Written evidence submitted by Siemens Mobility (MTP0019)

 

  1. About Siemens Mobility

 

1.1.           Siemens Mobility has been a leader in transport solutions for more than 160 years and now employs 36,800 people worldwide, 4,500 of those are in the UK. The organisation is constantly innovating its portfolio in its core areas of rolling stock, rail automation and electrification, turnkey systems, and intelligent traffic systems.

 

1.2.           Siemens Mobility Limited carries a full range of transport-related activities in the UK including research, manufacturing, installation, testing and commissioning across its portfolio. The company works with around 3,000 suppliers, 47 percent of them are UK based SMEs. Around 90% of our spend is with UK based suppliers. This means the organisation is ideally placed to provide expert advice and input into matters affecting the transportation industry in the UK.

 

In total Siemens Mobility Limited operates from around 70 UK locations. Its bases are geographically spread from the south coast of England to the north of Scotland and include a mixture of manufacturing sites, offices and depots and maintenance facilities. They include factories in Poole and Chippenham which supply the domestic markets in road traffic management, railway signalling and train cab radio equipment as well as exporting globally.

 

The company is in the process of building a new rail manufacturing site in Goole, East Riding of Yorkshire. The Goole development will create up to 700 direct jobs, with a further 250 roles created during the construction phase and an additional 1,700 indirect supply chain opportunities. It is scheduled to open in 2023. The company plans to create an associated rail supplier village and innovation centre with co-located suppliers making Goole a rail centre of excellence for the UK.

 

1.3.           With its broad transport portfolio and major UK presence backed up by the support of a global organisation, Siemens Mobility Limited has been, and continues to be, involved in many of the UK’s major infrastructure projects/skills development initiatives.

 

This includes the most recent award of a contract covering 94 new trains and associated maintenance for London Underground’s Piccadilly line. These will be the first trains to be manufactured in Goole.

 

The company’s technology is also at the heart of London’s ultra-low emission and congestion charging zones where Siemens Mobility software integrates with roadside sensors and ANPR cameras. Such initiatives have had a dramatic impact on the standards of air quality.

 

Siemens Mobility was also heavily involved in Thameslink with the company providing 1,154 carriages, two new rail depots and associated maintenance, as well as new signalling capabilities. This include the integration of Automatic Train Operation with European Train Control System to enable a metro-like frequency through London’s core. Siemens Mobility also provided 17 very high-speed trains to Eurostar based on its Velaro platform.

 

The company was also instrumental in the development of the National Training Academy for Rail (NTAR) that was launched following a 50/50 investment by Siemens and NSAR with DfT/BEIS. NTAR’s Curriculum addresses industry skills gap and the need to focus on technological advancement of the sector.

 

Current projects include Crossrail, Europe’s largest engineering project, for which the company has two direct contracts. These cover providing the CBTC (communications-based train control) signalling and control system for the central section of Crossrail and the associated communication and control systems (covering station management systems; rail and station SCADA (Supervisory Control and Data Acquisition) systems and radio and network systems). 

Siemens Mobility Limited is also supplying a broad range of intelligent infrastructure solutions for the Edinburgh Tram to Newhaven extension. The contract covers electrification, SCADA, telecoms and tram and road traffic signalling.

  1. Summary of our response

 

2.1.           Siemens Mobility Limited is pleased to provide its response to the Call for Evidence launched on 4th December 2020. The key messages within our response are summarised below. We are keen to work with the government and industry to achieve these, ensuring that infrastructure investment spreads opportunity across the UK.

 

2.2.           Our key recommendations are as follows:

 

 

 

 

 

 

 

 

  1. Transport infrastructure strategy and priorities

 

Transport infrastructure priority and Levelling-up agenda

 

3.1.           In order to achieve the Government’s aim of levelling up Britain’s economy, transport and infrastructure should be prioritised on the basis of how well it stimulates growth and jobs across the country, and in particular areas where investment has traditionally lagged behind. 

 

3.2.           To achieve this, the wider economic benefits of a project and programme should take precedence over a traditional benefit-cost ratio, since in transport investment benefit-cost ratio- based business cases have historically favoured projects in London and the South East. We, therefore, welcome the amendments to the Green Book, which we trust will ensure the Government can achieve the ambition to 'level up' financially deprived regions and achieve other strategic objectives.

 

3.3.           Whole-life, whole system costs and benefits should also be prioritised over the level of up-front capital expenditure, to ensure value for money and reduced operating costs in the longer term.   

