With investment, rail can help power our economy and the net-zero transition

SPONSORED POST

On March 15th, Chancellor Jeremy Hunt will deliver his spring Budget, and the feeling is that rail is unlikely to feature, especially given the disappointing news pre-briefed last week that part of the construction of the HS2 northern leg will be delayed by two years. Encouragingly, Shadow Chancellor Rachel Reeves committed at the MakeUK Conference last week to Labour supporting building HS2 in full, including the eastern leg to Leeds, as well as Northern Powerhouse Rail. Building more capacity on the UK rail network has never been more urgent. Contrary to often misleading reports, passengers have been returning to rail travel in ever higher numbers, and rail will play an ever more crucial role in helping to power the UK economy and decarbonisation.

Passengers are returning to rail.

Just over a year ago, at the start of 2022, passenger numbers were barely half of pre-pandemic levels. Yet a year on, Department for Transport data shows that between January 14th and 31st 2023, passenger numbers were hitting 90-98% of pre-Covid levels every single day of the week. Further, revenues have been hitting upwards of 85% of pre-Covid levels, with every prospect this will increase in the future too. This return to rail has taken place against the background of widespread industrial action on the network, some passengers having poor customer experiences and the uncertainty of rail restructure hanging over the organisations that are delivering rail services.

As we recover from the pandemic, people are going back to their previous routines of working, visiting friends and family and enjoying leisure and hospitality. Whilst the majority of workers still go to the workplace every day, ‘hybrid workers’ are increasingly spending more time in the workplace. According to the Office of National Statistics opinions and lifestyle survey, only 10% of people actually work remotely every day and around 35% of workers are using public transport (i.e. train, tube and bus) to get to work.

Rail is not in managed decline, it needs sustained investment to support growth.

So despite the sometimes negative noises about rail, we do not need post-pandemic managed decline. Rather we need the exact opposite: sustained investment to keep up with growing demand. It is welcome that Labour has committed to HS2 and Northern Powerhouse Rail, and we encourage the party to support sustained levels of investment in rail renewals, enhancements and signalling and rolling stock work. However, supporting UK rail is not just important to enable passengers to get from A to B. It is also sustaining an industry which is significant for UK plc, as well as one which generally pays for itself thanks to its £14bn annual tax revenues back to the Treasury. Oxford Economics showed in 2021 that the railway industry supports 710,000 jobs, £43bn in gross value added and, for every £1 spent on rail, £2.50 is generated in the wider economy. Not only is growing rail imperative to catering for growing passenger and freight numbers on the railway, but it can also play a strong helping hand in powering the UK economic recovery too. It should not be seen as a cost on the public purse in the way that it is sometimes portrayed.

We need rail to thrive if it is to hit its decarbonisation targets.

Finally, investing in rail is also crucial to hitting decarbonisation targets, to get all diesel-only trains off the network by 2040 (2035 is the Scottish government target) and to making rail net zero by 2050. Rail plays a small part in the carbon problem but can be a big part of the solution. To take just one example, a single freight train removes up to 76 lorries from the roads, significantly cutting carbon emissions. Yet at the current level of investment in, for example, electrification and battery- and hydrogen-powered trains, the 2050 target will not be close to being hit. Currently, the UK has only 38% of track electrified compared to 57% in mainland Europe and, according to Office of Rail and Road data, between 2020 and 2022, the amount of electrified track actually fell by 7km, from 6,049 to 6,042. So the Railway Industry Association (RIA) and our members have six key asks, which we hope Labour can adopt as it develops its policies through 2023.

 RIA’s six key asks

1. Commit to investment pipeline certainty and transparency. 

Certainty and visibility of future investment plans generates best value for taxpayers and investors. It is crucial to making sure the industry gets the right skills and equipment in the right places to deliver efficiently.

2. Invest in major infrastructure projects. 

Major rail projects are transformational for the communities they connect, wider economy and in transitioning the UK to clean transport. Recent government commitments to HS2, East West Rail and Northern Powerhouse Rail are welcome, and other major schemes should be a question of when, not if. There is no question that the UK will need this capacity, and early and consistent commitment is the way to secure best value for money and catalytic benefits from the economy.

3. Accelerate decarbonisation and green growth.

To ensure the UK meets its legal obligations on net zero, RIA’s RailDecarb23 campaign calls for: i) immediate implementation of a rolling programme of cost-effective electrification on intensively used lines; ii) ramp-up of fleet orders of low carbon rolling stock using new traction methods on less intensively used parts of the network, including hydrogen and battery; and iii) government, Network Rail and other rail clients to work with suppliers so they never lose out for offering lower carbon solutions but are incentivised to reduce emissions.

4. Get on with rail reform. 

More clarity on the detail and a long-term strategy for rail reform is needed, to encourage investment and ensure rail can attract talent to the industry.

5. Unlock innovation.

Innovation is essential, not just for boosting efficiency and productivity, but for the railway to rise to challenges such as climate resilience. There is significant progress in research and development, but a step change in behaviour and approach is needed to ensure adoption of new technologies.

6. Grow UK rail exports. 

UK rail has a global reputation, so there is great potential to grow rail exports, boosting UK trade and also increasing resilience of the UK supply chain e.g. creating new SME jobs. The global market study conducted by European trade association UNIFE last autumn forecasts rail markets to grow by 3% every year to 2027.

Action needed, starting now.

So in summary, it is clear that for reasons of capacity, the economy and decarbonisation, we need to continue as a country to invest in rail. The strong passenger return to rail makes this all the more imperative, given that rail is a long-term game and the work to grow rail – both on the rolling stock and the infrastructure side – needs to take place straight away if we are to have the capacity we need both now and in the future. We urge Labour to adopt the six asks above, to work to enable rail to deliver for passenger demand, help to power a strong economic recovery, including enabling levelling-up, and to help deliver on the net-zero agenda.