Rolling into town: GBR’s rolling stock and infrastructure strategy
The eagerly-awaited long term rolling stock and infrastructure strategy (the Strategy) was published on Monday 28 September. The Strategy is a key part of the formation of Great British Railways (GBR) and the bringing together of track and train. It is one of the first documents to be branded as a GBR strategy, and so is a notable milestone.
For the first time since privatisation, with the creation of GBR the industry can take a holistic approach to the delivery of rolling stock which best needs passenger needs, as well as the interrelationship with infrastructure requirements. It recognises that in the short to medium term, big choices need to be made on rolling stock procurement and refurbishment. Necessarily, decisions on one impact the other, and the Strategy will therefore be a key document underpinning GBR’s future work. Key headlines include a move away from diesel rolling stock, whilst recognising the need for transitional arrangements, a more homogeneous fleet, the possibility of a publicly-owned rolling stock company and a commitment to social value with a 20% weighting.
The Strategy sets out GBR’s vision – albeit for the moment issued by the Department for Transport (DfT) and DfT Operator Limited (DFTO) – for the procurement, management, and modernisation of the UK’s train fleet and infrastructure.
So what is on the horizon and what are the key takeaways? Over the course of the next few weeks, Stephenson Harwood’s Rail and Road team will share our thoughts on what operators, manufacturers and financiers of rolling stock might be thinking about the Strategy. For now, this insight considers some of the key issues identified by the Strategy, the proposed solutions, and what this might mean in practice.
The Strategy can be found in full here.
What are the issues that the Strategy seeks to address?
By its nature, any strategy is the product of a number of balancing acts and is intended to set a direction of travel, rather than being prescriptive in detail. The Strategy is no exception. It acknowledges upfront that the Strategy will need to evolve over time and various choices will need to be made, balancing the needs of customers and operators against cost (including whole-life cost of maintenance), performance and operations.
Perhaps unexpectedly, the Strategy is reasonably practical in its approach. It reviews the existing market and identifies a number of challenges, best summarised as being a “fragmented fleet” with inconsistencies in train specification and quality across the railway network. This manifests itself in a number of ways:
Reliability, environmental credentials and passenger amenities (including accessibility and comfort): These lead to an inconsistent passenger experience and will no doubt impact the drive to encourage more people to rail travel over road.
Variety of suppliers and solutions: Whilst a diverse and well-populated market is to be encouraged and brings benefits of competition and innovation, the Strategy indicates that it can also lead to uncoordinated and uneconomic procurement and operational delivery (particularly with regards to maintenance and infrastructure integration). This may detract from some of the overarching benefits of competition and delivery.
Changing climate: The economic and natural environment is changing, as are passenger behaviours and needs. The rolling stock procured (whether new or refurbished) ought to meet the needs of today whilst also planning for tomorrow.
Misalignment with infrastructure: In particular, ensuring decisions around rolling stock are compatible with maintenance and depot arrangements and future-proofed technologies.
It is worth noting that whilst freight and open operators are not within the scope of the Strategy, GBR acknowledges that they form part of the broader railway ecosystem and GBR will continue to engage on infrastructure and wider network decisions. This links in with our recent insight on GBR’s Access and Use Policy, which you can find here. We suspect some scepticism will understandably remain of where freight and open access sit in the pecking order when consultations are undertaken – and only time will tell.
How does the Strategy propose to address these challenges?
The Strategy sets out its vision for addressing the identified challenges in a number of areas:
A national portfolio or standardised “fleet families”: One of the more eye-catching features of the Strategy is the announcement of a proposal to standardise and ensure greater consistency within particular categories of rolling stock. Whilst this will not come as a surprise to many readers, as it has been trailed for some time, the intention is that there will be central management of rolling stock as a national portfolio of assets, rather than being fragmented across operators. There will be four categories of rolling stock: Intercity, Regional Express, Commuter and Metro. Encouragingly, before detailing each of these and their various features (cabs, systems, interfaces), the strategy first addresses accessibility (including unassisted boarding), connectivity, toilets, security, climate control and passenger information, putting these front and centre of its “train design approach”. This evidences the customer-centric approach that GBR is aspiring to.
