Rail infrastructure investment Contents

2The electrification debate

16.We first scrutinised the Secretary of State’s decision to cancel the three electrification schemes in the Midlands, south Wales and the Lake District as part of a wider oral evidence session on the Department’s policy priorities in October 2017.21 We were dissatisfied with his answers to our questions in oral evidence, and those in response to follow up letters from our Chair. We recalled the Secretary of State to give a fuller account of the decision in oral evidence on 22 January.22 By the time we heard oral evidence from the Rail Minister, Jo Johnson MP, on 30 April as part of this inquiry, the National Audit Office (NAO) had investigated the Secretary of State’s decision and published its findings.23

17.This chapter considers the case for extensive electrification, as made in 2012; the rationale for the July 2017 decision and the nature of its announcement, in the light of the NAO’s findings; and the coherence of the DfT’s new approach in the context of its recent challenge to the railway industry to phase out diesel traction by 2040.24

The case for electrification in 2012

18.In the 2012 HLOS, the then Secretary of State announced a £38 billion funding package for railway infrastructure in CP5 (2014–19), the flagship of which was a highly ambitious, highly specified programme to electrify around 850 route miles of railway. This would be a huge undertaking: for comparison, only 60 route miles were electrified between 1997 and the start of CP5.25

19.The DfT intended that, by 2019, the previously announced trans-Pennine and Great Western Mainline (GWML) schemes would be completed, as well a new, ambitious “electric spine” from the south coast, through the Midlands to Sheffield and an extension of previously planned GWML electrification in south Wales, further west beyond Cardiff:26

Figure 1: Planned electrification in CP5 (2012 HLOS)

Source: DfT, July 2012

The 2012 package was repeatedly hailed by the DfT, Network Rail and Cabinet Ministers as “the biggest investment in our railway network since the Victorian era”.27

20.The DfT, under successive governments, and Network Rail set out a compelling case for widespread electrification: moving from diesel to electric traction, particularly on heavily-used parts of the network, would reduce journey times and facilitate lighter, more efficient trains, reducing long-term costs and improving environmental sustainability.28 The Department also emphasised that the economic benefits of investment in electrification would be spread widely across regions.29

The cancellation announcement, July 2017

21.On 20 July 2017, the day the House of Commons rose for its summer recess, the Secretary of State for Transport announced the cancellation of electrification schemes on the Midlands Mainline (MML), between Kettering and Sheffield, the GWML west of Cardiff and the Lakes Line (LL) between Windermere and Oxenholme.30 The status of schemes (categorised as completed, pending or cancelled), in the electrification programme following the announcement is illustrated in figure 2, below.

Figure 2: Status of electrification schemes after July 2017 announcement

Source: National Audit Office, March 2018

22.Instead of electrifying these stretches, the Government announced that it would invest in bi-mode trains capable of switching between diesel and electric traction; it was therefore no longer necessary to complete the full electrification programme as planned. The Secretary of State emphasised that the industry was “also developing alternative fuel trains, using battery and hydrogen power”. The implication was that bi-mode diesel/electric operation would be a temporary solution while battery and hydrogen traction was developed. He said:

These new technologies mean that we can improve journeys for passengers […] sooner than expected with state-of-the-art trains, instead of carrying out disruptive electrification works along the whole of these routes.31

23.The Written Statement, and the DfT’s accompanying press release, focused entirely on benefits to passengers. The press release, headlined “New improvements for rail passengers in Wales, the midlands and the north”, cited long-distance journey-time reductions from Sheffield and Nottingham of “up to 20 minutes in the peak”; trains with 130 additional seats on the GWML and MML; and “better on-board facilities”, for example.

24.Neither the statement by the Secretary of State nor the Department’s press release addressed the potential loss of the wider benefits of electrification i.e. reduced long-term costs and improved environmental sustainability, including reduced carbon emissions and improved air quality. Neither mentioned the overrunning costs of electrification in CP5 as a factor in the decision.32

Reaction to the announcement

25.The announcement was met with a high level of scepticism, disappointment and vexation, particularly in the affected regions.33 There were comments in the trade and mainstream media that the decision had been made solely on pragmatic, cost-based grounds following the earlier overruns.34

