Investment in transport is vital not only for those who use it but also for supporting economic growth and jobs across the UK. Putting funding into transport not only improves social mobility it also helps rail companies throughout the country – no matter where the funding is delivered.
Because of that there will be many rail businesses all over the UK, many of which we at trade body the Railway Industry Association represent, waiting for a deal for Transport for London to be agreed by Sadiq Khan and the government.
The current situation is clearly difficult. Passenger numbers in the capital have fallen during the pandemic and although we are confident numbers will return in the medium term, over the coming years TfL will not be able to rely on funding from fares alone. It is therefore clear that a deal needs to be agreed to secure its future.
If a deal is to be confirmed, the more long-term it is and the more certainty it provides, the better for business. For a complex industry such as rail, companies need to invest in a skilled workforce and capabilities such as factories and machinery.
This investment can only come if businesses have a clear sight of work ahead. For multinational companies playing a vital role in the UK’s railways, this can be a decision about investing in the UK market or elsewhere in the world. And for specialist small and medium enterprises, a forward plan can be vital to their survival and success.
Certainty for TfL will mean more jobs and investment around the entire country. In a recent report, independent economists Oxford Economics found that the railways in London support some £13.5 billion in economic growth and over 158,000 jobs in the capital alone while across the country our railway system generates some £43 billion a year and supports 710,000 jobs.
As TfL’s own figures have shown, for every £1 spent on transport in the city, 55p is spent with workforces based outside London. Many of the companies that have contracts with TfL are based in the Humber, the North West, the Midlands and the South, to name but a few regions. All of them will be wanting to see a long-term deal agreed.
The solution may be to emulate Network Rail’s funding set up, under which the national rail body receives funding in five-yearly cycles known as control periods. The government could look at establishing a control period for TfL, providing it with tapered funding as it emerges from the pandemic.
With the latest deadline for funding negotiations getting close, rail businesses are struggling to plan and may defer investment decisions. This volatility, even in the short-term, will have a longer-term impact on rail supply chain capability. This risks increasing the cost to the taxpayer of essential projects on the existing network.
It is clear that a long long-term financial agreement for TfL is needed. Such certainty benefits not only Londoners but also a national industry that generates jobs and investment.
Darren Caplan is chief executive of the Railway Industry Association, the national trade body for the UK rail supply sector.
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