Neil Robertson
Image: Rail Forum
Mind the productivity gap By Neil Robertson, CEO National Skills Academy for Rail and programme lead for TIES Living Lab
Stubborn Unlike just about every other major industry, rail has been stubbornly resistant to improvements in productivity. But the problem is not evenly spread throughout the industry. On the operations side there have been dramatic improvements. Investment in newer, longer, faster, safer trains for one thing has seen an upsurge in passenger numbers. It is on the infrastructure side where productivity has flatlined, and some comparisons between the two areas of investment might offer an insight into what we can do to fix it.
Summer May 2022 2022
For all their faults, the rail operator franchises created an environment that encouraged private sector investment because they were long-term and stable with clear targets. But rail infrastructure procurement has been saddled with the sort of short termism that is deadly to both to investor confidence and the willingness to innovate and modernise.
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Investment in newer, longer, faster, safer trains has seen an upsurge in passenger numbers
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he Williams-Shapps rail reforms are just over the horizon, promising a simplified, rationalised rail network for the UK that - we are confidently assured – will soon deliver £1.5 billion a year in efficiency savings. Is that a realistic figure? Is the industry really misspending that much annually? Efficiency in policy proposals sometimes seems like the goose that never quite gets round to laying a golden egg, a magical promise in place of real, hard money. But in the case of rail, I think they are on to something.
The forward business competence of a rail supplier, on average, is about 15 months, with a return on investment that is typically about three years plus. The only way we are going to improve on that is by creating a policy environment that properly aligns procurement governance with contracting practice to create more competence in the supply
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chain and more enthusiasm from private investors. Under the right conditions, it is reasonable to assume that investment would double, rising to levels that are normal in other sectors.
Contracts for difference And we have seen those conditions created elsewhere. The UK has developed a world-leading wind power industry from a standing start in 10 years. It was largely done through imaginative procurement and governance arrangements that made wind an extremely attractive investment prospect. Under the government’s Contracts for Difference policy, companies were promised a set price on every megawatt hour produced for 15 years. It was a long-term bankable promise, immune to changes in administration, that attracted enormous amounts of private investment into what could appear to be a very risky, unproven new technology. With the right policy environment, we can do the same thing in rail. But infrastructure is only one part of the story. The skill crisis in rail is another area which demands investment that is not only more but smarter.
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