digitally connecting the nation · 2019-11-07 · a digitally transformed railway will contribute...

ONE RAILWAY:DIGITALLY CONNECTINGTHE NATION

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FOREWORD‘One Railway: Digitally Connecting the Nation’ sets out a well-defined and ambitious strategy to ensure the UK Rail Sector becomes a world leading industry. Our plan will transform industry through digitalisation - enhancing the customer experience, whilst creating a truly sustainable UK rail sector. A digitally transformed railway will contribute £63 billion per year to the UK economy while costing up to 30% less to deliver. The Rail Sector Deal will improve performance, capacity on the network, and safety, while at the same time increasing employment and export opportunities.

The UK rail sector is highly regarded both at home and abroad. This Sector Deal provides an opportunity for us to build on this to become a global leader. As well as our expertise in operating, maintaining

and enhancing the conventional rail network, the delivery of HS2 will allow us to showcase the latest cutting-edge innovations and technologies to export markets.

Our proposals will position the railway at the heart of an accessible door-to-door, multi-modal transport system. It will ensure that our customers are at the centre of everything we do and receive the right information at the right time to make the right decision.

e use of rail has grown dramatically over the last 20 years with passenger numbers doubling, making the UK rail system one of the busiest in the world.

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Working in collaboration with the Government, we will deliver a better deal for customers that will result in more reliable and efficient passenger and freight services that use new technologies to increase capacity and availability.

is will deliver substantial economic benefits for UK plc, transforming services for all customers and enabling UK-based suppliers to develop world-leading and high value skills, products and services.

Over the next 20 years, the railway will see transformational change.

Our strategy focuses on three pillars:

1. ACCELERATING THE DELIVERY OF THE DIGITAL RAILWAY to unlock capacity and connect communities creating One Railway which is digitally connected, increasing train capacity and reducing crowding.

2. SIGNIFICANTLY ENHANCING THE CUSTOMER EXPERIENCE by harnessing the value of data and embracing emerging technologies to deliver Intelligent Mobility.

3. DELIVERING A SUSTAINABLE UK RAIL SECTOR that is successful at home and abroad increasing productivity, while lowering industry costs to the benefit of customers and tax payers.

Philip HoareRail Sector Deal Co-lead

Anna DelvecchioRail Sector Deal Co-lead

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CONTENTSExecutive Summary

Our Vision

Context

Introducing UK Rail Sector 5.0

Core Ambitions

Transformation through Digitalisation: Unlocking capacity and connecting communities

Significantly enhancing customer experience: Pioneering Intelligent Mobility

Delivering a Sustainable UK Rail Sector: Successful at home and abroad

Rail Sector Deal: Economic Impact

Appendix

Cost Savings

Innovation, knowledge spillovers, export potential

Capacity benefits of Digital Railway investments

Midlands Rail Case Study

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26 30

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40

44

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TRANSFORMATION THROUGH DIGITALISATION: UNLOCKING CAPACITY AND CONNECTING COMMUNITIES

SIGNIFICANTLY ENHANCING CUSTOMER EXPERIENCE: PIONEERING INTELLIGENT MOBILITY

DELIVERING A SUSTAINABLE UK RAIL SECTOR:SUCCESSFUL AT HOME AND ABROAD

LIVE UPDATES ON TRAIN LOCATION

REAL TIME INFORMATION ON ROLLING STOCK &

MAINTENANCE

REAL TIME DISRUPTION

NOTIFICATIONS

DIGITAL TRAIN CONTROL AND

TRAFFIC MANAGEMENT

TRAIN TIMETABLES

SMART DIGITAL

TICKETING

APPRENTICESHIPS

EFFICIENCIES

UNLOCKING CAPACITY

£

INVESTMENT

BIG DATA

MULTIMODAL TRAVELFREIGHT OPERATIONS

EXECUTIVE SUMMARYꢀ e Rail Sector Deal is our ambitious plan to deliver transformation across the rail industry over the next 20 years.

Industry off ers• We will accelerate the delivery of the Network Rail Digital Railway

programme with whole industry collaboration. ꢀ is will be the catalyst for a lasting transformation of railway operations in the UK. With digital train control and traꢁ c management at its heart, it will add signiꢂ cant capacity, revolutionise performance and dramatically improve the customer experience for rail passengers and freight users.

• We will deliver digital train control and traꢁ c management solutions oꢃ ering far greater customer beneꢂ ts than conventional signalling and at lower unit cost. By the end of 2025 we will have achieved whole system (train borne and infrastructure based) unit costs lower than current conventional infrastructure only costs bringing signiꢂ cant beneꢂ t to rail users with no additional burden on tax payers.

• We will drive continual technical development of digital capabilities across the sector to pioneer the next generation of train control (ETCS level 3). We will achieve this through the creation of a virtual Digital Academy bringing together Academia, industry, the UKRRIN Digital Systems Innovation Centre (DSIC) with SMEs, innovators and new entrants to the rail industry. ꢀ is will stimulate growth in capability and create export opportunity for UK based companies.

Industry asks• For a Digital Railway strategy and committed delivery plan that encompasses all

elements of train control including traꢁ c management, conventional signalling and all associated data and telecommunications network under a single DR client body with accelerated development and funding for the Strategic Business Cases currently being developed by the Digital Railway programme team.

• For support to develop a new product and process acceptance regime developed, owned and managed by the industry, to speed up product acceptance and allow innovation to ꢄ ourish across the sector.

• ꢀ at franchise speciꢂ cations support digital transformation and incorporate commitments to provide Digital Railway technologies in collaboration with rest of the sector.

Industry off ers• We will develop Intelligent Mobility capability to increase the

accessibility of rail for all. We will harness data to improve the door‐to‐door journey experience and provide greater journey personalisation including the creation of ‘on‐demand’ services.

• We will provide open access to relevant rail industry data and create an environment that encourages industry, SMEs and new entrants to provide new customer propositions that support improved journey choice and travel experience.

• We will be the transport sector leaders for Intelligent Mobility and work collaboratively with other modes to develop innovative digital solutions that transform the customer experience.