26.Furthermore, some experts doubted that bi-mode diesel/electric operation would produce a boon for passengers sufficient to outweigh the now abandoned wider benefits of full electrification.35 This was broadly reflected in evidence to our inquiry. The Campaign for Better Transport, for example, emphasised that electric trains were more reliable, less noisy, lighter, causing reduced wear and tear on tracks, with better acceleration and deceleration, increasing efficiency and reducing long-term costs.36 Urban Transport Group, representing transport authorities in major urban conurbations, wrote:

We believe that hybrid traction has potential in relation to enhancing the range of some local and regional services but we are not convinced of the merits of the technology for long distance inter urban services. […] hybrid long distance trains are heavier and more complex, which means they are less efficient and rapid, cause more impact on infrastructure, and potentially contribute to local air quality problems. They are also largely unproven technology for such services, and at such scale, whereas electrification is proven technology and the technology of choice for all the world’s leading long-distance passenger railways.37

Our scrutiny of the decision

27.In oral evidence to the Committee in October, the Secretary of State acknowledged that the decision had been one of “practicality” and value for money, in the context of passenger benefits. He claimed, for example, that the projected cost of completing electrification of the MML as originally planned would be around £1 billion and “save one minute on the journey time to Sheffield”.38

28.When we recalled the Secretary of State to give oral evidence in January, it became clearer that the cost-overruns earlier in CP5 had been a central factor in his thinking. Challenged about why, given that bi-mode technology had been available in 2012, the then Secretary of State had opted for such an ambitious programme of electrification, he could not account for the decision of his predecessor, but emphasised that:

[…] the decisions you are talking about in 2012 took place before the Hendy review and before the reframing of the capital programme. I looked very carefully at the capital programme going forward for the rest of CP5, and indeed what was likely to be achievable in CP6, and what we had to spend our money on. I came to the view that in a network that has significant capacity constraints it was better to focus our spend on things that delivered capacity improvements.39

29.We challenged the Secretary of State on the consistency of the new approach with the Department’s rail investment strategy. In particular, we wanted to know how he could be confident that broader, longer-term cost and environmental benefits could still be achieved. We were concerned that the procurement of more hybrid diesel/electric trains might tie the Department to a potentially less cost-effective, less environmentally sustainable investment strategy for decades.

30.In the October oral evidence session, Mr Grayling noted that it was possible “in theory” to “swap the engines in due course”.40 In January, he told us he had:

[…] talked to senior people in the industry who believe that there will only be one generation of diesel engines on the bi-modes, and the second generation will be hydrogen engines. We are now looking to get the first hydrogen trains on our network within a very short space of time […]. The technology is really moving apace.41

National Audit Office investigation

31.The NAO’s investigation reached a very clear conclusion that the three schemes were cancelled because they were unaffordable within the post-Hendy review enhancement profile. It found that Network Rail’s plan to fund investment through asset sales was unachievable, and its ability to borrow had been severely restricted by its reclassification as a public body.42 This is despite the previous Secretary of State assuring our predecessor Committee that reclassification would have no effect on investment in the railway.43 This meant that spending needed to be curtailed. The Department estimated that cancelling the three schemes would avert £130 million of spending in CP5 and nearly £1.4 billion in CP6.

32.The NAO found that, in making its decisions, the DfT “considered potential savings and value for money as well as reputational impacts and the implications for passengers, the franchise and the supply chain.” In selecting schemes to cancel, its approach was to identify those “where it believed the majority of passenger benefits could be delivered by other means or where value for money was low.” The decision to cancel the MML and LL schemes was made in March 2017, with the decision on GWML from Cardiff to Swansea deferred until July 2017, to allow the Prime Minister to reflect further on an updated business case.

33.The NAO concluded it was “too early to tell the extent to which the Department will be able to deliver the benefits of electrification without electrifying the three routes.” It noted that:

Although bi-mode trains allow greater flexibility by being able to run on electrified and non-electrified lines, there are some disadvantages, such as increased track damage and higher energy costs, which the Department will need to take into account.

