What have been the barriers to establishing stable and transparent long-term investment pipelines in the past (such as for track enhancements, station upgrades, and rolling stock orders) and how can they be overcome? | A long-term investment pipeline is needed to meet London’s growth challenges beyond the next ten years and help to drive long term productivity and improve public finances. We understand funding and supply constraints and our aim is to develop a coherent, phased and manageable programme that is affordable for London and the UK, with a strong focus on managing down costs and maximising value for money. A stable, long-term pipeline of investment will offer greater certainty for our supplier base, allowing better planning. Failing to achieve this can add significantly to project costs. 2018 research by the Railways Industry Association stated that ‘boom and bust’ work profiles cause a 30 per cent increase in the cost of infrastructure. A key barrier to establishing stable and transparent long-term investment pipelines for TfL has been the lack of multi-year capital funding settlement from the Government. As recognised by the government and in common with other transport authorities, we cannot solely fund major enhancements and asset replacements from our operating incomes. Uncertainty of long-term Capital funding creates significant risk to achieving efficiencies. Specifically, it results in: - Uncertainty, sometimes close to the start of the budget year, which affects procurement, recruitment and financial decisions all of which would ideally be made over a longer time frame given the resource intensive and time-consuming control processes
- Greater inefficiencies from project initiation and (partial or full) project closedown as a result of managing to a series of short-term budgets despite investing in assets with decades-long lifespans
- Reduced agility in planning and procurement with no certainty of future years’ funding to adapt plans and projects as situations evolve.
There are also existing barriers to establishing stable and transparent long-term investment pipelines for significant projects with multiple stakeholders. The termini stations in London have multiple stakeholders with varying and sometimes disparate requirements. These stations require agreement from Network, Local Authorities, TfL, leaseholders, developers to support funding, etc. Many of these station improvements have been discussed for many years but have not yet happened. Clear master-planning, funding sources and direction from Government to make these happen would support agreement and implementation. Delays in making decisions will inevitably lead to increases in scheme cost. Schemes being rolled over from one funding period to the next creates uncertainty for suppliers, limits the funding available for new enhancements and ultimately impacts confidence. This issue could perhaps be overcome with timely decisions, more robust project sponsorship and project management, and greater incentives for delivery of key strategic milestones. On occasions where TfL or its partners have bid for funding from Government to progress or deliver schemes, the timelines for decision making can be unclear, characterised by long periods without communication followed by requests for substantive additional information to be provided with a very short deadline. This could be improved by the Government providing clearer messaging about the decision-making process and information requirements. The Department for Transport’s Rail Network Enhancements Pipeline which set out for stakeholders how the government is progressing the rail enhancements it funds was last published in 2019. This has meant there has been less clarity and certainty on government priorities which hinders the ability of the industry to undertake long term planning. |
What funding sources need to be drawn on to plan such pipelines and is an appropriate framework in place for the allocation of funding to different projects? | Current TfL funding sources include: - Fares income
- Road charges
- Car park charges
- Advertising and third party income
- TfL fee income
- Government grants
- Development/developer contributions
Our framework for the allocation of funding to different projects is the TfL business planning and budget processes which draw on our asset strategies which condense all our asset information and knowledge. Funding sources from Government could include allocations from the DfT as part of the Rail Network Enhancements Pipeline (RNEP) or from other departments such as MHCLG for schemes that unlock new homes. The process for prioritising projects and investment is often unclear to organisations external to DfT and Network Rail such as TfL. |
How could a potential pipeline provide transparency and certainty for industry? For example: i.what time period should it cover? ii.what level of project specification should it include? iii.what commitments from Government should it include in both the short and long-term? iv.what budgets and sources of public funding should it encompass? v.how should it engage private investment? | To provide transparency and certainty for the industry we recommend that a pipeline plan is high level, outcomes focused and underwritten by committed funding allocation. The pipeline should be composed of a variety of projects, with different scales of intervention, and include flexibility to response to opportunities as they arise e.g. land availability, third-party funding, changing priorities. Funding being provided for a project should be based on project specification but parties should still be able to change the specification if it is found that a scheme could be better delivered differently during design development. We consider a plan covering a five-year period would align well with business planning. For some projects that require funding beyond the settlement period, a commitment to fund the remainder of delivery in the following period(s) is needed. |
What role should the industry play in the development of this pipeline and how should Government engage with industry in its delivery? | The Rail Industry could make its asset strategies, renewal plans and business plan available in public domain. It could require that those business plans have sufficient long-term planning to benefit a supply industry. This would be akin to a more frequent, structured version of what currently happens in Network Rail’s strategic business plan as part of the periodic review process. The need for a whole industry strategy, as first suggested in the Williams-Shapps white paper on rail reform and further underlined in Labour’s Getting Britain Moving Plan to Fix Britain’s Railways, is paramount. The absence of such a strategy is preventing a clear articulation and alignment of national, regional and local priorities that would support the creation of a consistent pipeline of projects. |
What role would a long-term rail investment pipeline play in developing the railway supply workforce? | A long-term investment pipeline would support the industry to hire and develop staff (and apply lessons from previous experiences) over a longer period by providing confidence that there is a reliable pipeline of work rather and avoiding a stop/start approach. This would also provide those considering joining the railway supply workforce confidence that there is long-term career in the industry. We would expect industry supply chains to invest more in research, tech and employment with the greater consistency and certainty provided by a stable investment pipeline. A long-term investment pipeline could feed into national and local skills plans, and hence into the education sector and planning for apprenticeships. It will also help trigger action to reduce the current climate change risk and adaptation knowledge and skills gap in the supply chain. |
How should a pipeline interact with the Government’s development of a wider long term rail strategy, rolling stock strategy, infrastructure strategy, and the Invest 35 industrial strategy? | From TfL’s perspective, there should be alignment between land-use strategy (NPPF, London Plan), Transport Strategy, Asset Strategy, business plan and specific action plans where relevant. Climate change risk and adaptation will also need to be factored in. 
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