Union Connectivity Review Response

January 2020 – Final Submission UNION CONNECTIVITY REVIEW: CALL FOR EVIDENCE RESPONSE FROM THE RAILWAY INDUSTRY ASSOCIATION (RIA) INTRODUCTION This submission constitutes the response from the Railway Industry Association (RIA) to the Government’s Union Connectivity Review. RIA welcomes the strategic consideration of the UK transport network represented by the Union Connectivity Review. Rail is highly effective at long distance, intercity and commuter mass transit. It also supports green and efficient freight transport. Rail provides the backbone for an effective transport network supporting efficient, green, active and accessible travel and freight – it should be central to thinking on Union connectivity.

BACKGROUND TO RIA 2.1 RIA is the trade association for UK-based suppliers to the UK and world-wide railways. It has some 300 organisations in membership covering all aspects of rolling stock and infrastructure supply and covering a diverse range of products and services. As well as large, multi-national companies, 60% of RIA’s membership base is comprised of SMEs. 2.2 The Oxford Economics 2018 report shows that the UK rail sector contributes annually over £36bn Gross Value Added (GVA) to the UK economy, employs some 600,000 people and generates £11bn in tax revenues. For every £1 spent on rail, £2.20 of income is generated in the wider economy, meaning rail is not just an important sector in its own right, but it is also crucial for UK plc, its economy and connectivity. Rail has been a growing industry with the number of rail journeys expected to double in the next 25 years, along with significant growth in rail freight traffic, regardless of shocks such as the present Coronavirus crisis. The full report Oxford Economics report can be accessed here. RIA member companies are based across all the regions of the UK a map can be seen here.

2.3 RIA provides its members with extensive services, including: • Representation of the supply industry’s interests to Government, Network Rail (NR), TfL, HS2, ORR and other key stakeholders; • Providing opportunities for dialogue and networking between members, including several Special and Technical Interest Groups; • Supply chain improvement initiatives; • Provision of technical, commercial and political information every week; • Export promotional activity, through briefings, rail trade missions overseas, hosting inwards visits; and • Organising Great branded UK Pavilions presence at key exhibitions overseas.

2.4 RIA recognises that equality diversity and inclusion drive innovation, financial performance and success.

Together with Women in Rail, RIA is promoting an ‘Equality, Diversity & Inclusion Charter’ for rail, which has the potential to support social mobility, grow UK STEM skills, create local opportunities, and increase the talent pool from which the future leadership of the rail sector will be drawn.

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EXECUTIVE SUMMARY RIA recommendations • Recommendation 1: That the Union connectivity Review should recognise the full value and potential of rail sector to support passenger and freight connectivity, zero carbon, economic growth, levelling up and skills development.

Recommendation 2: Publish the Integrated Rail Plan for the North and ensure that the Union Connectivity Review builds on these plans to develop a new national strategic transport network maximising the potential that rail offers. This will enable the development of clear 30-year investment plans for infrastructure and rolling stock, thereby maximising the benefits of investment for the UK nations as part of the new strategic transport network • Recommendation 3: Support multi-year funding settlements for devolved Government transport bodies, in order to enable them to work with the supply chain to deliver local and integrated priorities effectively. Involve the private sector, to help develop creative funding and financing models, building on the lessons from regulated asset base financing, and performance-based build/lease/operate models and plans for the new Investment Bank alternative and co-funding models.

• Recommendation 4: Ensure rail is at the heart of Government thinking on transport, including this Union Connectivity Review and the Transport Decarbonisation Plan, in order to unlock the full benefits of rail, and enable effective planning and investment. This should include early decisions on electrification, hydrogen and battery technologies, and digital rail – and deliver a zero carbon transport system which is cost-effective and efficient for passengers and freight, and which supports the levelling up and exports agendas.

UK RAIL POTENTIAL 3.1 Rail investment is crucial to UK connectivity and, as part of the economic recovery, it offers three benefits: • Growth: As mentioned in section 2.2 above, rail projects generate significant investment – for every £1 spent on the rail network, £2.20 is generated in the wider economy; • Geography: Rail projects support investment in all regions and nations of the UK, including areas of social deprivation where investment and regeneration is urgently needed – supporting the Government’s ‘levelling up’ agenda; • Green: Rail is a green mode of transport and investing in rail will ensure the economic recovery is also an environmentally-beneficial one. Rail is the only mode with a ready solution to zero carbon long distance heavy freight and has a major role to play in modal shift.