Industry asks• For the provision of reliable and ubiquitous connectivity throughout the rail

network in the UK including early implementation of 5G connectivity. ꢀ is is essential to improve productivity and provide real‐time, trusted information to customers and freight users.

• For the appropriate legislative framework to ensure that all organisations in the sector provide their data freely and openly to facilitate Intelligent Mobility across the sector. ꢀ is should include requirements in future franchises to promote new data-led innovative solutions and door-to-door travel.

• To accelerate fares reform so that the industry and its partners can design, innovate and transform the experience delivered to customers.

Industry off ers• We will develop GB Rail export and trade opportunities in partnership with

Government to double rail exports by 2025. By developing a strong domestic market and the ability to showcase digital technologies and innovations here in the UK, we will be uniquely placed to export our products and services around the world and position the UK as world leaders in digitalisation.

• We will create a uniꢂ ed 21st century railway industry where suppliers, routes and passenger and freight operators work collaboratively to deliver a higher performing, customer-focussed railway.

• We will create jobs across the country and invest in our people to develop the necessary digital skills, upskilling and reskilling the industry’s workforce for the future. ꢀ at future depends on having a talented, diverse workforce with the right customer-facing and digital skills.

Industry asks• For new business, procurement and operating models to put the customer at

the heart of all decisions, and to encourage innovation and private ꢂ nance investment in rail infrastructure. If the right framework is in place, operators and suppliers will have the ꢄ exibility to innovate to deliver exceptional customer service and attract new sources of funding.

• ꢀ at the industry be empowered to develop and deliver the most eꢁ cient and eꢃ ective ways of satisfying customer needs based on a framework of long term outcomes agreed with Government.

• For a visible 10-year investment pipeline supported by a long-term rail strategy and an intelligent procurement model. Long-term conꢂ dence in the UK market will enable the industry to invest in innovation and skills driving up productivity and reducing costs.

Benefi ts for the UK: higher productivity levels, lower industry costs to benefi t the tax payer and fare payer, opportunities to export products, services and expertise, unlock government funding for use on alternative schemes.

Benefi ts for the UK: a transformed door-to-door journey for customers, more sustainable travel patterns and data analytics to improve network performance.

Benefi ts for the UK: more trains, reduced crowding, better connections, improved performance.

ONE RAILWAY: DIGITALLY CONNECTING THE NATIONVISIONA digitally transformed rail network with high levels of productivity, performance and availability, providing high standards of service for customers and freight users at the heart of a connected and sustainable network.

ꢀ is will build on the UK’s heritage as a leader in rail technology and operations by creating new jobs, expanding the capabilities of our supply chain, growing exports to the global rail market and supporting greater connectivity, house building and economic growth.

HOW THE RAIL SECTOR ALREADYMAKES AN IMPORTANT CONTRIBUTION TO THE UK ECONOMY:

TODAY

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THE ECONOMIC BENEFITS OF THE RAIL SECTOR DEAL

SUPPORT AND ENHANCE THE DIGITAL SYSTEMS INNOVATION CENTRE

DIGITAL SYSTEMS INNOVATION CENTRE COULD DELIVER ECONOMIC RETURNS OF OVER:

5:1

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DIGITALISATION OF THE NETWORK WILL INCREASE CAPACITY AND RELIABILITY

£35BNTO

£63BN

RAILUSERS

NON-RAILUSERS

WIDER UK ECONOMY

Mainly due to business and commuting passengers

Mainly from reduced congestion

Agglomeration and increased output

HS2 Phase 1

Crossrail

Road Investment Strategy to 2020

TOTAL ESTIMATED ECONOMIC BENEFITS OF INCREASED CAPACITY ON THE RAIL NETWORK

Compared to economic benefits of:

BENEFITS£37BN1

£25-45BN2

£31BN3

1 DfT (2013), e Economic Case for HS2”, October. Values are presented in 2017 prices and have been discounted to 2017. 2 Crossrail (2011), “Crossrail Business Case Update: Summary Report”, July. Values are in 2017 prices and have been discounted to 2017. e lower figure does not include wider economic benefits. e larger value includes wider economic welfare benefits. 3 DfT (2015), “Road Investment Strategy: Economic Analysis of the investment plan”, March, Table 2-1. Values are presented in 2017 prices and have been discounted to 2017.

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VISION

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VISION

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Digitally transformed

High performing

Connected transport network

Supporting greater connectivity

Increased capacity and productivity

Transforming customer experience

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A digitally transformed rail network with high levels of productivity, performance and availability, providing excellent service for customers and freight users at the heart of a connected transport network.

is will build on the UK’s heritage as leaders in rail technology and operations, grow our export capabilities in the global rail market and support greater connectivity, house building and economic growth for the UK.

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CONTEXT

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CONTEXT

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e rail sector plays a critical role in supporting the health, wealth and wellbeing of our country.

With 240,000 people employed either directly or in our supply chains, our industry creates £10.4 billion of wealth (Gross Value Added) annually to the UK economy. e numbers are significant and our importance to the UK goes far beyond that.

We connect people, places, goods and markets - we are critical to keeping the population moving and supporting

a range of wider benefits: improving connectivity for workers which is key to productivity; providing access to skills, health and leisure opportunities; providing an effective alternative to the road network, helping to mitigate congestion issues; and with increasing numbers of electric trains we provide a cleaner, lower emissions means of travelling for large numbers of people every day.

Markets

Goods

People

Places

The UK Rail Sector

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HOW DOES RAIL CONTRIBUTE TOTHE UK ECONOMY?

UP TO

240,000PEOPLE

e rail industry & its supply chain employ

e rail industry & its supply chain contributes UP TO

£10.4BNIN GVA PER YEAR

UP TO

£16.7BNPER YEAR

User benefits for passengers and freight from travelling on rail are

e UK rail supply chain alone employs 125,000 people and includes a full range of capabilities including Original Equipment Manufacturers, contractors and consultants. We supply a booming rail operating sector for both passengers and freight that has seen sustained growth over the last two decades. at growth has helped transform the UK railway from being in managed decline to booming with demand for rail travel at a record high.