 

3.4.           To support levelling-up, the Government’s transport strategy should include commitments to investment in schemes across the UK, providing a real alternative to the use of private cars, such as: 

 

 

 

 

 

 

3.5.           The Governments National Infrastructure Strategy lays out plans for a levelling up fund and restoration of some of services lost in the Beeching cuts. Infrastructure which connects Britain’s regions should be a key priority, reducing reliance on London as the only hub and delivering agglomeration benefits between towns and cities. These investments could also support the drive to net zero by 2050. They should include: 

 

 

 

 

 

 

3.6.           Investment should of course also continue in London and the South East, but the Government’s transport strategy should prioritise those projects which deliver direct economic benefits elsewhere in the UK.   

 

For example, new London Underground trains and upgraded signalling for the Piccadilly, Bakerloo and Central lines, and in traffic management systems for London create jobs and investment in places like Poole, Goole and Chippenham where Siemens Mobility has or is building factories. Our existing factories in Poole and Chippenham employ many 100s of skilled individuals in traffic and railway markets and export between 25 - 50% of their output.   

 

This will be equally true for other suppliers with manufacturing capability in the UK, so funding for projects like the replacement of the South Eastern train fleet can also have a much wider economic impact. 

 

3.7.           To support this, and as the UK has now left the European Union’s single market and customs union, it is essential Government and industry investment in ‘Made in Britain’, R&D, manufacturing and the supply chain continues to increase. We are already playing a key part in investing and levelling up Britain, for example via our investment in a new state-of-the-art train manufacturing facility in Goole, Yorkshire as well as the planned Innovation Hub, RaisE, adjacent to the factory which will have robotics and autonomous systems at its core. We also ensure that we support SMEs through our supply chain approach, around 44% of our spend being with UK SMEs, and UK academia as a founding member of UKRRIN.

 

Meanwhile our innovative electrification and road enforcement technology is helping reduce carbon emissions to help meet the Government’s ambitious net zero target. Whilst our partnership with Network Rail to develop the East Coast digital railway will bring our latest innovations to deliver improved reliability, capacity on this route with others to follow. 

 

Decarbonisation

 

3.8.           The Government has rightly made decarbonisation of the economy in general and transport in particular a priority and focus on this will increase through the spending review period especially with this year’s COP26 conference set to take place in Glasgow. 

 

3.9.           With the eyes of the world on the UK, the government can accelerate decarbonisation of our transport network by taking a joined-up, whole-system approach that reduces all sources of greenhouse gas (GHG) emissions produced as a result of transport.  

 

Such an approach should focus on all emissions released directly by rail and road vehicles, emissions from the production of electricity used to power them, embedded carbon in materials used to build infrastructure as well as the emissions and carbon produced during the build itself. We assume that the Transport Decarbonisation Plan due for publication by Government this spring will provide clear guidance on this matter. 

 

3.10.       In delivery of its contracted projects Siemens Mobility is already adopting approaches to ensure that it minimises emissions in the production of products, the delivery of them as well as ensuring that the ongoing operation and maintenance minimises emissions.  Examples from our portfolio include light weight electrification systems using less components and need fewer supporting structures, reducing materials and concrete during construction and less maintenance activity. Electrification of the core network is essential if we are to decarbonise our railways both for passenger but also for freight. This also brings advantages of cleaner faster and more comfortable journeys. As well as our new Plus + traffic system which at a medium size traffic junction reduces the amount of cooper cabling required by over 6km, a reduction of some 4,500kg of CO2.

 

As a business we continue to invest in carbon efficient technologies and will incentivised further as customers include or increase the evaluation criteria for such measures.

3.11.       But we need to go further and faster and are looking to build new hydrogen and battery trains in the UK. We also want to install more of our digital signalling systems and electrify key lines to improve rail connections between towns and cities, introduce more clean air zones to reduce pollution in them and roll-out electric vehicle charging infrastructure across the country to speed up the transition from petrol and diesel road vehicles. We are also keen to replicate the trials Siemens is already running in Europe for the eHighway in the UK, leading to significant emission reductions on our strategic road network. Government commitment for such initiatives is essential if we are to compete with other countries

 

3.12.       New technologies which could help lower carbon emissions across the transport network      often require significant investment in research and investment from the outset and alternative funding models could be considered.

 

3.13.       To attract the necessary private sector investment in research and development, manufacturers need security from the UK Government that having invested they will not effectively be “gazumped” by competing on capex in short-term contracts. This continues to be a real risk in the rolling stock market where the Government’s approach still allows diesel rolling stock including diesel bi-modes to be considered as a viable option in franchises with a ban on diesels only anticipated from 2040. Similarly, technology is often procured on the basis of the up-front development and installation costs without consideration of the longer- term benefits often leading to sub optimal procurement decisions.

