This is a sponsored post from the Railway Industry Association. Darren Caplan is its Chief Executive.

ConservativeHome readers may recall that back in July the Railway Industry Association (RIA), the UK rail supplier trade body, published an article on this site urging the Treasury to bring forward £500 million to bridge a rail funding shortfall up to March 2019, when the current five-year Control Period 5 (CP5) funding cycle runs out.

We argued that failure to plug the funding shortfall would result in significant falls in renewals work on the railway, primarily in track, signalling and consultancy and that this could ultimately jeopardise passenger and freight services.

So we are pleased that the argument got through and we can report that as of last month Network Rail now have an additional £200 million funding for CP5. This is not the full amount requested but it is certainly a step in the right direction for now.

That July ConservativeHome article played a key part in helping get our points across to policy makers and influencers in Government. The All Party Parliamentary Group on Rail made funding its central issue at its next meeting, and asked RIA to present. The Department for Transport (DfT) and the Treasury engaged with Network Rail to see if more money could be found for CP5. And the Transport Select Committee is now conducting an Inquiry into rail funding, to see how boom, busts and shortfalls can be avoided in future. Whilst ConservativeHome cannot be accredited directly for all these developments, it should certainly be congratulated for provoking debate and initiating the chain of events which led to the additional funding, which we understand will now be spent on essential renewals, one of the areas hit hardest by the rail funding slowdown.

On another positive note, the DfT has recently announced a 20-25 per cent increase in the overall funding envelope for the next Control Period, CP6 (April 2019 to March 2024), from around £38 billion to £48 billion, with a further announcement on enhancement projects due in the New Year. So whilst there still remains an albeit smaller shortfall to March 2019, it is indisputable that there has been real progress to improve rail funding overall recently, and that the sector was right to lobby for its funding ‘asks’ in the first place.

The funding debate now needs to turn to the long-term issue of how to reduce ‘boom and bust’ in the current Control Period system. ‘Boom and bust’ creates uncertainty within the supply chain and is a disincentive to invest in new technology, processes and people, increasing costs by up to 30 per cent. This is bad not just for rail suppliers but also for Government, the travelling public and the taxpayer, too.

Enhancing the Control Period system does not mean a return to the old British Rail system of annualised budgets, and we would not recommend a complete overhaul of the current mechanism for funding rail. But there does need to be a smoothing of workload profiles to ensure rail suppliers no longer face a large ramp up in activity at the start of a Control Period before a drop off in workload at the end.

We look forward to the rail industry discussing this issue in the months ahead, initially via the current Transport Select Committee Inquiry into rail funding; and subsequently by all interested parties getting around a table in 2018 to find solutions.

Rail funding may not be the most evocative of issues for ConservativeHome readers, but it certainly is crucial to all those who care about the future of the UK’s rail system. Something a bit different to mull over in the Christmas and New Year festivities ahead.

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