However, we are clear that the pressure to deliver even more is real. Capacity constraints on the rail network are evident and difficult to fix cheaply or quickly; customer expectation is much higher; and we, as a sector, need to address a number of issues impacting on our business sustainability including a workforce that is ageing and that needs to adopt new skills rapidly to keep up with the development in technology.

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Building on the UK rail sector’s global reputation.

INTRODUCING UK RAIL SECTOR 5.0

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e time is right to transform our industry into a modern, dynamic, high-tech sector that has significant capacity for growth both domestically and in the global rail market. e Rail Sector Deal will deliver a true digital revolution of our industry – the fifth seismic transformation of our industry following the founding of the railway, the formation of the powerful Big 4 rail companies, the nationalisation of the industry, and the privatisation of the railway in the late 20th century.

FORMATIONBIRTH OF

THE RAILWAY

1.0

CONSOLIDATION1ꢀ23

2.0

NATIONALISATION1ꢀ48

3.0

PRIVATISATION1ꢀꢀ4ꢁ1ꢀꢀ7

4.0

DIGITALISATIONTODAY

5.0

But there is a further critical meaning to this. Currently ‘Industry 4.0’ is very much the vogue with digitalisation and automation providing much greater efficiency and productivity in industrial operations. However we place huge value on our people and believe that the combination

of Industry 4.0 plus our people will create an even more productive and successful UK Rail Sector 5.0.

We set out here our plan to transform our sector, how we are perceived and how we operate.

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Our plan is to transform our industry, to deliver a strong, thriving rail sector that brings economic growth with better connectivity and reliability to the communities and businesses it serves.

We plan to use these digital technologies as the catalyst to

increase our Sector’s productivity, our skills base and our export capability. Through greater investment in skills and innovation supported by a new intelligent procurement model we will fundamentally change how the Sector works.

e rail sector deal will completely transform our sector using digitalisation as the recurrent theme to achieve that.

Over the next 20 years, the railway will see transformational change driven by the rail supply industry working in partnership with rail operators (both passenger and freight) and infrastructure managers. e development and application of new digital technologies have the potential to deliver substantial economic benefits for UK plc, transforming services for all of our customers and enabling UK-based suppliers to develop world-leading and high-value skills, products and services that can be exported.

With High Speed 2 moving into delivery phase and with a number of other major programmes such as Digital Railway, Northern Powerhouse Rail, the Deep Tube Upgrade Programme in London and many more, the UK rail industry has the opportunity to develop new ways of working and delivering that can drive down cost, increase productivity and give us the springboard to export in significantly greater volumes into the global rail market.

UNLOCK CAPACITY

INCREASE SECTOR’S PRODUCTIVITY

INCREASE SKILLS BASE

INCREASE EXPORT CAPABILITY

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rough widespread industry collaboration driven by the Rail Delivery Group and Rail Supply Group, and supported by the Railway Industry Association, the Rail Alliance, Rail Forum East Midlands, and a number of individual businesses and stakeholders from across the rail and digital sectors, we have developed this Rail Sector Deal setting out a

number of industry offers along with a number of asks of Government.

Prior to the submission of our Sector Deal we held an open consultation with the UK rail industry and adjacent sectors to feed into this submission. is was complemented by three Supplier briefings in mid-October to share the draft proposals.

e rail industry (through the Rail Supply Group) has enjoyed recent success through effective collaboration with Universities having successfully bid for funding from HEFCE to establish the UK Rail Research and Innovation Network (UKRRIN)4.

e UKRRIN bid demonstrated the ability of the rail industry to work

collaboratively with academia to develop a £92m project with the industry contributing two-thirds of the total amount that will provide world class research and innovation across industry and academia that will help deliver products and solutions that put the UK rail industry at the forefront of the world rail supply market.

A SECTOR DEAL FOR THE UK RAIL INDUSTRY

SUCCESSFULLY DELIVERING THE UK RAIL RESEARCH & INNOVATION NETWORK

4 Further information can be found at ukrrin.org.uk

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CORE AMBITIONS

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CORE AMBITIONS

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MAINTENANCE


NOTIFICATIONS

TRAFFIC MANAGEMENT

TRAIN TIMETABLES

SMART DIGITAL

TICKETING

APPRENTICESHIPS

EFFICIENCIES

UNLOCKING CAPACITY

£

INVESTMENT

MULTIMODAL TRAVEL FREIGHT OPERATIONS

BIG DATA

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Our vision for the UK rail sector is focused on three core ambitions:

1TRANSFORMATION THROUGH DIGITALISATION: UNLOCKING CAPACITY AND CONNECTING COMMUNITIES

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MAINTENANCE


NOTIFICATIONS

TRAFFIC MANAGEMENT

TRAIN TIMETABLES

SMART DIGITAL

TICKETING

APPRENTICESHIPS

EFFICIENCIES

UNLOCKING CAPACITY

£

INVESTMENT

MULTIMODAL TRAVEL FREIGHT OPERATIONS

BIG DATA

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2 SIGNIFICANTLY ENHANCING CUSTOMER EXPERIENCE: PIONEERING INTELLIGENT MOBILITY

3 DELIVERING A SUSTAINABLE UK RAIL SECTOR: SUCCESSFUL AT HOME AND ABROAD

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1TRANSFORMATION THROUGH DIGITALISATION: UNLOCKING CAPACITY AND CONNECTING COMMUNITIES

Digital train control and traffic management systems can provide a step change in the successful operation of the UK rail network. Both capacity and reliability are critical metrics that the railway is under pressure to significantly improve. Demand for rail travel has grown hugely over the last 20 years as has customer expectation.

ese new digital technologies provide a golden opportunity to deliver greater capacity on the existing rail network. In addition they provide us with the ability to move towards a zero disruption rail network, with maintenance and enhancements becoming deliverable through digital infrastructure that will not impact on operational requirements.

e Digital Railway is a major opportunity for the UK to become the global leader in the development and delivery of these new technologies. With first mover status we can establish ourselves as the global reference for how digital train control and traffic management can transform a complex railway, with obvious significant benefits to UK suppliers, operators and customers. ese range across the broad economic benefits of productivity and GVA gains, as well as the jobs and skills opportunities and export capability generated for the UK rail sector by being at the forefront of early successful delivery of these critical new technologies.