Alternative financing models and public ownership: Financing and ownership is to be considered on a case-by-case basis. Whilst some parts of the industry have come out saying this heralds the end of privately own ROSCOs and a commitment to public ownership of the trains, this is a misrepresentation of what the Strategy says. Instead, it leaves all options on the table, which could include a publicly owned rolling stock company, but might also include the more familiar post-privatisation ROSCO leasing model and, in more recent years, alternative new entrant SPV financing structures. Decisions will be made on the basis of delivering the “strongest overall outcome” and keeps options open as circumstances and budgets change over time.
Electrification and Battery traction: The Strategy specifically references battery electric hybrid rolling stock as the standard for future procurements, referencing its flexibility, environmental benefits and potential cost benefits. This is both from a reduced reliance on expensive fossil fuels – which fluctuate in price – and providing alternative bridges to areas that are not feasible (whether practically or cost wise) to electrify the network. This will is a key feature of considering track and train together as one.
Long-term pipeline and market confidence: The Strategy recognises the call from industry for greater certainty by committing to a “disciplined, whole system view” of the pipeline. Whilst more detail is to follow, and that detail will be particularly important to the rail industry supply chain, the commitment to address the “boom and bust” procurement cycle which critics have highlighted will be welcome. We hear this consistently from all sides of rolling stock transactions and the need for continuity, consistency and reliability when planning, procuring or bidding. This is a step in the right direction for the manufacture supply chain in particular, as well as prospective investors, but these words will need to be put into action to achieve confidence in practice.
Track and train, together: The Government emphasises the importance of considering infrastructure together with its rolling stock strategy, as one. This goes beyond electrification alone and covers maintenance and depot locations, asset monitoring and digitalisation (in particular signalling and use of the European Train Control System). Integration with track will require clearer and decisive choices about the trains’ specifications but has the potential to improve the whole system and value proposition. This upfront investment can alleviate the need for expensive and disjointed retrotfitment projects down the line. The Strategy also recognises that fleet asset management should be aligned with infrastructure projects, to ensure coordination on power, signalling and maintenance solutions (including depot availability). The establishment of the “FIP” (Fleet and Infrastructure Plan) will also assist with this.
Passenger-Centric Design: The Strategy focuses heavily on putting the passenger at the heart of the design and specification of rolling stock and services. This is encouraging and highlights the need to make rail an attractive proposition for current and potential passengers. The Strategy highlights the importance of accessibility, information, and connectivity. It also acknowledges the diverse range of passenger types and the need to achieve a higher degree of uniformity across fleets in the areas that impact travel the most.
Maintenance and asset management: The Strategy alludes to perceived shortcomings of existing maintenance arrangements and indicates a renewed focus on whole-life cost. There appears to be a view that maintenance is sometimes procured on a short-term basis at high cost, driven by delays in cascading rolling stock or without a whole-system approach to rolling stock being undertaken. GBR also proposes to monitor fleet condition more closely and take maintenance decisions on an informed basis to ensure procurements are run at the appropriate and justified time in an asset’s life. There are also proposals to establish a new train fleet management function to address this. the Strategy does stress though that there will remain a place for other maintainers, including the original equipment manufacturer, in the process, where this delivers GBR’s aims in a cost-efficient way.
What does this mean for procurement and investment in UK rail…and will it work?
On its face, GBR’s “single directing mind” ethos makes possible this standardisation by holding the reins of rolling stock and infrastructure procurements and taking a bigger-picture view across operators and routes for both track and train.
Consistency, economies of scale and long-term stability have the potential to benefit not only GBR but also the supply chain. In principle, with a firmer pipeline, the supply chain should be able to invest in the people and skills needed to deliver GBR’s aspirations. Key to this through will be GBR applying its thinking broadly across operators, routes, passengers and service types, and long term. Inevitably, there will be change, and foresight is needed of passenger demand, future technologies, environmental challenges and economic growth.
The Strategy is also keen to emphasise that this joined up approach should not overlook individual requirements where appropriate. More localised business cases and route, passenger and work force requirements will need to be considered, as will proper engagement with all relevant stakeholders. Ultimately, at the heart of the Strategy is what it calls a “whole system value for tax payers”. Consistency of opportunity and access to standardised quality rolling stock for passengers across the network is a core part of this. Executed sensibly, the ambitions of the Strategy could be realised – but if the acknowledged balances and choices are not fully reconciled, it could be a missed opportunity.
