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Hansford: Contestability offers chance to unlock capacity and improve quality on network

The review of contestability undertaken by Professor Peter Hansford has today been released, concluding that a contestable market has few barriers to entry, and can lead to greater innovation and better value and delivery for customers.

Prof Hansford was commissioned to take on the review by CEO of Network Rail Mark Carne, looking into how a more contestable market would affect the UK’s rail network.

It revealed that a more contestable market would create pressure on Network Rail and its suppliers to be more innovative, improve cost performance and deliver projects more successfully.

The research also uncovered a number of barriers that currently prevent third sector companies investing in rail infrastructure projects, including a lack of a specific part responsible for ensuring the creation of a more contestable market and the risks of companies investing in projects outweighing potential gains available.

A number of key recommendations to increase contestability on the network were also suggested, including Network Rail developing and embedding processes and specialist commercial capability consistently within routes to establish and deliver a range of alternative design and delivery options for infrastructure.

It also suggests the creation of a transparent process to enable and facilitate third party challenge of scope and standards applications during project development.

In conclusion, the Hansford review argued that the panel drew confidence from successes that had been achieved through the introduction of contestability on a number of large projects, including HS1, Crossrail and HS2.

“Unlocking investment in rail infrastructure by third parties will have dual benefits. It will attract much needed additional funding, whilst also bringing a competitive pressure to reduce costs. These changes will benefit Network Rail, government and the wider investment market,” Hansford said in his foreword to the document.

“My recommendations are offered to the Board of Network Rail, as well as to all parties with a role to play in taking this important agenda forward. I believe that the potential ‘size of the prize’ is significant and that this prize is within reach.”

And Darren Caplan, chief executive of the Railway Industry Association (RIA), said: “The Railway Industry Association strongly supports the view that greater contestability in the UK rail market would provide the opportunity and encouragement for third parties to invest in rail infrastructure improvements to help meet the growing needs of the network.

“We are pleased that areas where the current system could be improved – as highlighted in our submission – have been addressed by Prof Hansford, including various barriers to entry like standards and scope control and complex business cases and funding agreements.

Caplan added that the radical reforms will allow third party stakeholders to confidently compete for and deliver railway projects.

“This has the potential to unlock the capacity of the network to improve passenger experience, to increase UK productivity and to allow economic growth,” he added. “It’s an exciting and forward-thinking set of recommendations and we are pleased to see that Network Rail is already taking steps to implement them.”

The RIA boss also encouraged the government to continue in this direction by considering even more ambitious opportunities to work with the private sector to bring their expertise and innovation directly into the financing and delivering of railway projects. 

“The UK's railway supply industry is ready and willing to rise to the challenge of introducing third party financing into UK railway infrastructure,” he concluded. “We look forward to working with stakeholders to deliver this and to continue working with Network Rail to review and deliver the recommendations in this very welcome report.”

The review was also published alongside a swathe of Network Rail reforms that will drive private sector involvement in major infrastructure projects on the railway.

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Samir Kahn   02/08/2017 at 09:32

To state the blindingly obvious, the rail industry is not cheap to get into, so there is an enormous barrier at the start, then there are the questions of quality, technical and engineering knowledge, So where is this easy entry idea coming from? What rubbish. More companies don't make things better or cheaper, they will make it more complex (look at the number of 'management' companies in the industry now, who do no work, just manage bits of projects. Then there is the lack of accountability when things go wrong - every company claiming it is anothers fault. We keep hearing this lie of the need for more competition but where is there any evidence that it works? Always that the current failings are because there is not enough when in fact what is lacking is a strategic centralized policy and accountability, like other countries have - you see, I reference Italy and Spain and Japan and France and Germany as evidence of how something works, not just quote the old failed lie that we need more privatization and competition for something that fails. People who push for more privatization and competition should be forced to declare how much they have been paid and how much profit they personally will make from it, not just quote failed lies.

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