Digital Railway will improve safety, performance and capacity and so will contribute to a growing railway with more jobs and skills for the UK workforce as well as providing an export capability.

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For a Digital Railway strategy and committed delivery plan that encompasses all elements of train control including traffic management, conventional signalling and all associated data and telecommunications network

under a single DR client body with accelerated development and funding for the Strategic Business Cases currently being developed by the Digital Railway programme team.

ACCELERATING THE DELIVERY OF THE DIGITAL RAILWAY

Digital technology has the potential to transform operational performance of the rail network when used in modern train control and traffic management systems.

It can also enhance the delivery of investment projects aimed at improving the rail network for the benefit of all rail users. e rail industry has been slow to adopt many

of these innovative techniques and must now look at how their use can reduce costs and bring significant benefits to all customers.

We will accelerate the delivery of the Network Rail Digital Railway programme with whole industry collaboration. is will be the catalyst for a lasting transformation of railway operations in the UK.

With digital train control and traffic management at its heart, it will add significant capacity, revolutionise performance and dramatically improve the customer experience for rail passengers and freight users.

OFFER

ASK

OUTCOME

CHALLENGE

is will bring a consistent approach to train control and traffic management systems across the GB rail network, ensuring efficient investment plans are developed, considering whole system needs whilst supporting the needs of devolved routes and train and freight operating companies. It will provide complementary support to the ORR and NR’s System Operator. Ultimately, it will increase productivity in the

provision of train control and traffic management reducing the unit costs and strengthening the business case for investment. e new acceptance body will ensure new and innovative products and processes can be accepted for use in a timely manner maintaining high levels of integrity to assure system safety and quality but reflecting modern methods for product development and acceptance.

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For support to develop a new product and process acceptance regime developed, owned and managed by the industry, to speed

up product acceptance and allow innovation to flourish across the sector.

We will deliver digital train control and traffic management solutions offering far greater customer benefits than conventional signalling and at lower unit cost. By the end of 2025 we will have

achieved whole system (train borne and infrastructure based) unit costs lower than current conventional infrastructure only costs bringing significant benefit to rail users with no additional burden on tax payers.

BUILDING DIGITAL CAPABILITY AND CONFIDENCE

e rail industry depends on a strong and vibrant supply chain, supporting a diverse workforce, requiring a range of skills in most engineering and commercial disciplines.

e UK was the birthplace of the railways and has been at the forefront of many technical and operational developments over many years. However, the current business environment has put considerable strain on supply chain relationships. As a result, suppliers have had great

difficulty in having the confidence to make significant investment in skills, products and modern innovative processes. Creating that confidence will attract investment and build a strong UK capability, spread throughout the regions and creating significant export opportunity.

OFFER

ASK

OUTCOME

CHALLENGE

is approach will result in suppliers being confident to invest in activity which will significantly improve productivity. It will also result in suppliers developing their networks, supporting regional and SME growth. New, high level skilled jobs will be created and suppliers will develop

strong exportable skills. Ultimately, UK based business and global corporates will be able to demonstrate UK strength and capability as a world leader in digital transformation of existing railways creating significant export opportunity.

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e business case for investment in trackside digital train control systems is significantly enhanced when they can be provided without wayside colour light signals. is requires all trains operating in the area to be equipped with on board ETCS equipment. Freight locomotives operate across many regional boundaries and early fitment would be a key enabler to

accelerate digital transformation. e same applies to passenger fleets where post-franchise award negotiation can be avoided by specifying the need for fitment as a clear franchise commitment. In addition, franchises which specify the need to support the operational changes and associated training programmes will also be a key enabler to accelerate digitalisation.

BUILDING THE FUTURE DIGITAL RAIL MARKET

Digital technologies do not recognise the corporate and organisation boundaries which exist within the UK rail industry.

ere are significant benefits for all rail stakeholders and in improving productivity by enabling technology solutions, such as modern train control, monitoring and reporting systems,

to work across boundaries on a whole network basis incorporating the needs of Infrastructure operators and train and freight operating companies.

We will drive continual technical development of digital capabilities across the sector to pioneer the next generation of train control (ETCS level 3). We will achieve this through the creation of a virtual Digital Academy bringing together

Academia, industry, the UKRRIN Digital Systems Innovation Centre (DSIC) with SMEs, innovators and new entrants to the rail industry. is will stimulate growth in capability and create export opportunity for UK based companies.

OFFER

ASK

OUTCOME

CHALLENGE

That franchise specifications support digital transformation and incorporate commitments

to provide Digital Railway technologies in collaboration with rest of the sector.

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Customers want, and deserve, easy travel from door-to-door. ey want to plan, book and pay for journeys across different modes simply without needing to understand complex rules about tickets, pricing or travel restrictions. ey want to be kept informed during their journey and given timely, helpful advice on what to do when things go wrong. e data exists and the building blocks are being put in place to realise our ambition of delivering Intelligent Mobility.

Intelligent Mobility uses emerging technologies and data to enable smarter, greener and more efficient travel and movement of goods across the country. It enables the integration of transport services into a single mobility service accessible on demand. e overall aim is to provide the best way for any individual to travel that responds to their needs.

2SIGNIFICANTLY ENHANCING CUSTOMER EXPERIENCE: PIONEERING INTELLIGENT MOBILITY

Intelligent Mobility for rail will allow a customer to plan and travel door-to-door using a single transaction.

Customers would possess, on a mobile device such as a smart phone, the necessary permissions to travel from home to the station, from station to station and then from the station to the final destination however and

whenever they wish to travel. is contrasts with today where customers have to grapple with different websites, different payment channels and different rules and travel restrictions.

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ENABLING DOOR-TO-DOOR TRAVEL ON DEMAND

e customer journey starts and ends ahead of, and beyond, the station; a customer’s journey is, in fact, from door-to-door. e industry recognises this but does not provide a single journey service so customers are forced to plan separate parts of a single journey. In planning and experiencing travel to and from the station customers are increasingly exposed to on-demand travel and this is beginning to shape expectation for the whole journey.

