ENGAGING WITH GOVERNMENT

1. ENGAGING WITH GOVERNMENT Peter Loosley - Policy Director - Railway Industry Association 22 November 2018

2. PRESENTATION STRUCTURE Content • Why rail is important to UK PLC • The Williams Review • Smoothing the Renewals Profile • The Enhancements Pipeline • The Rail Sector Deal • Brexit • Conclusion • Questions

3. WHY RAIL IS IMPORTANT TO UK PLC

4. THE WILLIAMS REVIEW Another Review…. But an Important One • This will be a long (possibly one year) and wide-ranging review and will consider the structure of the industry and the role of its key stakeholders • As such a key stakeholder and representing the Supply Chain, RIA is already engaging with the Williams Team/DfT and will provide regular & constructive input • It is vitally important that business continues as usual during the review – we must not go into stasis during the course of the review because:- • Stable work profiles are essential to industry efficiency

5. SMOOTHING THE RENEWALS PROFILE A Nice Smooth Renewals Profile • You would think the annual expenditure profile for something as regular as renewals (eg track, signalling, civils) would be both smooth and predictable in order to allow the supply chain to plan properly • Well, this is what it looks like:-

7. SMOOTHING THE RENEWALS PROFILE A Nice Smooth Renewals Profile • Following lobbying from RIA around that issue and the fact that we had run out of renewals funding for the last 18 months or so of CP5 the Transport Select Committee took evidence on Rail Funding in January 2018 • It concluded by agreeing with our suggestion that DfT should convene a high-level stakeholder group to examine the options for dealing with the ‘boom and bust’ profile • DfT has accepted that recommendation and the first meeting of this stakeholder group will take place in January 2019. This is a significant lobbying win • Our suggestion is to set a baseline renewals level for each year of future CPs • We also have concerns over ‘annualized’ funding for CP6 • There is also by the way a similar boom & bust profile for trains:-

9. THE ENHANCEMENTS PIPELINE There Doesn’t Seem to be One • There has been a significant change in the handling of enhancements since GWEP • Understandably perhaps, HMG has decided to detach the enhancements process from the ORR and put it under DfT control. • This means that every future enhancement project will have to satisfy a rigorous stage-gate approval process – and a project can fail at any stage • There is roughly £10bn in CP6 funding for ‘Hendy Tail’ and other enhancements which will be subject to this process • But there is no obvious timed pipeline for such schemes to come forward • And further future enhancements will be subject to DfT’s fledgling new market–led proposal initiative

10. THE ENHANCEMENTS PIPELINE There Doesn’t Seem to be One • All this means that whilst there is a welcome increase in renewals funding for CP6, there is no obvious forward pipeline for enhancements • And the skillsets for multi-disciplinary enhancements are subtly different from those needed for, usually, single-discipline renewals • So, with no future pipeline, there is the risk that the multi-disciplinary project management and system co-ordination skills could be comprised and move to other clients (eg HS2), sectors or even countries – which could cause difficulty when NR enhancement schemes eventually do come to market • This is equally true for Network Rail’s own resource as it is for suppliers • We are in discussion with DfT and NR about this and will be lobbying further on this issue in the New Year

11. Sector Deal

12. BREXIT Negotiations • Draft deal announced on 14 Nov – negotiators level • 5 hour Cabinet session – support secured • More resignations: Jo Johnson, Dominic Raab (Brexit Sec), Esther McVey (Works and Pensions Sec), Shailesh Vara (NI Minister) • Next Council meeting 25 Nov – political approval • Deal expected to go to Parliament in December • Also needs approval by EC, EP • 127days to go

13. BREXIT RIA BREXIT CHECKLIST RIA Activity • To support DfT ‘no deal’ Brexit planning, RIA has combined its checklist with that of Rail Delivery Group (RDG) to give broader rail overview • Help get answers to key questions for members • RIA gave oral evidence to HoL on future UK/ EU transport arrangements. View at: https://parliamentlive.tv/event/index/7e862f7e-84be-4618-ab7b-14e6aa804530?in=10:45:40 • Meeting with PPS DExEU on 12 November • Interview with IRJ, presentations to RSG Council, Rail Peoples’ Forum A checklist to help RIA members consider the changes that Brexit may bring and to help members plan for and manage Brexit

14. CONCLUSIONS Our Relationship With DfT is Strong • We have good working relationships with Ministers and with DfT from the Permanent Secretary downwards and we will do our best to ensure that continues • We will need to continue to work collaboratively together to address these issues which will be pivotal to the successful, efficient delivery of CP6 which we are all collectively striving to achieve for rail passengers, freight users and the tax-payer • We have a very good settlement for CP6 and collectively we need to ensure that we do indeed deliver this efficiently • If we do not, there has to be a significant risk that the settlement for CP7 will be far less favourable • Together we can, and will, deliver CP6 efficiently

15. THANK YOU Happy to take Questions