When the government and the rail industry recently agreed a new Rail Sector Deal, intended to deliver more for passengers, create jobs and drive economic growth across the country, it was hailed as a key milestone in the government’s modern industrial strategy.
The Rail Sector Deal is intended to help increase the exchange of ideas between the rail industry and other sectors, predicting problems on the network before they arise and solving them through innovative working.
It all sounds like a good idea. But how does it work? And why does the railway need such a deal now when it never had one before?
Rail Engineer sat down with the three people who have been instrumental in developing, co ordinating and agreeing the deal through to ask those questions, and others. Gordon Wakeford – industry chair of the Rail Supply Group and also chief executive of Siemens Mobility UK, Philip Hoare – chief executive officer of SNC-Lavalin’s Atkins business in the UK and Europe, and Anna Delvecchio – commercial account director at Amey and the winner of the Woman of the Year award at the 2018 FTA Everywoman in Transport & Logistics Awards, who had all arrived at the Institution of Civil Engineers fresh from a meeting at 10 Downing Street.
The Department for Business, Energy & Industrial Strategy (BEIS) introduced its new Industrial Strategy on November 2017. This was built on five foundations – ideas, people, infrastructure, business environment and places.
Each ‘foundation’ had three key policies. For example, the first policy under Ideas was to raise total research and development (R&D) investment to 2.4 per cent of GDP by 2027. Under business environment was the policy to launch and roll out Sector Deals – partnerships between government and industry aiming to increase sector productivity.
The first Sector Deals were in life sciences, construction, artificial intelligence and the automotive sector. Creative industries and nuclear followed, and then aerospace and rail were launched on the same day – 6 December 2018.
Speaking at the launch of the Rail Sector Deal, Gordon Wakeford recalled the government’s green paper ‘Building on Industrial Strategy’, which was issued in January 2017 and challenged industry “to provide government with compelling and detailed proposals of how, working in partnership, both sides, government and sector, could agree a sector deal to further the competitiveness of the sector”.
He went on to explain that, after a long and sometimes bumpy journey to reach a conclusion, government and industry had developed a sector deal that “will be transformational”.
“One word that shines through this document,” he continued, “is collaboration. We will increase productivity, we will reduce costs as an industry, we will move from ‘boom and bust procurement’, we will introduce new technology, release data as an enabler, improve the skills of our workforce, and not only increase local ‘value add’ through import substitution but also refocus on ways to double exports.”
Graham Stuart, Minister for Investment at the Department for International Trade, spoke on behalf of government: “Much of the network is bursting at the seams. When things go wrong, as they have this year following problems introducing the new timetable and widespread, and often unnecessary, industrial action, passengers endure poor performance, which means the railway faces greater levels of public scrutiny.
“We all know that we can do better, and that we must raise our game. This collaboration and cooperation that we are launching today between government and industry is one way of responding to that.”
The intention is that, through improved engagement between industry and government, the supply chain will understand future demand better. This will both enable companies to invest with confidence to increase skills and innovation and will also help the industry reduce the cost of building and maintaining the railway, support the sector to increase its exports, attract small businesses to the market and encourage more young people to pursue a career in the rail industry.
The bigger picture
Since that day in early December, the rollout of the new Rail Sector Deal has continued to involve both industry and government.
Gordon Wakeford started by outlining what the Rail Sector deal actually is. “It is a coming together of government and industry to look at the bigger picture, looking five years hence and even beyond that. It asks what we can do, as British industry and government, to make a real go of this industry – this rail industry of ours.”
As Anna Delvecchio explained, a sector deal is a partnership between government and industry on sector-specific issues that can create significant opportunities to transform sectors, boost productivity, innovation and skills. It is not a commitment to engage in a contract favouring individual suppliers or an offer that may pre-empt or prejudice a contract.
“But the essence of the deal remains the opportunity to transform the railway through digitalisation, enhanced customer experience and sustainable business models,” she continued. “Over the last 18 months, we have held numerous roundtables, had meetings with key stakeholders in Government and across industry and engaged the supply sector from train operating companies and OEMs through to the smallest of SMEs. We had over 200 companies come forward to help us, including new entrants, to develop the deal.”