 

3.14.       An example of a technology that could be utilised by the UK’s rolling stock industry is Hydrogen Fuel Cells that could be powering trains on the UK railway network by 2024. Siemens Mobility and indeed other manufacturers are investing in this technology and a confirmed pipeline for such independently powered rolling stock would stimulate such investments as well as supporting the drive for hydrogen investment. This was identified in the Government’s Green 10 Point Plan which proposes the use of low carbon hydrogen production in transport.

 

3.15.       Moreover whilst much of the discussion around travel post the COVID-19 crisis has focused on reduced demand, the crisis has also shown the limitations of remote interactions both in a business and personal context and despite this third lockdown once vaccinations are more wide spread indications are that many people will still have to (or choose to) travel for work and leisure much of the time.

 

3.16.       Therefore, whilst we have seen demand depressed in the short-term and acceleration of remote working trends, there is already evidence that road congestion has increased in places like outer-London which means emissions from transport are likely to remain high.

 

3.17.       It is vital therefore that Government investments enable transport whether passenger or freight on the railways or private or freight on the roads to become cleaner, greener, and safer regardless of how many people travel or what method they use. This will also support the drive for a clean economic recovery from the current pandemic.

 

 

  1. Appraisal and funding of transport infrastructure 

 

4.1.           To secure an economic recovery and the future prosperity of the UK, investments in transport and infrastructure need to be delivered at pace and be affordable at a time when the public finances are particularly constrained.   

 

4.2.           But all too often transport, and infrastructure projects take too long to plan, sometimes run over-time and over-budget in delivery. They also have to compete for public funding with one another, as well as capital projects in health, education etc.   

 

4.3.           Therefore, the Government should help remove barriers to timely delivery and outside investment which hold back investment in the UK and thereby inhibit growth and productivity improvements. 

 

4.4.           Part of achieving this requires cutting through the red tape which slows projects down.  This could be achieved by: 

 

 

 

 

 

 

 

Siemens Mobility would welcome further engagement with the Department for Transport, Transport Committee and the Government’s ‘Project Speed’ taskforce on these and related issues.

 

4.5.            The success of the Government’s transport decarbonisation strategy will ultimately depend on: 

 

 

 

4.6.            To do this, we need to take an approach which considers both: 

 

 

 

Siemens Mobility has these technologies available and are working with customers in the UK to bring them to fruition.

 

4.7.                   Therefore, to support the reduction in emissions from road and rail transport, the Government should ensure that decarbonisation is a formal part of the business case and the appraisal processes for transport infrastructure projects.

 

Private financing

 

4.8.           Private financing could enable the Government to deliver more projects, more quickly between now and 2024, helping to level up the country, create jobs and increase growth.

 

4.9.           There is still significant interest in investing in UK infrastructure from private investors ranging from pension funds to businesses like Siemens, and in many cases (including for Siemens) the cost of capital is comparable to the rates at which Network Rail and others can borrow.

 

4.10.       By enabling greater private financing of transport infrastructure, DfT can reduce pressure on the public purse over the CSR period and transfer a portion of the risk to the private sector, reducing the likelihood of over-runs and over-spends and reducing the Exchequer’s exposure to them.

 

4.11.       To overcome the barriers to private financing transport and infrastructure projects previously encountered (most recently in DfT’s Market-Led Proposals competition), HM Treasury should help make private financing more accessible.

 

One of the fundamental problems with the Market-Led Proposals approach was the insistence that all financing be an off-balance-sheet for the Government, making contractual arrangements impossible. A more pragmatic approach would be to recognise that whilst the ONS may need to classify some financing from public-private projects as public debt, the financing risks will be shared, reducing the Government’s practical liability.

 

Levels of financing and circumstances under which other public bodies such as Network Rail, Highways England et al are authorised to share or transfer financing risk where that increase was on their balance sheets.  

 

For example, DfT could allow a certain percentage of spending over and above existing debt ceilings provided that a percentage was privately financed (adhering to clear and consistent value for money measures and given due diligence).

 

 

  1. Factors influencing the cost of transport infrastructure in the UK 

 

              Output Specifications

 

5.1.           Contracts in the railway supply chain are traditionally tightly specified by the client and leave little room for innovation by suppliers. Greater use of output specifications focused on performance rather than preferential engineering should encourage innovation by the supply chain and reduce costs and add to a positive passenger experience. 

 

5.2.           We have experience of working successfully for other clients in this way, including London Underground in the delivery of the Victoria Line resignalling project, allowing operation of up to 36 trains per hour. During this project, we agreed to deliver against certain contracted KPIs). These may be as simple as the percentage availability of a piece of equipment, the headway on a section of track (the minimum safe separation of trains enabled by the signalling system), the availability of power to trains, or an inter station journey time. Our experience of working with London Underground is that it is possible to create a range of KPIs, and to measure success against them.