Furthermore, in relation to the MML, the NAO found that, although the Department expected bi-mode trains with the required speed and acceleration to be developed, the Secretary of State had been advised that they “did not exist” at the time of his decision. Ultimately, however, the July announcement was able to specify that the new bi-mode rolling stock would be deployed by the operator from 2022. In relation to journey time savings, the NAO noted that “the Department expects journey times with bi-mode trains to be only one minute slower between London and Sheffield than they would have been with fully electric trains.”44

Coherence of the DfT’s strategy

34.When we questioned the Rail Minister on 30 April, we were concerned about the coherence of the DfT’s strategy, particularly in the light of his recent challenge to the industry to phase out diesel by 2040.45

35.He insisted that the strategy to cancel the schemes and instead invest in bi-mode trains while more long-term cost effective, environmentally sustainable options were developed was “not at all inconsistent” with the aim of eliminating diesel from the railway. He echoed the Secretary of State, confirming the intention was to convert the rolling stock, removing the diesel engines and replacing them with “other power sources, whether that is electricity stored in a battery, hydrogen units or other technologies in development.” He insisted this was “not fantastical”, and that “such technologies are already being piloted and developed elsewhere in the world.”46 While a level of scepticism about this persists, Malcolm Brown, CEO of the train-leasing firm Angel Trains, confirmed that his company had recently invested in 95 bi-mode trains, designed with the option to replace diesel units with alternative fuel sources in the future.47

36.In oral evidence, however, the Minister demonstrated a somewhat shaky understanding of how, and where, the emerging technologies were being developed. For example, he told us there was “a hydrogen trial in the lakes at the moment”.48 In a follow up written submission he “clarified his understanding”, telling us that:

Northern are looking at a number of options for the Windermere line which I understand are more likely to be battery based rather than hydrogen based but these are still under development. It is in the North East that they are looking at hydrogen and I understand that they have been in discussion with Tees Valley Combined Authority and Network Rail.49

37.The Minister noted that battery-powered trains were in development by Bombardier and Vivarail in the UK. He emphasised that the Department had supported a 2015 trial of an “Independently Powered Electric Multiple-Unit (IPEMU), battery-powered train in passenger service between Harwich International and Manningtree stations”. A prototype “was developed to demonstrate the potential of a battery/electric hybrid EMU.” He referred to the potential use of “trackside super-capacitors”, which had been tested on the Docklands Light Railway, to “enhance the existing electrical supplies” on the mainstream rail network. He emphasised that hydrogen-powered trains were due to enter service in Germany later this year.50

38.The Railway Industry Association (RIA) and others, however, were convinced that, for now, electrification remained the “optimal” solution for train traction, particularly on heavily used routes, balancing significant benefits to passengers with the wider environmental benefits and long-term cost efficiency. RIA emphasised that it had launched a cross-sector “Electrification Cost Challenge” in 2017, to “investigate how the costs of electrification can be reduced.”51 Mark Bullock of Balfour Beatty noted that the railway supply chain had “built up a lot of skills, knowledge and experience” of electrification and believed it would be “a tragedy if we lost that capability for the industry.”52

39.Alstom told us that it, and other private sector companies, had an appetite “to provide a third-party funded electrification scheme” on the MML. Jonathan Willcock, Alstom UK & Ireland’s Managing Director of Signalling and Infrastructure, said the “case was compelling”. Alstom had presented a proposal to the DfT, but believed the Department was now firmly committed to bi-mode operation.53

40.We wanted to know whether the Department had altogether ruled out further electrification of the MML, GWML, and LL, or whether it remained open to lower-cost options, particularly in the context of its recent call for market-led ideas for enhancements (discussed in chapter 4). Brian Etheridge, Director of Rail Network Services, said he was “not aware” of the specific Alstom MML proposal, but, more broadly, insisted the DfT was “very open” to alternatively-funded options across the network.54

41.We are disappointed that the Secretary of State did not engage more openly with our scrutiny of his decision last year to cancel the three electrification schemes. In seeking a clear understanding of the rationale for the decision, we had to enter into correspondence and then recall him to give oral evidence a second time. The National Audit Office’s recent investigation concluded very clearly that the three electrification schemes on the Midland Mainline, Great Western Mainline and Lakes Line were cancelled in July 2017 because they had become unaffordable. This was a knock-on effect of earlier cost overruns in the CP5 electrification programme, compounded by restrictions on Network Rail’s ability to borrow and the fact that income from asset sales did not materialise as envisaged in Sir Peter Hendy’s 2015 review. Given the decisions to cancel the Midland Mainline and Lakes Line schemes were taken in March 2017, it is regrettable that the announcement was not made until July, by Written Statement on the day the House rose for its summer recess, limiting the opportunity for proper scrutiny and debate.

42.The Secretary of State’s 20 July Written Statement, and the Department’s accompanying press release, focused solely on passenger benefits which were, and to some extent remain, uncertain. We, and the public in the affected regions, were entitled to expect a greater level of candour from the Department. That said, we acknowledge that passengers on the Midland Mainline and Great Western Mainline should see improvements in capacity and journey times from other enhancements in CP5.

