Rail Infrastructure Submission

Written evidence submitted by West Yorkshire Combined Authority (INV0041)

About the West Yorkshire Combined Authority:

1. The West Yorkshire Combined Authority has a £64.6 billion economy and serves a population of three million and a making it the biggest economic contributor to the Northern Powerhouse. Around 3.6 million journeys are made on the West Yorkshire public transport network each week and the authority is planning to invest £155 million in transport projects this year. The rail network plays a key role in ensuring the local population can access jobs, education and services efficiently and it requires continual investment to ensure it supports the regions young and fast growing population.

The impact of postponing renewals from the current control period into the next and the implications of the Secretary of State’s decision to remove enhancements from the control period process;

2. Postponing renewals from the current control period will have a negative impact on the resilience of the railway network, potentially leading to a decrease in the performance of both passenger and freight services. Increasingly intense use of the existing rail network means it is more important than ever to ensure it is robust. The impacts of climatic change, for example, are already putting significant pressure on the current infrastructure. More generally, the network continues to age, and ever more significant renewal work to structures will be necessary to ensure the system remains reliable for future generations. It is therefore important to ensure renewals are undertaken in a timely and co-ordinated manner.

3. Some rail enhancement schemes are helpfully programmed alongside renewal schemes to maximise the benefits of rail investment and delivery investment efficiencies. For example, line-speed improvements are often implemented alongside signalling renewal. Delays to the renewal programme will put proposed rail enhancements at risk especially when these are funded by third parties and needs to be spent by a certain time limit. In some cases, funding constraints, particularly programme-related constraints, might lead to a loss of cost efficiency in cases where it will no longer be possible to co-ordinate renewal and enhancement work. To mitigate this risk, it will be helpful to ensure that Network Rail maintains a clear schedule of proposed renewals so that opportunities to realise cost-effective enhancements can be realised.

4. Removing enhancements from the control period process would seem a logical move to ensure that large projects are taken out of the political cycle and ensuring certainty with regards to a long term vision for the railway. However, more clarity is required as regard to how rail enhancements are funded and prioritised in order that the rail industry and other third parties can work with government to maximise the benefits of any proposed enhancements. Notwithstanding the difficulties experienced in delivering the current programme of enhancements, the control period process provides a helpful basis for all parties to plan resources. This is important particularly for the supply-chain; investing in skilled people, including growing skills, is very important for the efficient and effective realisation of specialist rail projects. The unpredictability of rail investment is a barrier to achieving this.

5. If enhancements are funded and assessed case by case, there should be a mechanism to ensure that different rail investment programmes are joined-up, with opportunities for passive provision and early implementation identified at an early stage to reduce the total costs of rail investment. Ultimately, this all points to the need to ensure good long-term planning that provides a clear view on future likely investment in both renewals and enhancements beyond the 5-year control period process.

The adequacy of the control period process in enabling the delivery of long term rail infrastructure objectives;

6. The current process is widely recognised to be inflexible, centralised and process heavy. This top-down planning approach is no longer appropriate where there is on-going political devolution such as the North of England where Transport for the North (TfN) will provide a strengthened focus on investment. There is increasing evidence of disconnect between the planning and delivery of network enhancements with committed franchise service improvements. This must be resolved as a matter of urgency as a number of high-profile planned service improvements are apparently at risk as a consequence of inadequate network capacity. Any process to enable the delivery of long term rail infrastructure must have the flexibility to take into account and adapt to local and regional aspirations so that it brings real benefits to these communities.

7. A commitment to fund and deliver long term rail objectives is crucial to inspire the private sector to take a more innovative and long term approach in delivering rail projects and by default supporting regional jobs and economic growth. For example, the new Kirkstall Forge station in Leeds supported the regeneration of a brown field site and levers in more than £400m private investment. Planning and coordination of funding and delivery was one of the most crucial aspects in successfully realising this project. This is always the case where a mix of funding sources are used. Private sector investors also have reasonable expectations around delivery and service levels, which the rail industry is not always well-equipped to respond to.

Whether Network Rail’s long term planning process is effective in providing the industry with strategic direction beyond the five year control period;

8. Five year control periods are too short and an artificial time line with many projects taking more this to plan and deliver. A longer term planning cycle would provide both the rail industry and private sector greater confidence and will encourage greater investment and innovation. The boom and bust cycle that the 5-year control periods impose on the supply industry makes meaningful investment in skills challenging and creates general business planning difficulties. The Shaw report (Shaw Report: the Future Shape and Financing of Network Rail 2016) is clear that a long term vision setting out clear priorities for the rail industry over the next 30 years should be developed. WYCA supports this view which aligns with the TfN Strategic Transport Plan which when published set out the connectivity priorities for the North of England between now and 2050.

9. Network Rail’s long term planning process also tends to be very capacity focussed instead of supporting economic and connectivity ambitions to grow the economy and connect places. Any long term planning process must take into account the regional economic and connectivity objectives such as the Leeds City Region Strategic Economic Plan and the Rail North Long Term Rail Strategy.

10. The long term rail planning process also needs to provide a steer and a fixed strategic direction on routes – electrification for example. This will encourage rolling stock manufacturers, leasing companies and franchise bidders to take a longer term view on investment decisions. This also creates the contextual certainty that is required to secure significant private sector investment.

The reasons for the apparent regional disparity in rail infrastructure funding, and the mechanisms by which regions may have a greater input into planning and delivering rail infrastructure, including through route devolution within Network Rail and entitles such as Transport for the North and Midlands Connect;

11. A recent report by IPPR North highlight the disparity in transport funding per head between different areas of the country. The difference is stark with a £190 spend per head in Yorkshire & Humber compared to £1,940 per head in London (2016/17 onwards). Whilst this covers all transport spending rail has a big part to play in this; notably the difference between the £14.8 billion Crossrail scheme to the £1bn allocated to the Great North Rail project. The latter is intended to have benefits across the North of England rail network.

12. The current transport appraisal process does not reflect the wider regenerative economic benefits of rail infrastructure projects which makes it harder to justify investment in the North of England. Providing Transport for the North with greater autonomy and associated funding will go some way to addressing this disparity.

The possible implications of the Government’s policy of increasing the share of private sector financing in rail infrastructure;

13. The implications for the North could be very different to those for London and the South East. Investment in the North of England is required to ensure regeneration of its cities and towns by supporting transformational economic growth and increasing productivity by improving connectivity.

14. The benefits of investing in Northern transport projects are social as well as financial, and often relate to unlocking potential, which is inherently seen as more of a risk, although the rewards are potentially high. Private sector investment in transport schemes in the North would not always generate the same financial return as those in the South of England. Therefore increasing private sector investment could result in reduced financing for rail infrastructure projects unless public sector funding is targeted at the North.

Whether steps taken by the Government and Network Rail to increase private sector investment for rail infrastructure are adequate and how continuing barriers to private sector investment might be addressed.

15. The Hansford Review (Unlocking rail investment –building confidence, reducing costs, 2017) indicates the perceived barriers discouraging third parties from investing in rail infrastructure projects. These include the lack of a specific party who has oversight of this area, no clear plan of upcoming opportunities for private sector investors, no guidance or templates for those investing and Network Rail lacking interest in achieving cost effective results. Network Rail responded that they will change their behaviours and approaches and it is up to the Department for Transport to ensure that this happens.

16. The Network Rail approach is process heavy, full of terminologies that are quite alien and remote to the private sector. The general approach of emerging price contracts and lack of certainty / control on costs is one of the biggest barriers to private investment.

December 2017