Businesses set to benefit from announcement on rail funding

The government announced on Thursday that between 2019 and 2024 £48 billion will be spent on Britain’s railway. By maintaining the network, this investment will ensure that the railway benefits the manufacturing sector by £800 million every year, the construction sector by £300 million and finance by £500 million. In total, sectors across the economy benefit by £8 billion a year from the rail network. 

Research by economic analysts Oxera earlier this year found that Britain’s railway provides £31 billion a year of benefits to the economy through freight and passenger services, reduced congestion on roads and wider economic impacts. The government's announcement means companies will continue to benefit from the increased output, reduced costs and better links between companies and their employees that rail provides. 

Firms and producers benefit from clustering near rail links and from being located closer together, cutting travel time and improving the sharing of information and technology. They also benefit from the growth in the concentration of employment brought by rail, says the analysis. Business travellers and freight customers also benefit by avoiding road traffic congestion.  

The estimated benefits across British industry and business add up to more than £8 billion (see table below).  

In addition to the investment to keep services running, businesses will benefit further as rail links get better with investment in large infrastructure projects to improve connections between cities and make services faster and more frequent. 

In Manchester the Ordsall Chord project will link the city's three main stations for the first time, with new links to Manchester Airport from across the north of England and improved journey times across the city and beyond.   

The Edinburgh-Glasgow Improvement Plan includes electrification of the mainline between Edinburgh and Glasgow and beyond, bringing faster and more frequent services, as well as improvements to stations and key junctions.  

In London the Thameslink Programme will connect Peterborough and Cambridge to Gatwick Airport and Brighton through a new tunnel linking the East Coast and Midland main lines, as well as delivering services with tube-like frequency through central London.   

Paul Plummer, chief executive of the Rail Delivery Group (RDG) - which brings together train operators and Network Rail to enable a better railway, said:  

“Rail is vital for Britain and that’s why rail companies together are investing to keep the railway running as well as ensure it is ready for the future, with better, faster rail connections, benefiting every sector of the economy. The railway breathes life into the economy, helping firms to win new business, create jobs and generate growth. Working together, rail companies are investing to better connect and support communities and businesses across Britain."  

Chris Richards, Head of Business Environment Policy at EEF, the manufacturers’ organisation, said: 

“Effective and reliable commuter rail networks are an essential part of knitting together disparate local economies to make them stronger as a whole and today's analysis demonstrates this and other economic benefits of Britain's rail network.  

"Improved commuter rail networks are a key part of the arsenal in unlocking talent for manufacturers, with 68 per cent saying they would have access to a wider talent pool if there was better public transport in their area. As new Mayors and regional transport bodies develop their plans for transport investment a strong part of these plans must be improving commuter rail networks to unlock the talent on which industry relies.” 

Steve Turner, Director of Communications of Home Builders Federation said: 

"New housing development leads to significant investment in an area as well as providing much-needed new homes. Good transport infrastructure is key to an area’s desirability and so investment in better rail links will directly influence a developer’s decisions to bring sites forward."  

Jerry McLaughlin, Director, Economics and Public Affairs at the Mineral Products Association said: 

"Investment in rail freight is critical to the mineral products industry and our customers. With 20 million tonnes of aggregates and cement delivered by rail annually improved links are good for the economy, environment and society more broadly.  

"Each trainload is equivalent to 75 long distance HGV return journeys and therefore the consequences of rail freight restrictions would be damaging for congestion, emissions and road safety. Mineral products businesses have invested heavily in rail infrastructure and in many cases industry rail depots includes facilities for manufacturing asphalt and concrete and processing recycled materials, therefore providing vital sources of key materials for the construction industry. In locations throughout the UK where these facilities exist, they will enable the building of the housing, infrastructure and other developments needed by our economy and society."  

Ends  

Notes to editors 

Oxera apportioned the following impacts across industry sectors. This represents a sub-set of the overall benefits of rail, focusing on benefits that can be linked directly to businesses. 

• business passenger user benefits; 
• freight user benefits; 
• road congestion relief for business travellers and road freight users; 
• wider economic impacts. 

For business travel and freight user benefits, Oxera assumed that benefits accrue to different sectors in proportion to each sector’s spending on rail travel services based on the Office for National Statistics’ (ONS) Input-Output tables.  

The remaining benefits would not be captured by the ONS data as it does not involve direct purchases by businesses from the rail sector. As an approximation, Oxera apportioned commuting travel, congestion relief and wider economic impacts under the assumption that the use of rail services varies simply in proportion to gross value added (GVA) by sector.