How can the industry successfully deliver the Strategy?
A number of critical points will need to be worked through to ensure the Strategy achieves the intended outcomes and maximises the benefits of a whole-life approach to rolling stock:
Standardisation, but not at the cost of innovation: This will be a challenge for the “fleet families” approach. In seeking to ensure consistency, GBR needs to ensure that the commitment to standardisation does not stifle innovation which can lead to passenger or cost benefit. Otherwise, “playing it safe” will be the motto, with iterative versions of approved train platforms with little improvement or customer benefit. Rolling stock manufacturers risk being effectively barred from competition if their latest product cannot align to outdated technical requirements – so it will be important for these to evolve over time. This ultimately risks manufacturers losing incentive to innovate, or worse, lose their appetite for the UK market. On the other hand, the passenger, operational and cost benefits of having a standardised fleet cannot be underplayed – so GBR will need to finely balance these competing challenges.
Private finance’s role vs. direct ownership: As noted above, the Strategy is clear that there is no single preferred financing model. On the one hand, this is promising for investors and tax payers alike, in allowing more innovative and cost-effective financing solutions, but on the other, it potentially lacks clarity for private finance’s position in UK rail. The messaging around direct ownership in particular will need to be considered carefully. Although the Strategy states that this would “primarily” be focused on new trains, its messaging and consistency of decision making will be critical to preserve confidence in the market and retain the interest of investors.
A familiar but flexible procurement process: Centralisation and standardisation of fleets should also bring with it clarity and efficiency to regulated procurement processes. Whilst in principle this is welcome, familiarity may quickly become a self-imposed straight jacket, if the processes are not designed to adapt to changing landscapes in addition to protecting standardisation.
Long term thinking: GBR acknowledges that it needs to think long-term. This is not only a challenge for the technical design and engineering but also for procurement strategy and contractual structuring. Applied successfully, this could have significant benefits to rolling stock performance and maintenance (and ultimately passengers) as well as infrastructure development and renewal programmes and their impact on public spending. Without proper planning and consultation, decisions made as a whole now could cease to be fit for purpose after one or two procurements, either resulting in the inefficiencies the Strategy seeks to avoid or accepting divergences in approach and losing the sought after standardisation. The Strategy acknowledges that decisions must not be made in isolation and there is a need to consider all factors, particularly correctly sequencing new infrastructure and infrastructure modifications in step with the cascade of new and refurbished rolling stock.
Maintenance – ensuring value, efficiency whilst allocating risk appropriately: Centralising processes and creating economies of scale are admirable. Tied to the point on market confidence is the need for risk to be correctly allocated. The maintenance supply chain will surely welcome certainty around its contracts through the potential for longer-term contracts and this should improve pricing and collaboration in contracts. These suppliers will, however, also be mindful of protecting their intellectual property, technology and working methodologies between parts of GBR’s network.
A national portfolio adapting to local needs: The Strategy recognises that, beyond the passenger base in different parts of the network, there will also be a variety of needs and capabilities in work force and maintenance and depot capacity. It also recognises the competing needs of passengers, and there is a sensible acknowledgement that there will be a need for trade-offs.
Rolling forward?
The Strategy represents a major shift towards a more joined-up, long-term, and passenger-focused approach to rolling stock and infrastructure – in theory. By holding the reins centrally, GBR aims to avoid the pitfalls of fragmented procurement and planning, and to deliver a railway that is modern, efficient, and fit for the future, both on and off the trains themselves.
However, success will depend on:
Maintaining a balance between national consistency and local flexibility.
Ensuring that standardisation does not hinder innovation.
Coordinating closely with the private sector and supply chain.
Making realistic, long-term, decisions about electrification and technology adoption.
If implemented as intended, the Strategy could transform the UK’s rolling stock landscape—delivering better value for taxpayers, a more reliable, comfortable and consistent passenger experience, with a greener, more future-proof railway.
Information contained in this insight is current as at the date of first publication and is for general information only. It is not intended to provide legal advice.
