Summary
The railway network is an economically vital national asset, which requires very substantial and continual investment. Much of the core network dates from the 19th century; a balance therefore needs to be struck between keeping an ageing system going, through operations, maintenance and renewals, and investing in enhancements and new projects. We welcome the substantial additional investment that is being made and wish to see it continue in future control periods.
A major focus in the current rail control period (CP5, 2014–19) has been on enhancements, including an ambitious programme of highly specified railway electrification, together with major station rebuilding and line capacity and speed improvements. As has been well-documented elsewhere, this programme started very badly. The sheer scale of schemes was over-ambitious. This, in addition to inadequate planning and budgeting, particularly in relation to Great Western Mainline electrification, and unclear definition of responsibilities between the DfT, Network Rail and the ORR, meant the whole of CP5 had to be re-programmed.
The full electrification programme was no longer achievable within the re-planned CP5 enhancement profile; spending had to be curtailed. The cancellation in July 2017 of three electrification schemes on the Midland Mainline (MML), the Great Western Mainline (GWML) in south Wales and the Lakes Line (LL) from Oxenholme to Windermere was a direct result of this. This has enabled consideration of alternative traction options such as bi-mode diesel/electric operation and new technologies such as hydrogen and battery.
The DfT’s announcement of the decision focused solely on the passenger benefits of its alternative, bi-mode diesel/electric approach. We acknowledge that bi-mode operation can deliver similar passenger benefits to electric traction. For example, on the GWML, line speeds west of Cardiff mean that electric traction would not deliver a faster service than diesel-only operation. The Department should have been more candid with Parliament, and the public in affected areas, about all the reasons for the change in policy, not only the positive reasons. Given decisions to cancel the MML and LL schemes were taken in March 2017, it is regrettable that the announcement was not made until July 2017, by Written Statement on the day the House of Commons rose for its summer recess, limiting the opportunity for detailed scrutiny and debate. Network Rail and the Department also have questions to answer about why alternative options were not considered before the 2012 HLOS electrification options were pursued.
We fully support the development of emerging train traction technologies. We encourage the Department to do more to support their development and testing on the network. It should set out a clearer plan of how it intends to make this possible. As it stands, the Department has not yet made the long-term case for bi-mode operation with a view to conversion to alternative train traction power-sources at some point in the future.
While electrification on the scale, and at the pace, envisaged in 2012 has proven unachievable, there is strong evidence that it remains the current optimal solution on heavily-used parts of the railway. The MML, GWML and LL schemes cancelled in July 2017 should therefore be recategorised as pending, and placed in the Rail Network Enhancements Pipeline (RNEP) for further development and design work. If new battery and hydrogen technology is proven, the Department and Network Rail should make a comparative cost/benefit analysis against any outstanding electrification projects in the pipeline. The Department, Network Rail and the industry should work together to learn the lessons of earlier electrification schemes and strive to reduce costs in a long-term rolling programme. The Department and Network Rail must also demonstrate a greater willingness to engage with third-party proposals for alternatively-funded electrification schemes; in particular, the existing third-party MML electrification proposal should be fully considered as a direct alternative to the proposed bi-mode solution.
Our inquiry also considered the balance of spending between the regions of England and Wales. Concerns about regional disparities in investment go beyond electrification. Measuring investment on a regional basis is difficult. Many projects deliver benefits well beyond the specific location of the work. A good example is the rebuilding and remodelling of Reading station and junction, which delivers substantial capacity and journey time improvements for the whole of Great Western’s and Cross-Country’s networks. However, evidence from regional transport bodies was clear: decision-making processes and systems of scheme appraisal currently work against regions outside London, and they do not believe they are getting their fair share. If this situation is not more directly addressed, regional disparities will increase. We welcome the Government’s recognition of this issue, and the DfT’s “rebalancing toolkit” supplementary guidance, as a step in the right direction. But we are not yet confident that it will be sufficient to make a material difference. The DfT must be clearer about the rebalancing effects it intends to achieve and commit to reviewing the toolkit’s effectiveness. The Department should also initiate discussions with HM Treasury about how economic rebalancing can be made an intrinsic consideration in transport scheme appraisals, putting it at the heart of investment decisions instead of being an add-on.
The problems of CP5 mean a greater focus on maintenance and renewals in CP6 (2019–24) is necessary and welcome. It is vital—for the confidence of the sector to invest in its workforce, skills and innovation, and to drive efficiency in the industry—that the increased volume of renewals is managed effectively from the outset, throughout the period and beyond. The Department, Network Rail, the ORR and the industry must work together to investigate the effects of the current control period system on the renewals spending profile, and identify and implement a mechanism by which it can be smoothed out from the start of CP6 in April 2019.
We support the intention behind the new RNEP; it should ensure that the planning and scoping mistakes made early in CP5 are not repeated. It has the potential to repair the DfT’s and Network Rail’s damaged reputations across the industry, providing greater certainty about the schemes that will ultimately be delivered. However, the DfT needs to take steps to ensure it has the capacity and capability to assume its strengthened role in the process. The ORR must also assure itself that the DfT has taken steps to fulfil its responsibilities in relation to determining the cost efficiency and value for money of enhancements.
The Department is relying heavily on market-led proposals (MLP) to deliver new enhancement projects. It does not appear to have a “plan B” should MLPs not materialise as hoped. A lack of specificity about projects available for investment, and concerns in the sector about the process itself, appear likely to dissuade third-parties from submitting proposals. Our judgement is that there is a substantial risk that the rush to deliver poorly planned and scoped enhancement schemes in the current period will be replaced by a different problem—a slowdown or interregnum in new, strategically necessary projects. This would be particularly disadvantageous to regions that have experienced under-investment in recent periods, and further damage confidence in the supply chain to invest in its workforce, skills and innovation.
To mitigate this risk, the DfT should, before the end of 2018, supplement its framework for the RNEP with a clear set of strategic priorities for rail infrastructure investment in each region and supplement its guidance on MLP with an outline of specific projects likely to be available for third-party investment, to meet the strategic priorities of each region. It must commit to transparency of projects at each stage of the RNEP process, so the industry has full visibility of the pipeline and can plan for the long-term with greater confidence.
Finally, we endorse the Network Rail route devolution process. Properly enabled managers ought to be able to determine the specifications of enhancement and renewal projects, thereby avoiding unnecessary expense.
Published: 28 June 2018