The Railway Industry Association (RIA) has told MPs that the current five yearly financial control periods for rail funding are not working.
In its evidence to the Commons Transport Select Committee’s inquiry into rail funding, the RIA said that although the control period system is better than the old system of yearly budgets, suppliers now see overspends in the early years and underspends in the later years. It claims that underspends in the later years mean some suppliers have to freeze recruitment, stop investment or even go out of business.
The RIA, which is made up of rail industry suppliers, claims the current system adds 30% to rail maintenance costs. It has suggested three different models that would alleviate this problem.
The first would be a rolling five-year programme with no start/stop date and regular reviews.
The second is extending the control periods from five to seven or 10 years.
The third suggestion for a baseline of work and funding to deliver a steady state ahead of a government Statement of Funds Available announcement/Final Determination for the following control period.
Railway Industry Association (RIA) chief executive Darren Caplan said: “While the current funding system of five-year control periods is better than the previous system of annualised budgets, it is clear that more should be done to smooth the rail investment pipeline and reduce boom and bust within the control periods.
“At the end of every control period there is a fall in work volumes, heavily affecting the ability of companies in the sector to keep their teams together and jeopardising the ability of SMEs to survive. The particularly frustrating point is that the sector then suddenly has to ramp up capabilities once the next control period starts, when a glut of work comes in.
“So RIA is suggesting to the Transport Select Committee that there be discussion involving all the interested parties in the New Year, to look at how the control period system could be improved. We are not arguing that there needs to be an overhaul, but that the current system should be enhanced to ensure smoother and more certain investment is available for rail suppliers and that this results in lower costs for taxpayers and passengers. Ultimately, this would translate into more investment, jobs and innovation in the industry.
“We look forward to making the case for these changes and working with the industry to find the best solution, as the Inquiry proceeds in the New Year.”