Darren Caplan is Chief Executive of the Railway Industry Association (RIA). This is a sponsored post by the RIA.
Rail: an industrial sector important to UK plc
When it comes to the UK’s railways, most people think of commuter journeys to work or intercity trains to visit friends or family around the country.
Few think of it as a burgeoning industry in its own right, supporting more than £36 billion in economic growth and 600,000 jobs, operating, maintaining, renewing, refurbishing and enhancing trains and railway infrastructure. For every £1 spent on UK rail, £2.20 is generated in the wider economy, meaning rail is not just a nationally significant sector in its own right, but is also important to UK plc more widely.
During the Coronavirus pandemic, rail was essential in getting key workers and goods around the country; and at one point last year, railway work accounted for 25 per cent of all UK construction, at a time when many sectors had to virtually shut down through no fault of their own.
As the country opens up in the coming weeks and months, UK rail will be an essential part of the Government’s plans to “build back better”.
The role rail exports can play with the right support
One way rail can support economic recovery is in its role boosting international trade. It is rarely mentioned compared to other transport modes, but rail is actually an important major export, comparable to the automotive or aerospace industries, with some £800 million in goods and services sold across the world each year.
With one of the oldest, safest, and yet most intensively used railways in the Europe, UK rail professionals are highly regarded across the globe, with a varied range of products and services sold across several continents.
When it comes to the Government’s priorities for Free Trade Agreements, there is an opportunity for rail to play a much greater role. An exports survey last year, commissioned by the cross industry-government body Rail Supply Group, and conducted by the Railway Industry Association (RIA), found that priority markets for UK rail suppliers align clearly with those of the Government.
For example, Australia, the US, India and Canada, were all in the Top 10 priority exports markets where companies believe their railway sector goods or services have potential to be exported with assistance from the rail industry and Government.
The recent Australia FTA was great news for the rail sector. From steel production in the Humber to innovative manufacturing in Shoreham, from train production in Goole to project design experts in London, there are myriad rail companies already working in Australia. Many more are excited to develop greater trade with our partners “Down Under”, particularly with the opportunities provided by the reduction in tariffs.
Turning off the TAP will have a major impact on UK SME’s looking to export
Yet, as the Government negotiates FTAs with various countries, there does need to be continued support too for the rail industry. A few weeks ago, RIA, the national trade body for UK rail businesses, was told that the Department for International Trade’s (DIT) “Tradeshow Access Programme” (TAP) – which provides small grants to SMEs looking to exhibit at overseas trade fairs – was closing down, with very little notice to the rail (or any other) sector.
While small in amount, these grants are pivotal for introducing smaller businesses to the world of exports – in rail, around 194 grants were given to businesses since 2016. Each grant is valued at just £1,500 to £2,500, and they are also used to support not just rail but many other industries, like fashion and manufacturing.
Analysis shows that these small grants add real value to UK plc’s exporting efforts. According to Export Partners UK – a group of some 50 trade bodies who work to support exporters overseas – for every £1 invested by HM Treasury in the TAP scheme, at least £40 comes back to UK plc.
A cost-benefit analysis of TAP by London Economics estimated that the total benefit of the programme in 2007/2008 amounted to £57.1 million. Given the programme costs of £11.2 million, the estimated benefit-cost ratio is 5:1. What is more, TAP was rated the best DIT service in the Government’s own Client Quality Survey 2018/2019, published recently in July 2020.
For the rail sector, TAP has been invaluable. One rail exporter reported a 1,200 per cent growth in its business following an exhibition it visited after receiving a TAP grant in March 2020. Another said they had seen £50 million in revenue generated in the Middle East, with the TAP grants contributing directly. Several companies have told RIA they would not have attended certain exhibitions without the support TAP provided.
Message to the Government: please reinstate the TAP (or something like it) as soon as possible
We and our members at RIA are not sure why the TAP scheme – so small in cost but significant in terms of impact – has been curtailed. We do know, however, that this move will have a detrimental impact on the ability of UK business to deliver the Government’s vision of a “Global Britain” and to achieve the Government’s aim of boosting exports to 35 per cent of GDP. In rail, it will make the target set out in the Government’s own Rail Sector Deal – of doubling exports to £1.6 billon by 2025 – even harder to achieve.
We welcome the support the DIT has up until now given rail exports, and the Government’s pursuit of trade deals abroad. But to unleash the full potential of exporters, in rail and other industries, in the future we continue to need this small package of support from Government. The TAP scheme should be reinstated or replaced by something similar. By doing so, it will enable UK rail to truly help the Government achieve its vision of a “Global Britain”, and ultimately support even more jobs and investment as we seek to “build back better” post Coronavirus.