Written evidence from Invensys Rail (TE 90)
1. Invensys Rail welcomes the opportunity to
make a submission to the Transport Committee's inquiry into transport
and the economy. We are the UK's leading manufacturer and supplier
of state of the art rail signalling, control centre, rail automation
and automatic train control products to Network Rail and London
Underground, with offices across England and Scotland and with
a manufacturing facility in Chippenham.
2. We are also a leading international supplier,
meeting the needs of high speed, mainline and mass transit customers
in over 30 countries encompassing North America, Spain, India,
Latin America and the Asia Pacific region, including China and
Australia. We have, for example, designed, manufactured, installed
and commissioned the train control and communications technology
for seven of the last eight high speed lines in Spain and for
the Spanish metro, and nine of the twelve Beijing metro lines.
We employ over 4,000 people worldwide, including around 700 people
in the UK.
3. In the context of significant fiscal consolidation,
it is essential that transport spending is appropriately targeted
to ensure that taxpayer value is maximised. This submission is
focused on the type of spending that should, in our view, be prioritised
in this environment to help achieve this aim while improving,
for the long-term, the capacity, reliability and running costs
of the UK rail network.
4. The key points of our submission are:
- Research shows that investment in the railways
provides a high return for the Government in terms of jobs created
(directly and indirectly) relative to other industries, and in
securing matching investment by the private sector.
- Demand for rail travel is growing fast and capacity
on the rail network is failing to deliver. Investment, in particular,
in signalling technology can play a central and cost-effective
role in addressing this challenge in a fiscally constrained environment.
- Independent research we have commissioned shows
that on a pound for pound basis, the greatest increase in transport
capacity (including highways) for the least price is secured from
investment in railway signalling and train lengthening.
- Railway signalling technologies lie at the heart
of improving the performance of the railways, not only by driving
out costs and increasing capacity on the network, but also though
wider non-safety critical operational benefits in areas such as
reduced fuel burn, better asset management and improved passenger
information.
- Given the cost-effectiveness and the operational
benefits of investment in new rail signalling and train control
technology, the case for prioritising transport spending in this
area is all the more compelling in the current economic environment.
CASE FOR
INVESTMENT IN
RAILWAYS IS
STRONG
5. Rail is a major UK industry with excellent
employment economics. It has the potential to be a significant
engine for job creation and economic growth and, as such, a key
industry in helping to drive the economic recovery.
6. The industry currently employs approximately
268,000 people. Of these, some 112,000 people are directly employed
by the industry, working for employers whose core businesses involve
the movement of passengers of goods by rail (Train Operating Companies
and Freight Operating Companies) and management of the physical
infrastructure (Network Rail and Eurotunnel). Indirect employees,
including people working for engineering companies and equipment
suppliers such as Invensys Rail, account for 75,000 jobs. The
remainder work for companies that depend upon the demand for goods
and services generated by the spending of direct and indirect
rail employees - 81,000 in total.
7. Given the Government's commitment to reducing
the fiscal deficit, it is vital that every pound of taxpayers'
money is invested to greatest effect, as the Committee acknowledged
in its call for evidence. Choosing to invest in areas that deliver
the widest benefits to the economy as a whole in the most cost-effective
way is clearly critical in this regard. The rail industry has
high economic multipliers, both in terms of job creation and attracting
additional private sector investment.
8. Analysis shows that every ten additional direct
jobs in the railways generate 14 indirect jobs in the wider economy;
this compares very favourably with other industries - for every
10 direct jobs created in the automotive industry, for example,
only five indirect jobs are created. As such, rail represents
an efficient investment opportunity in terms of job creation.
Furthermore, for every pound invested in the railways by the Government,
the industry generates £1.30 in its own funding. Thus, for
example, £1 billion invested by the Government would generate
£1.3 billon from the private sector - a total of £2.3
billion. Research suggests that this investment would support
the creation of an additional 52,000 direct, indirect and other
rail-induced jobs.
9. We believe that these figures demonstrate
the real value of investment in the railways, especially at a
time of economic difficulty. With public expenditure across government
departments under serious pressure in the forthcoming Spending
Review, investment in the railways should be a high priority relative
to other spending options.
INVESTMENT IN
SIGNALLING TECHNOLOGY
SHOULD BE
PRIORITISED
10. Considerable pressure is being placed on
the rail network by rising passenger demand, a trend which is
set to continue despite the tough economic conditions. Clearly,
safety must be an issue that underpins every aspect of the investment
strategy for the railway, and cost-effective investment will be
an overarching consideration given the Government's programme
of fiscal consolidation, but two other primary objectives for
rail investment must be to improve performance and increase capacity.