We will develop Intelligent Mobility capability to increase the accessibility of rail for all. We will harness data to improve the door‐to‐door journey

experience and provide greater journey personalisation including the creation of ‘on‐demand’ services.

OFFER

ASK

OUTCOME

CHALLENGE

For the provision of reliable and ubiquitous connectivity throughout the rail network in the UK including early implementation of 5G

connectivity. is is essential to improve productivity and provide real‐time, trusted information to customers and freight users.

e service will be transformed for the customer. We will offer a national comprehensive door-to-door service

tailored to customer need with the Railway at the core.

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TRANSFORMING THE USE OF DATA

e rail industry holds huge amounts of data about customers and the performance of the network but is unable to exploit it sufficiently to deliver exceptional door to door journeys.

We will provide open access to relevant rail industry data and create an environment that encourages industry, SMEs and new entrants to

provide new customer propositions that support improved journey choice and travel experience.

OFFER

ASK

OUTCOME

CHALLENGE

For the appropriate legislative framework to ensure that all organisations in the sector provide their data freely and openly to facilitate Intelligent Mobility across

the sector. is should include requirements in future franchises to promote new data-led innovative solutions and door-to-door travel.

e industry will deliver a service based upon customer need and customers will be empowered with all the information

they need to make the right decision for them and their journey.

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HARNESSING EMERGING TECHNOLOGIES

e industry is committed to the use of emerging technologies to deliver a transformation in customer experience. e industry are already taking steps in this space with the introduction of smart ticketing over the next 24 months but the development and application of other digital solutions enabling Intelligent Mobility are not supported by current regulation. e fares structure, for example, is built on regulation designed for paper tickets sold from a ticket office and not for digital tickets bought on-line.

We will be the transport sector leaders for Intelligent Mobility and work collaboratively with

other modes to develop innovative digital solutions that transform the customer experience.

To accelerate fares reform so that the industry and its partners can design,

innovate and transform the experience delivered to customers.

OFFER

ASK

OUTCOME

CHALLENGE

A modern, relevant and easy to use railway that customers trust.

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All parts of the rail sector – operators, suppliers, infrastructure managers and government client bodies – need to work together to invest and improve the railway for customers, communities and the economy. However, the way in which the industry is currently regulated, incentivised and managed does not sufficiently encourage collaboration, innovation and investment.

So the heart of this theme is the development of a sustainable business model for rail. A model that ensures government and its arm’s length bodies such as Network Rail are informed clients – benefitting from robust advice on investment choices, costs and benefits – supported by delivery partners who are trusted to use their

expertise and experience to design and deliver train services and infrastructure improvements to benefit customers. And a model that enables well managed businesses to be successful and work in partnership to drive further value to customers, communities, taxpayers and the economy.

Within this theme we have identified a range of measures which, when implemented, will enable the rail industry to deliver more efficiently, to bring in third-party financing and for the supply chain to innovate and maximise export opportunities. Ultimately this will result in a stronger focus on delivering better services for our customers and improve public trust in the rail sector.

3DELIVERING A SUSTAINABLE UK RAIL SECTOR: SUCCESSFUL AT HOME AND ABROADOne Railway working as a trusted partner of government to deliver what customers want, provide ever better value for money and support economic growth here and abroad.

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A greater number of enhancements will be delivered at lower cost. In addition, these schemes will provide greater value as they will have a

strong focus on minimising whole life costs and the long-term investability of the scheme rather than to a fixed upfront price.

BRINGING FORWARD PRIVATE FINANCE

e rail industry, Network Rail and Government all agree on the need to encourage private finance to enter the market to invest in rail infrastructure enhancements as an alternative source of funding to the public sector.However, there is little incentive and scope for private investment due to the complexity and inadequacy of contracting models used. In addition, there are complexities around whether private finance would be on or off

the Government’s balance sheet. Nevertheless, there is significant private sector appetite to invest in rail infrastructure but this finance requires clear opportunities for a return to be generated.

We will develop GB Rail export and trade opportunities in partnership with Government to double rail exports by 2025. By developing a strong domestic market and the ability to showcase

digital technologies and innovations here in the UK, we will be uniquely placed to export our products and services around the world and position the UK as world leaders in digitalisation.

OFFER

ASK

OUTCOME

CHALLENGE

For new business, procurement and operating models to put the customer at the heart of all decisions, and to encourage innovation and private finance investment in rail infrastructure.

If the right framework is in place, operators and suppliers will have the flexibility to innovate to deliver exceptional customer service and attract new sources of funding.

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IMPROVING SERVICES FOR CUSTOMERS NOW AND IN THE FUTURE

e GB rail franchising model has evolved over the last 20 years to deliver significant value for customers, taxpayers and the economy. It has doubled passenger numbers and now delivers an annual operating surplus compared to the £2bn loss incurred by BR. e role of competition for the market has been instrumental in delivering these benefits.

e rail freight sector is vital to the competitiveness and future growth of the UK economy. Every year freight operators transport goods which keep supermarket shelves stocked, generate electricity and help fuel the economy. Over the last twenty years the rail freight sector has delivered huge productivity gains for UK businesses and the wider economy as well helping to reduce road congestion and emissions.

We believe that reforms to the current franchising model are required to make it more sustainable and responsive to passenger needs and to build public trust. As an example, ever more tightly prescribed franchises by government inhibits innovation and yet, as our network becomes ever more congested, we will increasingly

need innovative solutions to increase capacity and improve performance.

Our passengers’ day-to-day experience of using the railway is primarily informed by the performance of their train operator and its frontline staff. We know that train operators understand and try to respond to

CHALLENGE

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We will create a unified 21st century railway industry where suppliers, routes and passenger and freight operators work

collaboratively to deliver a higher performing, customer-focussed railway.

at the industry be empowered to develop and deliver the most efficient and effective ways of

satisfying customer needs based on a framework of long term outcomes agreed with Government.

OFFER

ASK

OUTCOME

the needs of today’s customers for example by striving to improve performance and reliability, by investing in new trains and station refurbishments and ensuring timetables meet customer needs. But even relatively minor changes within a franchise must be approved by the franchising authorities even where they are demonstrably in the interests of customers. is acts as a disincentive to train operators to respond with agility to passenger needs.

e way in which the franchise model and industry processes operate, combined with the current challenging

economic climate also encourages train operators to focus on short term goals rather than longer-term customer needs. For example, there is little incentive for train operators to look beyond the end of their franchise to determine the needs of, and plan for, future customers.

