the full size and scale of the sector.

The report confirmed expectations on the true size of the sector. The new research found that the UK rail system contributes over £36bn annually to the UK economy –  a greater economic impact than the food, drink and tobacco manufacturing and the chemical and pharmaceutical industries; supports some 600,000 jobs – employing more people than the entire workforce of Birmingham; and generates £11bn annually in tax revenue – more than covering the cost of the railways when capital costs are excluded.

These figures are significantly higher than those currently being used by the government – with the new GVA statistics 3.5 times higher than previous studies indicate, and the jobs figures 2.5 times higher. This is because the new research takes into account the wider rail network, including metro services, the London Underground, Northern Ireland rail, exports, capital investment, catering and retail at stations, and induced jobs and GVA.

Alongside the doubling of rail passengers over the past 20 years, the growth of freight by 80%, a strong safety record and some of the highest passenger satisfaction scores in Europe, we have a great story to tell of the value rail brings to the UK economy. As an industry, we must all become far better at promoting ourselves and showing our value.

Making the case to government

The rail industry must also be more vocal in demonstrating its value to government. The government is currently working to implement its Industrial Strategy agenda through the development of sector deals – agreements with industry that help to unlock productivity, investment and economic development. As a sector that covers the whole of the UK, reaching almost all regions and communities, rail is well placed to act as a catalyst for investment through a sector deal. As our economic research shows, rail generates £2.20 of income from every £1 spent on the network – a strong return on investment.

Similarly, on Brexit, the industry is clear that the UK needs to continue to be a place that is conducive for rail suppliers. This means continued access to skilled labour, as frictionless trade as possible, and standards which maintain high safety levels whilst providing space for innovation. This new research shows that rail is an important industry for the UK and one that could also be part of future trade deals with both EU and non-EU countries after the UK leaves. The Department for International Trade should be making the most of the rail sector and recognise and use it, in the same way it uses aerospace and automotive sectors.

RIA has also been campaigning for the smoothing of control period funding, which has detrimental effects on suppliers by creating ‘boom and bust’ cycles. We recently asked the Transport Select Committee in its inquiry into rail funding to recommend the DfT, the ORR, Network Rail and all those involved in rail infrastructure come together to find a solution. Watch this space!

RIA’s new research shows the value the rail network provides the UK. We have a successful, valuable sector, providing real economic and connectivity benefits to UK plc – which we need to promote more. Rail could deliver even more with more supportive government policy on a positive Rail Sector Deal, a smoother funding pipeline, and in working together to take advantage of and mitigate the tests posed by Brexit. It’s certainly an exciting time to be in rail – the supply sector is up for the challenge.

 

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