Recommendation 1: That the Union connectivity Review should recognise the full value and potential of rail sector to support passenger and freight connectivity, economic growth, zero carbon, levelling up and skills development.

RESPONSES TO CALL FOR EVIDENCE QUESTIONS 5.1 When making transport investment decisions that aim to improve connectivity between the different nations of the UK, does the current appraisal framework capture all the potential impacts?

RIA welcomes the recent changes to Treasury Green Book Guidance so that it now better reflects the potential for rail investment to support strategic, zero carbon and indirect social and economic benefits.

5.2 Is there a need for the development of a national strategic transport network to replace the European Trans-European Transport (TEN-T) network following the end of the UK-EU transition 2/4

period? Please consider the specific strategic benefits of a replacement national network, which would connect strategically important regions and places in the UK in order to support economic growth and quality of life. View maps of the existing TEN-T inland waterways and ports and railways and airports network within the UK. How should such a network be defined? What would be the potential impact of such a network?

In order to maximise the benefits of rail, and other transport investment, long term strategic planning is essential. The Union Connectivity Review should build on the proposed Integrated Rail Plan for the North to create a new national strategic map for rail.

HS2 presents new opportunities to rethink north south and east west strategic networks including Union connectivity for freight and passengers. All modes of transport should be included. Criteria should reflect the full costs and benefits including passenger and freight connectivity, carbon and environmental benefits, and wider economic and social benefits. Too often rail is neglected as comparisons with road transport fail to capture the full costs and benefits. The UK transport network is congested – it is therefore more important than ever to make best use of all modes of transport and to invest in those which can offer the best long term societal benefit The scale of investment that would be entailed in high quality transport connectivity between the four nations is such that it would be important to establish agreement on a strategic target network (to replace the TEN-T network) which would be developed in phases. Providing commitment to such a framework would allow all Transport Modes and bodies to develop their own plans in the context of a long term strategic plan. Government could demonstrate commitment to the strategic plan by progressing the enabling acts to secure the routes.

Recommendation 2: Publish the Integrated Rail Plan for the North and ensure that the Union Connectivity Review builds on these plans to develop a new national strategic transport network maximising the potential that rail offers. This will enable the development of clear 30-year investment plans for infrastructure and rolling stock, thereby maximising the benefits of investment for the UK nations as part of the new strategic transport network 5.3 How should a network of this nature be managed or financed?

Effective management requires a balance between national and local structures. With regard to rail specifically, RIA supports long term funding settlements such as Transport for Scotland Network Rail Control Periods, which allow for a pipeline of work and integrated transport planning. Planning should also consider opportunities for alternative funding models noting that the Channel Tunnel was built on a Build Own Operate Transfer Model with a 65-year operating concession. RIA members have global experience of project funding and financing and would welcome the opportunity to share expertise and work with the Government on plans for the new Infrastructure Bank co-funding models.

Recommendation 3: Support multi-year funding settlements for devolved Government transport bodies, in order to enable them to work with the supply chain to deliver local and integrated priorities effectively. Involve the private sector, to help develop creative funding and financing models building on the lessons from regulated asset base financing, and performance based build/lease/operate models and plans for the new Investment Bank alternative and co-funding models.

CONCLUSION Strategic long-term planning such as this Union Connectivity Review supports cost-effective investment and delivery of zero carbon ambitions. It allows for prioritisation of service improvements on the existing network, for both passengers and freight. Strategic planning also enables balanced investment and cost-effective deployment of electrification, digital, hydrogen and battery across the 3/4

transport sector and wider economy. Rail can help ‘build back better’ – and draw on talents from across the regions. For example, RIA welcomes UK investment in test tracks and hydrogen – and often the UK nations together can develop and build on complementary capabilities to support UK export potential and levelling up.

Recommendation 4: Ensure rail is at the heart of Government thinking on transport, including this Union Connectivity Review and the Transport Decarbonisation Plan, in order to unlock the full benefits of rail and enable effective planning and investment. This should include early decisions on electrification, hydrogen and battery technologies and digital rail – and deliver a zero carbon transport system which is cost effective and efficient for both passengers and freight, and which supports the levelling up and exports agendas.

For further information, please contact Policy Director Kate Jennings at kate.jennings@riagb.org.uk / 07771 944135 or Policy Executive Isabella Lawson at isabella.lawson@riagb.org.uk / 07964 263836.

Railway Industry Association January 2021

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