We see a real opportunity to ensure that industry roles, responsibilities and incentives are properly aligned so that train operators take the lead in establishing the needs of today’s and tomorrow’s customers and then feed these into the work of the Network Rail routes and the System Operator.

A more vibrant and competitive bidding market for passenger services ensuring best value for taxpayers. Enabling a more stable environment for train operators enabling to focus

on delivery for customers in the short and long-term. More room for private sector innovation and a more agile response to changing customer needs.

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We will create jobs across the country and invest in our people to develop the necessary digital skills, upskilling and reskilling

the industry’s workforce for the future. at future depends on having a talented, diverse workforce with the right customer-facing and digital skills.

For a visible 10-year investment pipeline supported by a long-term rail strategy and an intelligent procurement model. Long-term

confidence in the UK market will enable the industry to invest in innovation and skills driving up productivity and reducing costs.

PROVIDING SUPPLY CHAIN CONFIDENCE

e UK rail industry supply chain is enduring a lack of long-term certainty in the pipeline of rail investment projects and programmes.

Linked to this, there has been huge variations for demand on suppliers causing instability, greater costs and a lack of investment in skills and innovation. We want a more sustainable sector with healthy businesses investing in their products, services and staff. is will create a strong rail supply chain bringing benefits in terms of productivity, skills, increased UK content and increased export capability.

Innovation is essential to transforming the customer experience. We want to harness innovative ideas from across the rail industry and bring in new thinking from SMEs and from other sectors. However, the way in which government and client bodies like Network Rail specify the services and products they want – whether through franchises or infrastructure projects - can inadvertently stifle the ability of suppliers and train operators to innovate.

OFFER

ASK

OUTCOME

CHALLENGE

e boom and bust cycle of rail investment will be transformed into a continuous pipeline of opportunities providing greater confidence and certainty for the supply industry. is will enable the industry to invest in innovations and skills particularly with a long-term view, which will provide significant benefit to the UK railway and to the economy.

A more intelligent approach to procurement will eliminate waste, drive up productivity, reduce imports, create new jobs and support the industry to invest with greater confidence, which in-turn will support the delivery of a rail renaissance in the UK rail manufacturing base.

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RAIL SECTOR DEAL 5.0: ECONOMICIMPACT

Prepared by Oxera for Rail Supply Group and Rail Delivery Group

41

RAIL SECTOR DEAL 5.0: ECONOMICIMPACT

42

It is important to note that the Digital Systems Innovation Centre currently has funding in place and will be established as part of the counterfactual case—i.e. it is not contingent on the Rail Sector Deal. e Rail Sector Deal does however include a commitment for additional support for the DSIC.

at said, even if these returns are non-linear and decreasing, this

would still be considered high value for money for a public investment. More than half of this return is due to a larger and more productive rail supply chain, but benefits would also be created from the centre directly, in the wider rail sector and the entire UK economy.

We encourage the Government to work with us to drive forward the potential within the rail industry.

INITIAL FINDINGSe Rail Sector Deal will deliver, among other things, digitalisation across the rail supply chain and the network itself.

e different offers of industry would complement one another to generate benefits across the rail supply chain, rail users and the wider economy.

Changes in the contracting model will work alongside support for R&D and innovation to both incentivise and facilitate digitalisation of the rail supply chain. e resulting cost savings will help improve the business case for the digitalisation of the rail network itself, with resulting benefits for both rail users and the wider economy.

Analysis by Oxera suggests that, for every £1 invested in a rail centre of excellence, the benefits to the UK economy would be more than £5.

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BENEFITS OF INCREASED CAPACITY

SUMMARY OF RAIL SECTOR DEAL AMBITIONS

While it is currently too early to conduct a detailed assessment of the specific Digital Rail network improvements as a whole, Oxera has considered the potential economic impact of a large increase in capacity of the kind (though not necessarily the size) that Digital Rail could deliver.

Oxera estimate the total economic benefits of the increased capacity on the rail network to be between £35bn and £63bn5, depending on the expansion assumptions used.

TRANSFORMATION THROUGH DIGITALISATION: UNLOCKING CAPACITY AND CONNECTING COMMUNITIES

SIGNIFICANTLY ENHANCING CUSTOMER EXPERIENCE: PIONEERING INTELLIGENT MOBILITY

DELIVERING A SUSTAINABLE UK RAIL SECTOR: SUCCESSFUL AT HOME AND ABROAD

£3BN TO £5BN

OTHER BENEFITS from agglomeration and increased output worth

£22BN TO £40BN

BENEFITS TO RAIL USERS WORTH

due mainly to business and commuting passengers

£10BN TO £18BN

BENEFITS TO NON-RAIL USERS WORTH

which come mainly from reduced congestion;

Source: Rail Sector Deal.

5 All values quoted here are net present values from

2020–79 in real 2017 GBP using discount rates as

given in WebTAG.

is includes:

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IMPACT OF THE NEW PROCUREMENT MODEL

COST SAVINGS

1

2

ere are two potential sources of cost savings that could be realised through digitalisation of the rail supply chain.

e Digital Railway Programme’s Early Contractor Involvement (ECI) initiative was set up to engage the rail supply chain with the Digital Rail Programme.

e ECI’s first report suggested that a fundamental change in the operation of the industry would help to reduce the cost of delivering the Digital Railway network investments. In particular, the ECI approach

advocates a long-term asset management approach involving closer engagement between suppliers and buyers, with a collaborative approach to determining maintenance requirements.

The ECI suggests that whole-life cost savings of 10% to 30% could be achieved for digital train control.

APPENDIX

THE CHANGE TO A WHOLE-LIFE ASSET MANAGEMENT

COST SAVINGS INHERENT TO NEW TECHNOLOGIES THAT WOULD BE BROUGHT IN

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COST OF NEW NETWORK TECHNOLOGIES

It is also possible that the technologies being introduced through the Digital Railway programme are inherently less costly to operate and maintain than the existing equivalents.

