Letter from Mark Harper MP to RIA

From the Secretary of State The Rt Hon Mark Harper MP Great Minster House 33 Horseferry Road London SW1P 4DR

Darren Caplan Chief Executive Rail Industry Association Kings Buildings 16 Smith Square London SW1P 3HQ

Tel: 0300 330 3000 E-Mail: mark.harper@dft.gov.uk Web site: www.gov.uk/dft

27 September 2023

Dear Darren, Thank you for your letter of 14 September, about the impact of the current market for rolling stock on RIA members.

Rail manufacturers and their suppliers play a vital role in growing the UK economy, in delivering better services for passengers and freight users, and in meeting global environmental challenges. The Government remains committed to supporting a world-class UK-based engineering industry, and I am aware of the very difficult trading environment currently facing rolling stock manufacturers and their suppliers. For these reasons, I am keen that my department continues to engage closely with the RIA over the coming months, so we have an accurate and up-to-date understanding of the pressures your members face and can work together to identify practical and effective solutions that benefit the country.

As you will be aware, government has provided £31 billion of financial support to the railways since the start of the pandemic, which has benefited transport across the country, connecting our regions, cities, businesses, and communities together to help drive economic growth and productivity. However, passenger travel habits have changed over the past three years and while numbers are showing signs of improvement, we are still seeing reduced passenger revenue on the railway.

My officials are working closely with the rail industry to ensure that rail services are fit for the future and at the same time carefully balance costs, capacity and performance.

As costs have increased across the public sector, the Government has had some tough choices to make to meet the budgets available for spending on rail.

There is no easy solution and I need to ensure public money is spent properly and that robust procurement processes are followed. That said, my ambition is to grow demand back and create a thriving railway, not only for passengers and freight users, but also to support the creation of high-quality jobs in a strong and resilient UK manufacturing sector.

Over the last ten years, DfT-contracted train operators have procured around 8000 new vehicles to replace an aging fleet and to meet the significant increase in passenger demand that occurred during that period. As you know, passenger trains are assets with a lifespan of 35 to 40 years and we must consider our budgets, the impact of inflation and the level of future demand for rolling stock to ensure continued value for the taxpayer.

New competitions to replace trains have just commenced for Northern, SouthEastern and Chiltern and I am pleased that RIA has welcomed and promoted these competitions to its members.

I recognise that there will nonetheless be a challenge for manufacturers and their suppliers in the short term while these new opportunities are competed in the market. I have written to the ROSCOs to encourage them to discuss with Train Operating Companies and manufacturers potential other opportunities such as refurbishments or major overhauls to reduce the environmental impact of travelling by train to ease short-term challenges in the supply chain. We are now commencing the annual business plan cycle so this would be a good time to bring any projects forward. But there will need to be a clear business case as the Department has a significant challenge on funding and affordability.

My department has been engaging with manufacturers regularly over recent months and we would be happy to continue constructive dialogue to share intelligence and assure them of our continued commitment to rail.

My officials will be on standby, should manufacturers wish to continue these discussions.

Yours sincerely,

The Rt Hon Mark Harper MP SECRETARY OF STATE FOR TRANSPORT