Philip Hoare was keen to point out what the deal meant for the supply chain: “The sector deal requires the industry to come together and have a conversation. I think the supply chain had too quiet a voice for too long, in terms of how policy is set and how decisions are made in the rail industry, and the big advantage for the supply chain is that this deal enables us to have a voice with government we have not had before.”
“It’s government in its widest sense as well,” Anna emphasized, “so not just the Department for Transport but BEIS (Department for Business, Energy and Industrial Strategy), the Department for International Trade and also the government-owned bodies such as Network Rail…”
“And that’s what sets it apart, certainly from our perspective,” Philip Hoare broke in. “We haven’t gone to government asking for lots of money. We’ve asked them to come and join a conversation to help us improve our lot as a rail industry – that’s what the deal’s been about.”
A greater voice
Readers might say that the industry did ask government for lots of money – just over £53 million for CP6 (including Scotland). But it wasn’t the industry – under the current mechanism, it is Network Rail, a government-owned organisation, that negotiates the Control Period funding with the Department of Transport and the ORR, including the detailed plans for how the money will be best spent.
“In developing the settlement for CP6,” Philip Hoare continued, “there was little supply chain engagement in how to deliver best value best and how we could help drive efficiency, working closely with Network Rail to optimise what could be delivered – the supply chain was not engaged in that discussion.
“And that’s the difference. One of the things here is that, as we develop CP7, industry will have a voice in how best to spend that money for the benefit of the railway. We’ll be part of the team alongside Network Rail, advising them on how best we can deliver value and efficiency – the supply chain will have a much stronger voice.”
It must be remembered that the Rail Sector Deal is all about cooperation and collaboration. So, it wouldn’t replace Network Rail submitting an application for funding to government. However, the amount requested would have been calculated following wider consultation than at present.
“Fundamentally, we would have a much stronger voice in determining, with Network Rail, how to get better value from future investment in rail, although ultimately it will still be a settlement between Network Rail and Government,” Philip Hoare emphasised.
“The amount of engagement we’ve had from Network Rail has been phenomenal,” Gordon Wakeford stated. “Sir Peter Hendy has been an advocate right from the outset,” Philip Hoare added, “and we’ve now had two CEOs from Network Rail who have both actively supported what we’re doing.”
It might seem that there are two separate topics. One is the supply chain engaging more with Network Rail, which had already been happening with early contractor involvement and other initiatives, and the other is Network Rail’s conversation with government about the funding package.
“They’re not separate though,” Philip Hoare explained. “If you look at how the delivery structure for this has been set up, it’s about having 18 people in the room, representatives from government and from Network Rail and from HS2, as well as from the supply chain, working together to solve a problem.
“So, if, for example, the discussion is about making significant reductions in the cost of Digital Rail, everyone is in the room. It’s about having that collective, collaborative viewpoint.”
Hands off, not hands-on
As the new Rail Sector Deal will involve industry – the supply chain – working with the Department for Transport, one of the potential stumbling blocks will be the DfT’s propensity to micro-manage everything, driving up cost. It happened with the design of the OLE portals on Great Western electrification, and on the Hitachi-built IEP trains to run under it, so what will prevent the Department from trying to do the same with these new collaborative committees?
“Hopefully, the more we’re engaged, the wider industry – including Network Rail – with government, this programme of work will be more effective,” Gordon Wakeford commented in response to that suggestion.
“It’s about better-informed choices,” Philip Hoare agreed.
“The Sector Deal alone is not going to fix the railway,” Philip Hoare expanded. “It’s a strand, an element, of a solution that will make our railway perform better for our customers. But it’s one strand of that, of which the Rail Review is another, ticketing reform is another, all working together to improve the industry as a whole.”
Work to do
The Rail Industry Strategy is now published, and available on the Rail Supply Group’s website, and a number of workstreams have been agreed. Each will have an ‘Industry Champion’, two further champions – from government and from the client (usually, but not solely, Network Rail) – and a delivery team, which will be a mix of industry, trade associations and interest groups together with two or three secondees.
