Made in Britain – What now for Britain’s train manufacturing industry?

By Maria Eagle MP

Rail is thriving in Britain. More people are travelling than at any time since the 1920s with 1.3 billion journeys by train every year, and predictions of a doubling of that figure within thirty years. Increasing capacity and continuing to reduce journey times are now the priority for investment. The choice we face as a country is whether that investment can also boost British manufacturing, jobs and growth. Since the election, the Tory led government appears to have made its choice. Britain, it seems, is no longer to be the home for world class rail design, engineering and construction.

Today, the Canadian firm Bombardier is the only remaining company to actually build trains in the UK. Under Labour it won successive orders, including for London Underground, London Overground, London Midland, Chilterns and Stansted Express. However, much of this work is coming to an end.

Yet the government has decided to award the £1.4bn Thameslink train contract to the German company Siemens and the even larger £4.5bn Intercity Express train contract to Japanese company Hitachi. Unlike Bombardier, neither company intends to build these trains in Britain. There will be component, assembly and maintenance jobs that are great news for the communities that will benefit, but which would always have been UK-based.

The Thameslink decision puts at risk over 3,000 British jobs at Bombardier, mainly in Derby with countless more in the supply chain. The even greater tragedy is that it puts at risk Britain’s entire train-building industry. Unbelievably, the decision was announced on the very day that the business secretary was launching the government’s ‘Made by Britain’ initiative. It’s clear that as far as this government is concerned, the closest we will get is ‘Assembled in Britain’.

It is a disaster for British skills, but also a very personal betrayal by the Prime Minister who took the whole cabinet to Derby in April, saying:

“I am bringing the Cabinet to Derby today with one purpose-to do everything we can to help businesses in the region create the jobs and growth on which the future of our economy depends.”

The government’s response to the uproar over the decision has been to wash its hands of the whole process. We’ve even seen the nonsense of the transport secretary writing to the Prime Minister to complain about his own decision.

John Denham and I have now called for a full independent review of the procurement. It’s clear that the Department for Transport has not secured the most economically advantageous outcome either for the local community or the country as a whole, despite it being perfectly permitted to do so. Despite what ministers say, the government is perfectly entitled to review the decision. As transport secretary, Andrew Adonis commissioned an independent review of the entire Intercity Express project.

If we are serious about ensuring that the success of rail in Britain translates into a high quality sustainable train manufacturing sector then there are three further steps the government should take.

First, the government must look at how we operate contracts under the European procurement directive and identify why France and Germany manage to ensure that their trains are always domestically built. In April, Germany’s national rail operator Deutsche Bahn placed a €5billion order for 200 high speed trains with Siemens. It would have been unthinkable for them not to have won that order.

Second, ministers need to take a longer-term approach to capital investment, not the stop-start approach we have now that leaves manufacturers unable to plan ahead and hits investment in skills. It’s 800 days since the last new rolling stock order was placed. That ‘feast-and-famine’ approach to procurement has blighted the sector for years and must change. A significant amount of the cost to manufacturers is in setting up the production line and Network Rail believes a fifth of all procurement costs could be eliminated if there was continuity of orders.

Third, the Department for Transport should reduce the number of train designs to enable longer, continuous orders to be placed and economies of scale to be achieved – as well as much needed interoperability. Network Rail has recommended reducing the 64 different rolling stock classes currently operating on the network to just three. The Competition Commission calculate the average cost per vehicle is over £1million, with 8% of procurement costs associated with the development of the bespoke model.

These three changes would make a significant difference both to reducing cost, but also enable British based manufacturers to plan properly, skill their workforce adequately and secure the long-term work of the kind that is achieved in other sectors.

In the meantime the government must not just sit back helplessly as yet another UK manufacturing sector is lost. It is not too late to look at the Thameslink decision again. It is not a done deal. Siemens has been named the preferred bidder but the actual contract has not been signed.

The chancellor tried to suggest that a major manufacturing revival in the UK was central to his Budget earlier this year, saying: “We want the words ‘Made in Britain,’ ‘Created in Britain,’ ‘Designed in Britain,’ ‘Invented in Britain,’ to drive our nation forward’. Instead, in terms of train building, for the years to come we will have ‘Made in Japan’ and ‘Made in Germany’.

Rail in the UK is thriving. It is set to have some of its best years ahead. It would be a tragedy if UK manufacturing workforce was not able to benefit from this exciting future, with high-end skills and secure jobs within a genuine rail manufacturing sector that builds, as well as maintains, Britain’s trains.

Maria Eagle MP is Shadow Secretary of State for Transport