£500m Network Rail shortfall 'could cause long-term damage'

 

Network Rail’s funding problems could cause serious damage to its supply chain, impact on passengers, and lead to a less efficient rail industry, a senior figure has warned MPs and Lords.

Peter Loosley, policy director at trade body the Railway Industry Association (RIA) told a meeting of the All-Party Parliamentary Rail Group that there was a shortfall of approximately £500m in renewals work in Network Rail’s current programme.

”Local

He warned that the hiatus in orders towards the end of Control Period 5 (CP5), which runs to March 2019, combined with a drop in work on future projects under the Governance for Railway Investment Projects (GRIP) process, poses a ‘significant threat’ to the rail network’s supply chain.

RIA members had reported falls in demand of between 20% and 45% in renewals work and ‘little if any GRIP 1-3 development work coming through for CP6’.

Suppliers also reported reduced confidence to invest, exemplified by British Steel downshifting its rail finishing facility by around 40%, and reduced staff levels at many companies.

Mr Loosley argued that this would require firms to ramp up staffing levels when work becomes available again, producing a very inefficient way of working, compromising productivity and increasing costs.

The downturn could particularly impact on SME and specialist companies, who often have a forward workload visibility of only a few months, he argued.

'It is not impossible that some will not survive into CP6,’ he warned.

Suppliers also described activity around CP6 enhancement work as ‘worryingly low, suggesting that the downturn could possibly last into CP6, even if the CP6 settlement restores volumes to pre-downturn levels’.

Mr Loosley said the RIA was ‘urgently lobbying’ Department for Transport and Treasury ministers and officials to see if £500m could be advanced from CP6 to plug the gap.

In the longer term, the RIA wants to see a change in the way that Network Rail’s work is planned, moving from five-year control periods, to a ‘regularly reviewed rolling five-year programme that doesn’t have specific starting and stopping points’.

The Government’s High Level Output Specification (HLOS) rail strategy, is due to be published this week, accompanied a Statement of Funds Available.

The Campaign for Better Transport suggested that the HLOS will move away from a five-year time horizon towards a rolling programme of projects. It said this ‘sounds great, but it could be a good excuse to do nothing’.

 

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