11. In the last railway Control Period, Invensys
Rail reduced the cost of its signalling systems by some 30% and
further cost reductions are possible. Major technological advances,
some of which are discussed in the next section of this submission,
are being made which will result in further increases in rail
capacity by enabling trains to be run more frequently and closer
together on the existing network, as well as costs coming down
further, potentially significantly, and will provide wider operational,
non-safety critical benefits in respect of fuel efficiency, asset
tracking and passenger information.
12. There must of course be a balanced investment
strategy across the various transport modes. However, independent
research undertaken for Invensys Rail demonstrates that investment
in signalling and train control systems provides the greatest
increase in capacity on a pound for pound basis, second only to
train lengthening (which itself is not always an option), compared
to all other forms of transport investment including road widening.
While investment in new railway lines and roads provides the greatest
absolute increase in capacity, this is very expensive. The following
table demonstrates the point.
| Commuter
| Long Distance / Motorway
|
| Capacity (people/hour)
| Cost per Km (£m/km) | Capacity per £1m spent (people per hour/£m per km)
| Capacity (people/hour) | Cost per Km (£m/km)
| Capacity per £1m spent (people per hour/£m per km)
|
| Road | |
| | | |
|
| New Build | 2,370 | 3.2
| 741 | 2,481 | 3.1
| 789 |
| Widening | 2,370 | 5.5
| 430 | 2,481 | 8.2
| 303 |
| Rail (including Rolling Stock)
|
| Rail new build | 12,701 | 12.0
| 1,056 | 4,032 | 20.5
| 197 |
| Rail widening | - | -
| - | 4,032 | 19.0
| 212 |
| Rail reinstatement | 1,411 |
1.4 | 1,018 | 806 |
2.2 | 366 |
| Train lengthening | 3,175 |
0.9 | 3,530 | 504 |
- | - |
| Signalling (traditional) | 2,822
| 0.8 | 3,678 | 806
| 0.6 | 1,260 |
| Signalling (ERTMS) | 1,270 |
0.7 | 1,825 | 1,814
| 1.3 | 1,348 |
Source: Invensys Rail Transport Capacity Research Paper
- A comparison of the cost of different methods of increasing
capacity in road and rail environments, Credo, November 2007.
13. Substantial reductions in departmental budgets, including
the transport budget, are widely anticipated in the forthcoming
Spending Review, and a tough settlement for the railways is expected
for Control Period 5. Public funds for investment in transport
generally, and in the railways in particular, will be constrained
for years to come. Against this backdrop, priority should be given
to those investments which provide the most cost-effective incremental
increase in transport capacity. The case for investing in new
rail signalling and train control technology becomes even more
compelling in these circumstances.
14. All too often, however, public policy discussions over
rail investment focus on the procurement of new rolling stock
without a full appreciation of the importance of investment in
new signalling technology as a pre-requisite. But there is little
point in investing in new trains unless the signalling system
is first upgraded to maximise the performance of that stock. This
clearly points to investment in new signalling, train control
and communications systems being a priority, especially over the
next decade, in order to optimise the benefits of other rail investments.
BENEFITS OF
NEW RAIL
SIGNALLING TECHNOLOGY
AND INNOVATION
15. The railway today has a mixture of technologies and approaches
to train protection and control. Some of the signalling systems
in place use mechanical systems and designs dating back at least
a century. While they rarely go wrong and are still safe, these
systems are difficult to maintain and change, and require significant
manpower to operate them. But technological advances are being
made that are central to delivering greater capacity and, importantly
in the context of deficit reduction, driving more value through
the railways. Two areas of innovation that could bring particular
benefits to the UK railways - ERTMS and modular signalling - are
considered below.
ERTMS
16. Network capacity can be increased through the use of signalling
technology based on the European Railway Traffic Management /
European Train Control (ERTMS / ETCS) standards. This technology
will facilitate the transfer of rail signalling systems from track
side to in-cab, with considerable opportunity to reduce the cost
of maintaining signalling systems. The Department for Transport's
2007 Rail White Paper envisaged that emerging technology in this
area would start to be rolled out from 2014-15.
17. Invensys Rail has considerable experience providing ERTMS
/ ETCS equipment for Spain's high speed rail lines, as well as
in Australia, New Zealand and Turkey, where equipment based on
the ERTMS standards is also being deployed. The computing power
of this emerging in-cab signalling and control technology is such
that it can import significant operational functions into a train
that substantially enhance its performance and reduce the costs
of operation. Indeed, rail signalling and train control technologies
are no longer simply a safety function of the railways and should
be judged by their ability to deliver value beyond safety and
train reliability.
18. The amount of additional capacity realised through the
implementation of ERTMS / ETCS depends on the particular nature
of the railway. UNIFE, the European rail industry association,
has indicated that increases of 15% increases on already optimised
lines are typical and this can be increased to around 25% on lines
with mixed traffic - as is the case in the UK. Some estimates
have put the potential capacity enhancements generated as high
as 40% on mainline railways. Furthermore, ERTMS / ETCS can enable
a train to be driven at its optimal speed relative to other trains
around it, ensuring optimal deceleration and acceleration and
thus significantly reducing fuel burn and wear and tear on the
track.
