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Supply chain to get longer term deals to help boost efficiency and investment

Rail industry suppliers are to be awarded longer term contracts in exchange for investment in innovation, cuts in costs and reduced travel disruption.

Network Rail chief executive Iain Coucher said this week that the rail operator is looking to sign deals that will span more than one regulatory five-year period. This will give its supply chain the long-term revenues and the confidence to invest in new processes and equipment.

“We want suppliers to innovate so we can lower unit cost and cause less disruption to passengers,” Coucher said. “Those who can do that will get more work.” “But we recognise that there is a nervousness about trusting Network Rail’s willingness to commit to the long-term planning horizon for capital investment that encourages innovation.

“So the general message now is that Network Rail will be looking at longer term relations that span over control periods.” Coucher spoke to NCE just ahead of last week’s publication of its New Lines Programme report.

Looking at the long term

The study signalled a turning point in Network Rail’s approach to the railways, he said. Network Rail’s first years had been about repairing the railway, he said. The next years would be about expanding capacity. “We need to make investments now, for the future,” he said.

“We are looking at a solution across the network, starting with Great Western.”

Iain Coucher, Network Rail

Coucher pointed to the recently announced £1bn electrification of the Great Western line as an example of the long-term thinking the operator can now engage in. Only 40% of the rail network is currently electrified.

“Electrification allows use of electric trains that are lighter, do less damage to the track, which does not have to be renewed or repaired so often, and are 10-30% cheaper to run,” said Coucher.

“Why have we not done it before? You have to link your investment in electrification to the purchase of new rolling stock. Trains last 40 years. So we are looking at a solution across the network, starting with Great Western which is able to replace a fleet of diesels.”

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