Guest Comment: Time to unlock rail’s potential

The Spring Forecast should reflect how rail can help the government deliver economic growth, says Railway Industry Association chief executive Darren Caplan.

Chancellor Rachel Reeves has made it clear that ‘growth’ is key when it comes to the domestic political agenda - a message we can expect to hear again in the government's ‘Spring Forecast’ on March 26.

We at the Railway Industry Association (RIA) - in our 150th anniversary year since being set up in 1875, and as we celebrate UK rail’s 200th year since the opening of the Stockton-Darlington line -  believe that rail is well-placed to support the Treasury’s ambitions.

Last April, RIA welcomed Labour’s Plan for Rail and its acknowledgement that rail connectivity is crucial for delivering growth - so central to the government’s economic policy, its stated social values, supporting housing growth, and the decarbonisation agenda.

We were encouraged that the Plan pledged to deliver rail reform in a timely fashion and to bring forward a long-term pipeline of work (both infrastructure and rolling stock-related) for the rail supply sector - including a long-term industrial strategy which should involve transport, and rail more specifically.

Rachel Reeves’ first Budget last October was broadly positive from a strategic rail perspective. There was an undertaking to progress HS2 tunnelling between Old Oak Common and Euston (although plans for the terminus station remain unclear), as well as commitments to progress key enhancements such as the Transpennine Route Upgrade (TRU), East West Rail (EWR), and positive noises on other regional rail projects. 

However, we still await a long-term plan for rail. And there is little sign of transport informing industrial strategy. 

A RIA-commissioned poll of 250 rail business leaders, published by Savanta last November, highlighted that almost half (48%) believed the railway industry would contract in 2025. 

This was partly down to negative comments made about the UK economy by senior government players just before the poll, but it has also been heightened by what many in rail consider to be a slower start than expected to Control Period 7 (the five-year Network Rail spending period between April 2024 and March 2029). 

Uncertainty over rail restructure has also added to that sense of uncertainty, and one can only hope that legislative plans are not delayedfollowing the government’s consultation on legislation, there will now be quick progress on developing the plans for how Great British Railways will work in practice.

At the start of 2025, Rachel Reeves set out her vision for driving UK economic growth - and the role of investment in transport infrastructure was prominent within that. 

The headlines were grabbed by a policy to increase airport capacity, but there was also a focus on the development of a key economic corridor between Oxford and Cambridge, including East West Rail. 

Despite the short-term challenges, RIA  is confident in the longer-term outlook. 

A report by Steer, which RIA commissioned in February 2024, forecasts that passenger numbers would grow between 37% and 97% in the next 25 years, with the extent of growth dependent on how supportive rail policy is in that time. 

Yet in the first year since that forecast was made, Steer (in February this year) has shown that passenger numbers have already increased at the very highest end of its various growth scenarios. Investment plans need to reflect the potential demand growth, which is also an important source of revenues.

Other countries are continuing to invest in rail. A report by Unife, the European rail trade association, forecasts that the rail industry will grow by at least 3% a year in European countries and around the world every year up to 2027. 

And those schemes mentioned above - HS2 Phase 1, TRU, EWR (and others) - are worth billions of pounds of spending in the immediate years ahead.

However, as ever, there is more that could be done. 

It is now over half a decade since the Department for Transport last published a pipeline of enhancements projects, despite an assurance that there would be annual announcements in a so-called Rail Network Enhancements Pipeline. 

We urge the new government to rectify this situation as soon as possible, by setting out its enhancements plans so that rail suppliers can plan and invest accordingly.

The Chancellor should also look to leverage private investment to deliver the benefits of rail as soon as possible. 

Rail supports over £40 billion GVA in economic growth, £14bn in Treasury revenue, and more than 640,000 jobs across the UK. What’s more, those rail jobs in the supply chain have 29% higher productivity than the national average (at £74,100 GVA per job). 

So, the challenging outlook for public finances means that the government should now look to unlock this rail’s potential as a way of channelling external finance into rail infrastructure, stimulating those economic benefits even further. 

The model for financing rolling stock has brought significant investment into rail since 1995, and shows that a combination of clear policies and a precise interface for bringing in private finance, alongside sight of future opportunitiesgovernment plans, can continue to attract investors. 

Politically, with the government strongly committed to devolving more power to the country’s regions, the railway is eminently well-placed to support the growth of city regions by enabling fast connectivity for large numbers of people to densely used urban centres. 

The National Infrastructure Commission (soon to be the National Infrastructure & Service Transformation Authority) has found that the productivity of city regions is directly related to the quality of transport connections. 

Rail connections are also key to optimising the use of public transport in the many new housing developments across the country. The recent reopening of the Northumberland Line has been a great success, and a reminder of the huge latent demand for rail services across the UK.

Remarkably, the DfT has not published a long-term rail growth forecast since well before the COVID pandemic. 

While the Steer report mentioned above gives categoric evidence of impending passenger growth, the Office of National Statistics is predicting substantial population growth ahead in the UK, with a five million increase by 2032. 

This should focus the minds of policymakers and encourage them to bring forward policies to increase rail capacity before the demand surge hits in the years ahead. 

Few other public services have such revenue growth potential - and ministers should seize it. Rail stands more than ready to play its part.