19. The major challenge associated with the deployment of
ERTMS / ETCS is not the reliability of the technology. Rather,
it is the management of the benefits accruing across the various
industry stakeholders, determining how the costs and benefits
should be shared, and also to what extent the roll out of the
new infrastructure should be driven by future rail franchise contracts
(given the presence of much of the technology on-board the train
and the wider public policy benefits of such technology). As the
capacity increases and cost savings of this technology are potentially
significant, its implementation on the railway should be prioritised
during the next rail Control Period.
Modular signalling
20. Modular signalling is a major initiative that the UK rail
industry has been driving forward in recent years. Originally
seen as a means of providing a business case for the upgrade of
secondary lines, particularly those with mechanical technology,
the benefits of this approach are now becoming clear for many
signalling systems. Modular signalling seeks to adopt the "plug
and play" approaches of industries such as telecommunications,
and offers much greater flexibility in how train control is provided
compared to existing signalling systems.
21. Invensys Rail's modular signalling solution is constructed
from a small number of standardised units that contain all of
the equipment necessary to carry out a particular function. Much
of the testing of these units is carried out off-site and they
can be installed very quickly by a small team without excessive
equipment. The system will bring typically 40% to 45% reductions
in the cost of providing signalling for secondary lines. This
alone represents a potential saving to the railway of around £150
million per year.
22. These savings are generated not just from the changes
in design, testing, installation, standardisation and modularisation
of equipment but also from significantly reduced project durations,
reduced time on-site and reduced needs for civil work, heating,
lighting and environmental control equipment. Such modular systems
can also be compatible with ERTMS (as is the case with our own
modular solution).
IMPORTANCE OF
LONG-TERM
PLANNING FOR
THE RAIL
INDUSTRY
23. To ensure that the rail industry and its suppliers understand
how the railway is expected to develop over the long-term and
the infrastructure and technology that will be required to achieve
this, and to help guide the long-term public and private investment
needed to underpin this, we believe the adoption of a well-defined
long-term strategy for the railways is essential. An approach
to procurement and investment which is highly transactional in
nature, as now, rather than based on long-term objectives and
strategic partnerships weakens the supply chain to the long term
disbenefit of infrastructure owners and the government.
24. The Periodic Review, High Level Output Specification and
Statement of Funds Available structures undoubtedly help the railway
industry to plan on a longer term basis than was the case prior
to rail privatisation. However, these planning structures remain
transactional in nature and short-term in focus.
25. A long-term strategy, perhaps taking the form of a strategic
30-year Control Period that sets out in high-level terms a clear
developmental path for the railways, would help to guide future
funding requirements, investment decisions and product and service
developments. This is vital for the supply chain, especially those
at the high technology end of the industry such as Invensys Rail,
if we are to continue to have the confidence to invest in research
and development programmes, and the recruitment and training of
skilled engineers. Such a long-term Control Period would overlay
the existing 5-year Control Period structure, guiding the specific
investments that take place within each five year block.
26. While the lack of long-term planning is not a barrier,
as such, to delivering new signalling and train control systems
it does nonetheless result in a sub-optimal approach to research
and development, and to a pricing strategy which may offer less
value for money than would be the case if suppliers had greater
certainty over their longer term order books. We would urge the
Government to give this approach further consideration in the
context of its rail value for money review.
CONCLUSION
27. The world has changed considerably since the Eddington
report was published in 2006. Given the scale of the budget deficit
and the new Coalition Government's overarching policy commitment
to reducing it, difficult spending decisions will have to be made
across Government. We recognise the complexity of these decisions,
but getting them right will be absolutely critical to the delivery
of the Government's strategies, in transport and other policy
areas, for the foreseeable future.
28. Investment in rail signalling and control technology may,
to the outside observer, seem like a second order issue within
the spectrum of competing demands for limited public funds. We
fully appreciate the huge pressure that the Government will be
under from a wide range of competing interests in this regard.
But when narrowing down the debate to what spending should prioritised,
and in particular what the priorities should be for transport
investment, we reach the inescapable conclusion that signalling
investment should be among those priorities.
29. Invensys Rail recognises that it is not a disinterested
observer in the debate over future investment strategies for the
railways in general, and in signalling and train control systems
in particular, and that we would be a potential beneficiary of
any decision to prioritise spending in this area. However, the
evidence shows that emerging rail signalling and train control
technologies can play a central role in materially improving both
the cost and efficiency of the railways as, as such, would be
the right way in which to invest limited resources.
September 2010
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