Ahead of the publication of the Government’s Integrated Rail Plan this Spring, Dan Rodgers, UK Rail Sector Lead at Turner & Townsend, looks at the pivotal role the rail industry can play in the levelling up agenda.
As 2020 drew to a close, a flurry of Government announcements set out infrastructure’s starring role in driving the post-Covid economic recovery and narrowing the north-south divide – with ‘Project Speed’, the National Infrastructure Strategy and Construction Playbook all appearing in quick succession.
Hot on their heels, this Spring the Integrated Rail Plan (IRP) will finally set out a coordinated approach to long-held ambitions to connect the Midlands and the North through rail. Back in December, and as a precursor to the IRP, the National Infrastructure Commission (NIC) published its Rail Needs Assessment for the Government to consider, looking at various budget options. It is the IRP that will be the real catalyst for change though.
The pandemic has made it quite clear that the UK needs a far more connected, multi hub economy to provide long term economic resilience. Improved transport connectivity has been recognised as key to curing this country of its systemic economic over-reliance on London and the South East – making regional and long-distance rail investment critical to the Government’s levelling up agenda. The work of the UK2070 Commission has also set out that national strategic spatial planning is vital to steer investment, if it is to truly address the economic, environmental and social inequalities that we see across UK regions and improve the prospects for the poorest communities.
In this sense, the IRP will represent a significant milestone for UK rail, reaffirming the Government’s willingness to invest in infrastructure and setting out a clear pipeline of major programmes for the industry to pull behind as we seek to build back better.
Be careful what you wish for?
A fundamental objective for the IRP is to avoid the unintended consequences of this explosion of expenditure, however well-meaning it might be. Project Speed might have a nice ring to it, but simply accelerating individual projects and programmes will not necessarily drive the long-term transformation we need to see in our country’s transport system. To create meaningful change and unlock the maximum value for rail users and the communities they serve, these programmes need to be approached and built in a joined up way that ultimately delivers a successfully integrated, sustainable and world-class rail construction industry along the way.
The IRP marks just the beginning, and the next challenge for Government and regional leaders will be to ensure that these major programmes are working together in practice, not just on paper. Part of this rests on casting aside the political agenda and getting unanimous long-term cross-party support for major infrastructure projects. But it also means facing up to the fragility of UK construction. The ambitions of rail are heavily reliant on this industry, yet categorised as it is by low margins and low productivity, this makes for uneasy foundations.
Investment in rail infrastructure is vital, but so too is the need to ensure major programmes – such as Northern Powerhouse Rail and the TransPennine Route Upgrade – are not going head-to-head competing for resources and funding at a time when we need to build the resilience and strength of the construction sector.
To make a success of the Integrated Rail Plan and to deliver the investment being proposed, we need to ensure that the industry is match fit.
Building skills and industry capacity
Our starting point needs to be addressing the capacity and capability conundrum in rail and construction more broadly. Already, local capacity is not always available for mega schemes – to be able to build back better, we need to build up and bolster the supply chain. This has perhaps never been more important. Collecting performance data from over 70 construction projects over the past three years, we’ve seen that on average there’s a 20 per cent loss in productivity on site, primarily driven by this lack of resource. The Covid-19 crisis and consequent cycle of national and local lockdowns has seen productivity on sites fall by a further 15 per cent due to new social distancing requirements, as well as reducing the financial strength of the supply chain. There remains a real risk that a ripple effect of insolvencies could materially lower industry capacity when we can ill afford it.
Added to this, since the start of the Brexit transition, the percentage of the UK labour force made up of migrant labour fell from 13.4 per cent to ten per cent. The new points-based immigration system will help future-proof the labour supply chain, but ultimately we need to recruit and train new talent into the construction industry to ensure these major programmes are a success. Not only will this de-risk projects that are reliant on a skilled workforce, but it is through building up home-grown talent in communities across the UK that we will truly ‘level up’ and become more economically resilient.
By providing clarity of pipeline and major programmes, the IRP provides an opportunity for labour and skills strategies to follow in its footsteps. It offers a unique chance to focus the development of these skills across communities in the North and Midlands, so that expertise created within a programme like Northern Powerhouse Rail can benefit HS2 and vice versa – ensuring these landmark programmes are not in competition, but in sync.
Putting the right delivery models in place
The IRP will set out a framework for what will happen and when. With this vision established, we then need to ensure we’re setting these programmes up for success from the outset – by making sure the delivery model is robust and putting in place the right contracting strategies to optimise performance.
Historically, there are well-publicised failings in how rail infrastructure is delivered in the UK. For rail travel to survive and remain competitive with roads and private vehicles in the aftermath of Covid-19, rail prices will ultimately need to be cheaper for users. Projects will only be under increasing pressure to be delivered more cost efficiently to the taxpayer.
This is a challenge, but it also presents a huge and exciting opportunity to re-assess how we deliver rail projects in this country. To do this we need to look outside of rail and learn from the successes of mega programmes in other sectors – particularly across aviation, nuclear energy, defence and roads.
Part of achieving this includes looking at alternative contractual models that apportions risk more fairly throughout the supply chain and embeds a high-performance mindset into the project team. For instance, the Project 13 model proposes a new way for contractors to work together where the emphasis is on delivering a full set of outcomes for the client, instead of simply focusing on time and budget efficiencies. It promotes collaboration and early engagement between those who invest in, own, commission and deliver infrastructure – ultimately uniting project team behind a central vision and driving efficiency.
Turning a plan into action
As attention turns to driving a sustainable national recovery and building long-term economic resilience, it’s clear that the levelling up agenda has new-found urgency and relevance – and that rail connectivity will be a vital cornerstone. The major programmes covered in the IRP will ultimately be key catalysts to the UK’s economic rebalancing and to overcoming the social inequalities that exist across the Midlands and the North. But to deliver on these promises, and capitalise on the significant investment headed its way, the UK infrastructure sector needs to get its house in order. To turn the IRP into action and progress for the poorest communities, we will need to see real change in industry skills, capacity and programme delivery.
Dan Rodgers is a Director and UK Rail Sector Lead at Turner & Townsend, based in Manchester