In 2015, PwC published a report for the European Commission to consider innovative financing solutions for deployment of the European Railway Traffic Management System (ERTMS), 2 which is one of the key technologies within the Digital Railway programme. PwC found that stakeholders expected a reduction in a range of costs and other benefits, particularly once the use of the system becomes widespread.

The main cost savings identified were:• maintenance: 10–20% saved upon

widespread roll-out of the ERTMS. The actual realised saving would depend on the existing system and the level of ERTMS deployed;

• energy consumption: this would come from more efficient vehicle monitoring leading to fewer speed adjustments. PwC reported that these could range from 1% to 12.5%;

• training: due to standardisation across Europe;

• authorisation of new equipment being brought into service. Currently in Great Britain this function is performed by the ORR.

INNOVATION, KNOWLEDGE SPILLOVERS, EXPORT POTENTIAL

e rail sector deal would provide and enhanced support package to the Digital Systems Innovation Centre (DSIC).

Support for a rail centre of excellence will help facilitate research and innovation activities creating economic benefits for the rail supply chain, the wider rail sector as well as the wider economy. Much of the

economic impact from DSIC would be likely to arise from a change in the size of the UK rail supply chain and an increase in the productivity of both the supply chain and other sectors of the UK economy.

2 PwC (2015), ‘Study to develop tailor-made

solutions for use of innovative financing to support deployment of

ERTMS, in particular along nine core network corridors Final Report’, 18 November.

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DSICSUPPLY CHAIN

WIDER RAIL SECTOR

WIDER UK ECONOMY

Increased R&D activity

More effective coordination

Increased exports (reduced imports)

Productivity

Profits and tax contribution

Lower costs to industry

Reduced requirement for government support

Reduced fares

Technology spillovers to other, related sectors of the economy

Rail user benefits

Productivity improvements

A centre of excellence is expected to facilitate additional or better-coordinated research and development, increasing the value of these activities to the UK rail supply chain.

Oxera has analysed the effects of a rail centre of excellence based on the economic framework described above as part of a project commissioned by the Rail Safety and Standards Board (RSSB).

Analysis is based on the incremental impact of a rail centre of excellence. is approach makes two broad assumptions:

1. at the innovations generated within a CoE would have been generated outside the UK in the absence of DSIC. DSIC would however bring more and better-coordinated research to the UK;

2. at labour and capital would be used elsewhere in the absence of DSIC. As a result, only incomes and profits that would not have been earned in the counterfactual case where there is no DSIC should be considered.

WHERE INVESTMENT IN DSIC WOULD CREATE ECONOMIC BENEFITS

59%SUPPLY CHAIN

11%WIDER ECONOMY

11%RAIL SECTOR

11%CoE

Benefits of a Digital Systems Innovation Centre include:

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Source: Oxera

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MORERAIL JOURNEYS

RAILUSERS

NON-RAILUSERS

WIDER UK ECONOMY

CAPACITY BENEFITS OF DIGITAL RAILWAY INVESTMENTS

The cost savings driven by the move to a new procurement model and innovation in the rail supply chain will provide scope for new investments in the network through the Digital Railway programme, which would be accelerated under the sector deal. This increase in

capacity has the potential to generate substantial economic benefits to users of the railways as well as wider economic impacts on the economy as a whole.

Increased capacity leads to more rail journeys through three main effects.

Oxera have found that the estimated returns to the UK economy to be more than five times the cost; so for every £1 invested in the centre, the benefits to the UK economy would be more than £5. More than half of

this return is due to a larger and more productive rail supply chain, but benefits would also be created from the centre directly, in the wider rail sector and the entire UK economy.

LESSCROWDING

EXISTINGRAIL JOURNEYS

BENEFITS

IMPROVEDRELIABILITY

HIGHERFREQUENCY

• COMMUTERS• BUSINESS• LEISURE

THROUGH REDUCED GENERALISED COSTS

THROUGH EXTERNALITIES

• ROAD CONGESTION

• OTHER

• AGGLOMERATION• INCREASED OUTPUT

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Note: ‘Other’ includes the following factors, which

have a small impact: infrastructure road

costs, reduced number of accidents, improved air quality, reduced noise,

reduced greenhouse gas emissions and indirect

taxation. Source: Oxera.

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MIDLANDS RAIL CASE STUDY

Rail Forum East Midlands (RFEM) is fully supportive of the rail sector deal and with a specific regional focus we are in a unique position to offer a regional dimension to it.

We recognise the government’s ambition to rebalance the economy; creating greater prosperity in the regions and drive economic growth through the development of new technologies and industries. Our region has a strong heritage and skills base from which to build with

specific strengths in digital/innovative technologies, rolling stock and high end consultancy. RFEM has therefore developed two case studies covering two aspects of rail where we believe, with appropriate support, we can add significant value to the delivery of a sector deal.

1.DRIVING THE MIDLANDS ECONOMY THROUGH MOBILITY AS A SERVICE (MAAS)AND FREIGHT AS A SERVICE (FAAS)

We will deliver a MaaS offering across the Midlands incorporating our major cities and several smaller towns that is autonomous vehicle ready and scalable across the UK. is will incorporate key opportunities for FaaS alongside MaaS. New business opportunities will be created offering not just MaaS/FaaS but selling the technologies and services behind them. Much has been made of the MaaS concept with the focus to date primarily on large cities. Utilising the combined strengths of our rail sector partners/members, our Midlands

geography and our links into other local world class clusters such as aerospace, with the technologies/software that they have developed around data management and analytics, we are ideally placed to act as the pilot and incubator for the proposed wider MaaS vision outlined in the sector deal. RFEM will lead a collaborative group of Midlands based companies, largely made up of SMEs and regional stakeholders to develop and pilot a broader MaaS offer that:

• is inter urban (across major cities) and also includes smaller towns that are currently less well connected including those in more deprived areas;

• incorporates options for improving

VISION

49

links/connectivity to the planned HS2 stations in the region;

• considers and incorporates certain aspects of freight targeting carbon reduction and reduced road haulage dependency as key drivers for change. e region is home to key distribution centres e.g. Amazon in Leicester as well as major planned developments such as East Midlands Gateway.

