Posted 19th July 2017 | No Comments

Rail suppliers warn of looming CP6 problems

THE Railway Industry Association has sounded a warning about the possible effects of budget cuts in Network Rail’s next five-year financial period, which starts in April 2019.

Calculations are now under way in government and industry about how much Network Rail should spend in Control Period 6 from 2019 to 2024, and these will be stepped up after the publication of the next High Level Output Specifications and Statements of Funds Available, which are due from the governments in Westminster and Edinburgh tomorrow.

It will be the first time that Network Rail’s budgets have been decided for a new Control Period since it became a government body in September 2014. One major impact of the changeover was the end of any further borrowing on the open financial markets.

RIA policy director Peter Loosley warned the All Party Parliamentary Rail Group last night (18 July) that the downturn in work done by Network Rail is a ’significant threat’, while the chief inspector of HMRI Ian Prosser, who published his annual safety review today, told Railnews that renewals need to come ahead of enhancements if safety is to be maintained at its present high level. He explained: “Anything else would be like spending money on a new conservatory rather than mending a hole in the roof of your house.”

Peter Loosely, meanwhile, has expressed concern about the general trend downwards. He told MPs: "The downturn in renewals volumes at the end of CP5 and the lack of enhancement development work for CP6 clearly pose a significant threat to the forward programme of work for the railway network and its supply chain.

“Enhancement development activity is worryingly low, suggesting that the downturn could possibly last into CP6 even if the CP6 settlement restores volumes to pre-downturn levels.”

He is also worried that fewer projects are currently in the earlier stages of development in the GRIP process, which must be followed through before projects become actual and funded.

He added: "If nothing is done to remedy the shortfall both in volumes of work at the end of CP5 and the lack of GRIP 1-3 development work to pump-prime CP6, the supply chain will further contract and then later need to expand to meet the next bow wave of work – if the necessary resources are available – almost certainly at extra cost. The supply chain will also become less productive precisely at a time when increasing efficiency is vital. Small and specialist companies are particularly vulnerable and some may not survive in the current stop/go environment.

"If we do not address the lack of renewals we will be running the risk of reduced performance and efficiency to the detriment of taxpayers, UKPLC and potentially passengers."