HS2

Carne: I’m determined for private sector to directly invest in railway

I have always firmly believed improving Britain’s railway is vital for economic growth, jobs and housing. The railway has been growing by 3-4% for 20 years, representing the fastest level of growth in the last hundred years – and passenger numbers could double over the next 25 years. Mega projects like the Thameslink Programme, the Great North Rail Project, Edinburgh Glasgow Improvement Programme, Crossrail, Great Western electrification, and Waterloo and South West Upgrade are on their final laps, and passengers will see a transformation in services in the next 18 months as much needed capacity with new, more frequent and longer trains come on stream. 

Network Rail is now delivering almost a quarter of all infrastructure investment in the UK. This is the biggest investment programme in generations – £130m every single week – and we do this in just a few short hours at night so the railway can keep serving 4.5 million passengers safely, every day. 

But there is huge demand for even more projects – many of them local improvements. Community leaders and developers that I talk to, up and down the country, say that they want more stations, railways reopened, better connectivity and faster journeys. And, worryingly, they consistently say that Network Rail is often an impediment to their ambitions rather than a welcoming partner.  Increasingly we will be dependent on the funding from the communities that directly benefit from better railways, so it is right that they have a greater say in the way that projects are delivered. We know we have to change, and that is why I’ve been pushing to break down the actual and perceived barriers to entry for those that would like to fund and build projects on our railway. 

That’s why, back in December 2016, I commissioned the Hansford Review to investigate how we can encourage competition into railway projects and attract more private sector involvement to fund and finance Britain’s railway projects. In July, we announced the findings of that review and a swathe of necessary reforms that will enable companies to become more heavily involved in delivering railway investment projects.

I want to create an environment where innovative third-party companies can compete for, and directly deliver, railway projects. Some of the reforms include: 

• Publishing a regular pipeline of third-party project opportunities
• Creating a swathe of third-party project champions across the country who will work side-by-side with delivery bodies, investors and funders to ensure their projects are successful
• Creating a clear service-level agreement for third parties so they have clarity and reassurance regarding Network Rail’s legal obligations
• Introducing flexibility to railway standards. Safety, of course, will always be central to our ethos. But where we can encourage innovation and reduce costs without compromising our solid safety record, we will explore how we can be more flexible
• Launching a rewards scheme where money saved from introducing a new idea or innovation is shared between Network Rail and the company or individual 

By the end of 2017 our routes will have published the first ‘pipelines’ of projects they intend to put out to market – and we will also be working with government on producing a list of third-party opportunities. Initially these may be at the smaller end of the spectrum, such as new stations, depots and car parks. Examples may include new stations planned at Warrington West, Reading Green Park, Bow Street in Ceredigion and Horden in County Durham. We also have aspirations to include other projects, for example the construction of improved rail links to support power generation plants, such as in Cumbria, or the construction of Sizewell C in Anglia. Over time, we will be able to use learning from initial projects delivered in this way to develop best practice criteria for when to adopt this approach. 

I am also determined to find ways for the private sector to directly invest in railway projects. As a government-owned business, this has some challenges. But by unlocking private finance we can potentially deliver railway improvements for passengers and communities that would otherwise not be possible by reducing the burden on central government and taxpayers. 

One of the first examples of projects being privately financed can be seen in the Digital Railway programme. We’ve now arranged an innovative two-year deal with Resonate – the British signalling and train control specialists – who are installing a new delay-busting traffic management system on the Great Western Railway to boost performance between London Paddington and Bristol Parkway. 

Together, we’ve agreed an innovative and groundbreaking way to finance the project so the cost to Network Rail and the taxpayer is minimal and the financial benefits will be shared. In practice, this means Resonate is picking up much of the costs to install and run the system. This is part of the early phases of the Digital Railway revolution, as we’re predicting reactionary delays could reduce by up to 15% on the main lines out of London Paddington. This will reduce the compensation paid to TOCs – and the money saved will be shared between Network Rail and Resonate. 

I am sure that there are many other potential examples like this, and my message to the supply chain is ‘we are open for business’. Come and tell us how you can save money or improve services and we will work with you to make this happen.