Initially we will develop the economic baseline/cost associated with current lost productivity due to road traffic congestion between our major cities of Leicester / Nottingham / Derby and Birmingham. We will also research regional customer knowledge and expectations for MaaS ensuring we understand the criteria that are likely to be important to future users. In addition we will work with freight colleagues to research the potential for smaller deliveries to be delivered using a FaaS concept, including final destination delivery versus station collection to reduce carbon emissions.

Working with a consortia of organisations including Midlands Engine, Midlands Connect, local TOCs, key local authorities and LEPs we will develop an offer across train (multiple TOCs), tram (Birmingham and Nottingham) followed by bus, car and also incorporating drone developers culminating in a number of software offers that can efficiently integrate all modes of transport to offer the best solutions based on a number of criteria e.g. cost, speed, comfort, mode, accessibility, calories burned for health purposes based on research as selected by the passenger or consumer. To deliver the transformation required we will work with several supply chain companies including SMEs, who often have the bright ideas, and also

capitalising on other Midlands based clusters and key industries including developments in the automotive sector.

We will seek to pilot several commercial models to a range of potential users refining these into a suite of full commercial offerings suitable for different types of user. We will work collaboratively with other pilots, cities or regions sharing our learning and best practice for the benefit of the UK as a whole.

is approach will develop capability in the supply chain in terms of data acquisition/use and the development of software products. It will also create emerging business opportunities for companies that could offer MaaS/FaaS commercially and create opportunities for the UK and international sale of consultancy, products and software. We will develop the economic business case for MaaS/FaaS based on e.g. improved productivity, reduced ‘lost time’, reduced carbon emissions and improved air quality in cities.

We will build on our existing skills activities/initiatives with local colleges, UTCs and universities to incorporate student projects and curriculum activity that support the above ensuring we are further developing the skills needed for the future. e introduction of new T level qualifications in 2020/21 provides an ideal vehicle for scaling up work placement and project opportunities to support this work.

To deliver this we ask that government support and endorse relevant fund-ing bids to existing innovation funds, university schemes and local growth funds where funding requirements are identified.

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2.DEVELOPMENT OF THE ‘PERSONALISED JOURNEY CONCEPT’ PASSENGER CARRIAGE ON AN ‘ULTRA LOW ENERGY / EFFICIENT’ TRAIN FOR THE FUTURE CREATING NEW TECHNOLOGIES FOR WORLDWIDE SALE

We will develop a fullyimmersive visualisation of an ultra low energy train including a personalised journey passenger carriage. is could lead to the development of an operational prototype as a flagship on the world stage for Midlands based rolling stock technology companies. e Midlands has a rich heritage and strong knowledge base associated with the design, development and manufacture of rolling stock. Working with a range of collaborative partners RFEM will lead the development of a virtual ‘Passenger Carriage of the Future’ (10 years + from now) that will offer a fully personalised journey to meet the needs of a broad range of different passengers. Ultimately this could lead to the production of a prototype carriage to take to a future Innotrans (or equivalent) – say in 2024? DfT has already indicated a desire to develop a ‘First of a Kind’ next generation carriage and our proposal supports this concept.

As a starting point we will conduct research to identify the different needs of a broad group of FUTURE passengers and likely trends in terms of the way in which journeys will be undertaken;

linking to the MaaS theme discussed at length in the sector deal. is includes people with disabilities, business and leisure travelers, families and young children, older people and individuals from a variety of cultural backgrounds. Alongside this we will identify key blockers to the improvement of passenger journeys, any technologies / equipment available or being developed (within and beyond the rail industry) to address these and where there are gaps in technology development.

We will also work with university partners from the UKRRIN and beyond and with other strong Midlands based clusters in aerospace, motorsport and automotive to identify latest trends in fuel technologies, energy systems, light weighting, aerodynamics, carbon and noise reduction, space utilization etc. with a view to developing concepts for an ultralow energy and high efficiency design. ese activities will be fully aligned with the identified priorities set out in the wider sector deal and the Rail Technical Strategy and include specific targets on recyclable material and consideration of bio materials to drive the circular economy.

We will create a series of immersive 3d visualizations of what the carriage of the future might look like for different groups of passengers and the

VISION

51

personalized services it would offer. Such a carriage would need to facilitate different people undertaking different activities in the same carriage. For example someone working and perhaps hosting a remote meeting, someone watching a film (with the train window as a screen), whilst someone else is playing a game. Opportunities for people to see the track ahead, to ‘play at being the driver’ or to design, build and race trains based on a range of key criteria could all be provided as part of an infotainment system. ese technologies already exist and they need to be available regardless of mobility, age or other disability. Availability of refreshments and food also need to be considered alongside seat configurations that might enable package and freight movement outside of passenger travelling hours.

We will identify a number of regional companies and university partners that could develop, design, manufacture equipment, develop software etc. to make the above a reality. Many of these companies are SMEs so the consortia approach will provide strong support for their involvement, development and growth. We will also engage with companies working in the refurbishment and aftercare market to identify opportunities for retrofit of new technologies onto existing fleets both in the UK and overseas. We will embrace companies outside the sector that have already developed relevant technologies; for example gaming developers, the

film industry and world class theme parks specifically identifying how such technology could be provided to the ‘mass market’ of travelers.

e activities required provide both an opportunity and indeed necessity to work with young people and the opportunity will be taken to engage local school and UTC pupils, college and university students in research and design projects working alongside industry partners. We will also engage with our museums - Derby Silk Mill and the National Railway Museum – both of whom have major redevelopment plans and a vision to inspire the next generation of railway professionals. Specifically, we will link our 3D visualisations to their railway exhibitions to allow visitors to design, build and try out their designs including taking a ride in our new carriage with the opportunity to provide feedback and further ideas.

e outcome will be new technologies and products with international appeal developed by consortia of UK/regionally based companies and universities who can collectively compete on the world stage regardless of individual size.

To deliver this we ask that government support and endorse relevant funding bids to existing innovation funds, university schemes and local growth funds where funding requirements are identified.

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