 

5.3.           Siemens Mobility would support the use of a contractual framework whereby the company was paid by delivery and subsequent performance according to the agreed performance output specification rather than being paid for inputs

 

5.4.           In the UK the push to deliver value for money tends to lead to shorter term contracts being let with frequent retendering and less consideration given to the overall cost of a project both the capital and the operational costs of the assets over their life for maybe 25 years.

 

5.5.           We play a much greater role in the ongoing maintenance and support of systems in other parts of the world and see increased service availability and passenger satisfaction as a result. In Norway we have recently been awarded a contract to digitalise the signalling system across the complete Norwegian rail network (4,200 km) and additionally to maintain it over 25 years. Taking this whole life approach allows Siemens to be more innovative and cost effective in terms of the solution delivered. A similar approach has been taken by Network Rail in its contract model for the digital railway programme on the East Coast Main Line (ECML) which Siemens Mobility has secured. Taking this whole life view of a project will, deliver better value, prioritising the interest of the taxpayers and ultimately the passengers. 

 

Early Contractor Involvement

 

5.6.           With an ever-growing demand for a greener, smarter, more reliable transport, the industry is also continually challenged to make the optimal use of the available investment. One approach that is increasingly being used to meet this challenge is early contractor involvement (ECI). By involving the technology supplier at an early stage, a much greater degree of operational flexibility can be achieved and programme disruptions minimised, allowing potential risks and challenges to be identified and enabling strategies to be developed to ensure projects meet their stakeholders’ requirements.

 

5.7.           To benefit from ECI, it is important to define exactly what the outputs from this stage of the programme need to be; ECI should clearly add value to either or both cost and programme certainty. The ECI process and period must also be effectively managed, ensuring sufficient time and effort is set aside to build the team and set goals, so that all parties are aligned.

 

5.8.           Within the ECML Power Supply Upgrade 2 project (ECML PSU2) and Transpennine route upgrade (both East and West), we continue to be involved at the early Feasibility and Option Selection stages as the technical lead helping to identify value creation by working with Network Rail to establish the optimum solutions to the output requirements. This has already led to large savings of over 50% planned costs on ECML PSU2 by introducing alternative technology.

 

Continuing to approach projects in this way brings benefits to the industry and users alike by reducing costs and delivering the right solutions.

 

Project Delivery

 

5.9.           We routinely carry out work at night or during public holidays. For many areas this is almost certainly the right approach provided that sufficient pre-planning, rehearsal, and detailed examination of risks are carried out.

 

5.10.       Projects such as the Derby Resignalling project delivered in 2018, have seen the use of extended ‘blockades’ – 79 days in that example. Whilst this directly impacts the traveling public for a period, it can minimise project costs and allow those affected to understand what to expect, when and for how long which can often be less disruptive than many months of shorter closures.

 

5.11.       We do not believe that the use of blockades is appropriate for every scheme but believe that there is much to be said for detailed understanding of opportunities to reduce disruption through alternative techniques.

 

5.12.       The use of new technology offers significant benefits in terms of improving reliability and availability. There is a potential cost impact involved in this, with railways typically going for the provision of redundant duplicated systems to minimise the impact of system failure. Whilst the cost of this is manageable when signalling and control systems were predominantly fitted at the trackside, as more intelligence moves onto the train this will no longer be an option as space is limited, and there is a real cost associated with moving that equipment around for the lifecycle of the rolling stock.

 

  1. Transport infrastructure capacity and skills 

 

6.1.           The Rail Network Enhancements Pipeline and the recently published Road Investment Strategy 2 (RIS 2) provides some initial indication as to the future planned pipeline within transport. Also, our close relationships with the key customers provides a level of future visibility. But a lack of published and confirmed detail on upcoming schemes will undoubtedly have a negative impact on the long-term planning of our own business. Particular skill sets are required specifically for larger projects to integrate and test multiple disciplines and integrate the overall system. In the absence of such work we anticipate a brain drain of the skills from this industry and/ or the UK.

 

6.2.           If such a pipeline were to be available on an annual rolling basis, it would provide a much clearer signal to the market about where priorities lay. Additionally, the supply chain could be available to help develop such schemes at a very early stage allowing for real innovation as opposed to just preferential engineering which is the typical approach today.

 

6.3.           Such a pipeline would also ensure that where there were skill shortages these could be addressed before becoming an issue, which today leading to inflated costs or an inability to deliver in the timescales required.

 

 

January 2021