A hiatus in UK railway spending decisions could lead to rail suppliers redirecting investment to other countries or slowing expansion plans in the UK, new research reveals.

The results of the Savanta survey come as the rail supply community gathers in London for the RIA conference, which takes place on Thursday and Friday of this week. The survey found that:

• Rail business sentiment about the UK rail industry shows a mixed outlook for the year ahead: more companies (43 percent) now expect the rail industry to contract in the coming year than expect it to grow (34 percent), which is a reversal of sentiment compared to a year ago, when 45 percent thought the sector would grow and 31 percent predicted contraction.
• But companies are more optimistic about their own prospects: 59 percent of respondents said that they expected their business to grow in the next year, compared to just 13 percent who foresee a contraction.
• However, a key risk for the UK is the potential for a hiatus in investment decisions: 77 percent of rail suppliers said that they consider a hiatus in rail work either quite likely or very likely over the next 12 months, for example due to uncertainty over future rail funding or delays in decisions on rail reform.
• For taxpayers and rail users, there are now risks from rising costs due to inflation and companies looking to shift investment overseas: rail suppliers are most likely to respond to the continuation of this hiatus by pausing or slowing expansion plans (36 percent of businesses), prioritising work outside of the UK (33 percent) and increasing the cost of products and services (31 percent). In addition, in response to rising inflation, 60 percent of companies said they were likely to have to increase the costs of products or services and 23 percent said they would be likely to prioritise work outside the UK.

Commenting, Railway Industry Association Chief Executive Darren Caplan said:

“The rail supply sector is in a prime position to play a key role in the UK’s post-pandemic economic recovery, and it is encouraging that despite the current economic backdrop, businesses are optimistic about their future. However, there is a real risk that businesses are put off investing in the UK because of uncertainty over future rail funding or delays in decisions on rail reform.

“The current ambiguity on the delivery of projects in the Rail Network Enhancements Pipeline and major schemes like HS2 and Northern Powerhouse Rail is also contributing to supplier anxiety over a hiatus in work, in what is already a difficult economic environment. It is concerning that the industry expects hiatus to continue well into 2023.

“Whilst RIA and our supplier members will of course take a proactive and positive approach to the future, we urge the Government to act now by giving more visibility and certainty on work pipelines. This would give businesses the confidence they need to keep investing in the UK, rather than slowing down expansion plans or redirecting investment overseas, so that we retain the skills and capabilities to meet the needs of a growing rail network in the coming years. 

“A visible pipeline also means the taxpayer gets best value for money, at a time when public finances are tight. We hope the Government heeds this call.”