43.The Department has not yet made the long-term case for bi-mode operation with a view to conversion to alternative power-sources at some point in the future. This approach remains untested and is therefore uncertain. We fully support the development of battery, hydrogen and other alternative fuel sources for train traction. We recommend the Department vigorously encourage and support the testing of emerging train traction technologies on the UK railway. The Department should use innovation funding to do so. It should set out in response to this Report a clear plan to bring these emerging technologies to fruition.

44.While electrification on the scale, and at the pace, envisaged in 2012 has proven unachievable in CP5 for a range of reasons, there is strong evidence that it is the current optimal solution on heavily-used parts of the rail network, balancing passenger benefits with long-term cost-efficiency and environmental sustainability. There is a widespread view in the industry that there remains a strong case for continued electrification of the Midland Mainline and the Committee is aware of a proposal by a leading supplier for a third-party funded scheme, which they describe as “compelling”.

45.We recommend that the Midland Mainline, Great Western Mainline and Lakes Line electrification schemes cancelled in July 2017 be recategorised as pending, and placed in the Rail Network Enhancements Pipeline (RNEP) for further development and design work (the RNEP is discussed in chapter 4). 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. Electrification should be delivered through a long-term rolling programme, in which the Department, Network Rail and the wider industry learn the lessons of earlier schemes and strive to reduce the costs. The Department and Network Rail should engage with the Railway Industry Association’s Electrification Cost Challenge initiative, and together produce a report on cost-effective electrification within 12 months. The Department and Network Rail must also demonstrate a greater willingness to engage with third-party proposals for alternatively-funded schemes; in particular, the existing third-party Midland Mainline electrification proposal should be fully considered as a direct alternative to the proposed bi-mode solution.

21 Oral evidence taken on 16 October 2017, HC (2017–19) 430, Qq 39-88

23 National Audit Office, Department for Transport: Investigation into the Department for Transport’s decision to cancel three rail electrification projects, HC 835 Session 2017–2019, March 2018

24All diesel trains should be scrapped by 2040, Jo Johnson tells rail bosses”, The Times, 12 February 2018 [subscription required]

25 Rail electrification, Briefing Paper SN05907, House of Commons Library, July 2017

27 See, for example, “£9bn railway investment announced by coalition”, BBC News, 16 July 2012; “Plans for £38 billion investment in railways unveiled”, joint DfT/HM Treasury press release, 31 March 2014; “Largest investment in railways since Victorian times will continue”, Network Rail press release, 25 November 2015; “

30 HC Deb, 20 July 2017, col 72WS

31 HC Deb, 20 July 2017, col 72WS

32 HC Deb, 20 July 2017, col 72WS; “New improvements for rail passengers in Wales, the midlands and the north”, DfT press release, 20 July 2017

33 See, for example, “All the reaction to the news rail electrification will not extend to Swansea”, Wales Online, 20 July 2018; East Midlands Councils, Midland Mainline Electrification: cancelled, accessed 16 May 2018

34 See, for example, “This ‘cunning plan’ confirms a lack of expertise”, RAIL magazine, 3 August 2017; “Rail electrification plans scrapped by government”, BBC News, 20 July 2017

35 New Civil Engineer, Bi-mode trains shouldn’t replace electric, say experts, accessed 16 May 2018

36 Campaign for Better Transport (INV0051)

37 Urban Transport Group (INV0040)

38 Oral evidence taken on 16 October 2017, HC (2017–19) 430, Q43

39 Oral evidence taken on 22 January 2018, HC (2017–19) 702, Q4

40 Oral evidence taken on 16 October 2017, HC (2017–19) 430, Q54

41 Oral evidence taken on 22 January 2018, HC (2017–19) 702, Q26

42 National Audit Office, Department for Transport: Investigation into the Department for Transport’s decision to cancel three rail electrification projects, HC 835 Session 2017–2019, March 2018

44 National Audit Office, Department for Transport: Investigation into the Department for Transport’s decision to cancel three rail electrification projects, HC 835 Session 2017–2019, March 2018

45All diesel trains should be scrapped by 2040, Jo Johnson tells rail bosses”, The Times, 12 February 2018 [subscription required]

51 RIA (INV0069); see also Chartered Institute of Logistics and Transport (INV0029)

52 Q4

Published: 28 June 2018