We're exploring new ways of paying for the growth in passengers and freight on the railway, involving private finance to release government capital, encourage innovation and speed up improvements
This follows on from Recommendation 6 of the Shaw report into the future shape and financing of Network Rail. The report noted that one option to introduce private sector capital in parts of Network Rail was through private financing.
Our approach is all about financial discipline, with a renewed focus on our core activities while being open and innovative about new sources of finance to fund our growing railway. While no decisions have yet been made, if there are investors or others with expertise in key areas who can help us do that, then we should look to embrace those opportunities.
Delivering safe, sustainable growth across the railway will be a key challenge in the future. However, this comes at a time when, given the current fiscal and economic environment, the government is aiming to control public spending to cut the deficit and bring down public debt. There is, therefore, an unavoidable tension between the overall constrained position faced by the public sector, and the need for sustained, substantial investment to grow the railway to meet social and economic needs.
Private financing refers to forms of third party capital (debt and/or equity), where a financial return is expected, along with the eventual repayment of the initial capital payment. This form of capital is typically provided by large investment companies (such as pension or insurance funds), or strategic investors (suppliers, contractors and so on) seeking a low risk rate of return.
This differs from third party contributions to Network Rail projects: details on this type of funding can be found here.
We recognise the potential for third party participation in Britain’s railway. Safety is our first priority and bringing innovation into a 21st century railway is our principal aim.
We are carrying out feasibility studies into a number of rail projects, assessing how private finance could be used to deliver them more efficiently, at lower cost and with better outcomes to our customers. We will continue to update this page with progress on our feasibility studies.
Alternative delivery and financing of enhancements
- The obstacles faced by investors interested in rail and the opportunity for private delivery and/or finance to play a greater role
- How the obstacles might best be best addressed in order to take advantage of the opportunities identified.
The RDG published CEPA’s report on 14 March 2017.
Professor Peter Hansford of University College London has been commissioned by Network Rail to undertake an independent review of contestability in the British rail market, with the intent of “encouraging third party investment and infrastructure delivery on the national railway”.
The review will consider opportunities for innovation and the use of alternative project delivery models on Britain’s rail network, and explore the barriers that prevent or discourage third parties from investing in, and delivering, rail infrastructure projects.