There are four main workstreams. Digital Railway will look at the transformation of the railway through digitalisation and seek to reduce unit costs, to agree a roadmap for asset renewal and to come up with a strategy and a delivery plan.
The second workstream is Mobility/Data, and this will look at the development of a data platform, innovation and opportunities for pilot schemes.
Sustainability is the third workstream, to concentrate on delivering a sustainable UK rail sector at home and abroad. It’s a big topic, and one of the first priorities will be to agree a mechanism to improve supply chain engagement through CP6 and beyond. This will include the smoothing of work pipelines (reducing ‘boom and bust’) and so facilitating investment decisions. Government will need to be involved, as will Network Rail and HS2, which should have similar approaches, and the whole result must be in alignment with the national infrastructure plan.
Export and inward investment is one of the big goals of the whole investment strategy, so this workstream will look at capabilities and opportunities, assess overseas markets and monitor mentoring and secondment programmes.
These four industry workstreams will be supported by three more initiatives that will impinge on all of them. Skills & People will develop the skills base that the industry so badly needs, Productivity will look at ways to increase efficiency in everything that the railway does, and there will be a pilot scheme run in conjunction with the Rail Forum Midlands that will look to increase SME involvement, enhance the offering and take-up of apprenticeships and develop engagement with schools and colleges.
So that’s seven workstreams in total. Industry is now being asked to ‘volunteer’ to serve on those workstreams, with a list to be published by the end of February.
The Rail Sector Deal is a big thing for the industry. Its foreward, signed by secretary of State for Transport Chris Grayling, Secretary of State for Business, Energy and Industrial Strategy Greg Clark, and Gordon Wakeford as Chair of the Rail Supply Group, states: “The UK’s railways are critical to our country’s economic success, as they have been since the age of Brunel. The Government is determined to ensure our railways continue to be at the cutting edge of global trends and build on the enterprise that invented, innovated and advanced rail travel throughout the world.
“The private sector has a significant part to play – privatisation has reversed decades of decline and heralded the fastest expansion of our railways since the Victorian era. This Sector Deal looks to build on the strong partnership working between the rail sector and the government to exploit the opportunities of new technologies, improve the efficient use of our rail network capacity and enhance the experience of the passengers who use our railways, by improving the service they receive.
“The Sector Deal will enable companies to drive innovation, invest in research and development, upskill the workforce and look beyond the UK to export markets worldwide. This Deal provides certainty for the industry with clarity and involvement in shaping investment in our railways for the first time and, through this collaboration between government and businesses, it will provide better railways for the country’s rail customers.”
Perhaps the last words should be left to Philip Hoare, Anna Delvecchio and Gordon Wakeford, who spearheaded the programme:
“One of the things that’s been really important is – why are we doing this?” Philip questioned. “We’re doing this because we fundamentally believe that we have a great railway in the UK that could do better. When I was working on the Rail Sector Deal, I didn’t think about the company I’m working for, I thought about how to make the railway better in the UK and I think that ethos, coming into it, is critical and I hope that we maintain that.
Anna Delvecchio added: “As a rail industry we should be proud about how far we’ve come and the role we’ve played in shaping the Sector Deal. Now it’s up to us to collaborate and work in new ways to make sure the rail sector deal is delivered. Behaviours will play a key part in making this happen.”
“There’s no doubt that this is a genuine opportunity for the industry to take centre stage in the country’s push to boost productivity – let’s make it happen.” concluded Gordon.
Developing the Rail Sector Deal, which encourages collaboration and involvement, has been a collaborative effort in itself. Gordon Wakeford, Philip Hoare and Anna Delvecchio would like to thank government department colleagues Mike Noakes (BEIS), Shamit Gaiger (DfT) Donald McNeill (DIT), Sir Peter Hendy and Andrew Haines (Network Rail) and Mark Thurston (HS2), as well as industry organisations and associations such as RDG, RIA, RFM, RA, UKKRIN, RSSB and NSAR, plus individuals too numerous to mention, all of whom played a key role in speaking with ‘one consistent voice’ to government and making the Rail Sector Deal a reality.