More than just a pipeline: What does GBR’s Rolling Stock and Infrastructure Strategy mean for train manufacturers?

The government's proposed railway reforms continue to gather pace. The eagerly awaited long term rolling stock and infrastructure strategy (the Strategy) was published on behalf of Great British Railways (GBR) on 28 September. Publication of the Strategy marks a notable milestone in the establishment of GBR and is a critical signal to the wider rail market of GBR’s priorities and intentions going forward.

For rolling stock manufacturers, the Strategy is likely to be particularly significant. The design and manufacture of trains requires substantial long-term investment in facilities, technology, skilled workforces, and extensive domestic and international supply chains. Those investments cannot be switched on and off in line with short procurement cycles. Instead, manufacturers require confidence that future demand will justify continued investment in people, production capability and innovation.

This is the second in a series of insights from the Stephenson Harwood Rail and Road team exploring the Strategy and what it means for manufacturers, operators and financiers of rolling stock. Over the course of the next few weeks, Stephenson Harwood’s Rail and Road team will also share our thoughts on what operators and financiers of rolling stock might be thinking about the Strategy.

You can find our overview and initial thoughts on the Strategy here.
  

Breaking the "boom and bust" procurement cycle

As noted in our overview insight, the Strategy is intended to provide the industry with clarity on GBR’s vision for the planning, procurement and management of rolling stock and infrastructure under the new regime. This includes how GBR intends to manage trains, track, traction power, signalling, depots and maintenance under a single integrated railway system.

GBR has acknowledged that a lack of long-term clarity surrounding the supply chain pipeline has in the past hindered private sector investment, fair commercial competition and innovation across the rail industry. The Strategy seeks to address this by providing greater certainty over the government's long-term direction of travel, allowing GBR and the wider industry to make better-informed strategic decisions.

Against this backdrop, we have considered some of the issues currently facing rolling stock manufacturers and discuss how increased clarity through the Strategy could impact their future direction.

One of the most significant challenges for rolling stock manufacturers is the cyclical nature of rail procurement in the UK. Historically, periods of significant fleet replacement have often been followed by lengthy gaps before the next major procurement programme begins. While large orders undoubtedly provide substantial opportunities for manufacturers, these peaks in activity have often been followed by periods during which production facilities become significantly underutilised. This uneven demand creates commercial uncertainty not only for manufacturers themselves, but also for the wider supply chain of component suppliers, maintenance providers and specialist engineering businesses.

This issue is far from new. The Long-Term Passenger Rolling Stock Strategy published by DfT in 2018 (the 2018 Strategy) recognised that substantial investment in new fleets had resulted in significant numbers of displaced vehicles, including relatively modern trains without future operators. The created challenges not only for rolling stock owners but also for manufacturers, maintainers and the wider supply chain. At the same time, the 2018 Strategy continued to forecast significant long-term growth in the national fleet over the following thirty years, demonstrating that the challenge was not one of insufficient long-term demand but rather how demand was distributed over time.

For manufacturers, the consequences extend well beyond factory utilisation. Modern train manufacturing requires substantial investment in production facilities, specialist tools, digital engineering capability and highly skilled workforces. Investments cannot be paused every time procurement activity slows. Equally, rebuilding capability after periods of inactivity is both costly and time-consuming.

The impact is also felt throughout the wider supply chain. Manufacturers depend upon hundreds of specialist suppliers providing everything from traction equipment and braking systems to software, onboard communications, passenger information systems and interior fittings. Greater certainty regarding future demand enables these businesses to recruit with confidence, invest in new technologies and retain specialist expertise that may otherwise be lost to other industries. Consequently, whilst the Strategy does not guarantee future contracts or commit government to individual procurements years in advance, manufacturers are likely to welcome the greater transparency in the Strategy around indicative fleet replacement programmes and infrastructure priorities (even where future competitions remain subject to funding decisions).

The key proposal set out in the Strategy for addressing these is the commitment to establish a Fleet & Infrastructure Plan (FIP). The FIP aims to provide the market with a time-phased, whole-system view of expected procurement pipeline activities. Broadly speaking, the FIP also has the objective of smoothing out procurement peaks and troughs by more effectively sequencing projects across the entire railway network. In terms of providing greater clarity as to the specific requirements for upcoming procurements, the Strategy also notes GBR’s intention for battery-electric hybrid rolling stock (BEMUs) to be the standard for new rolling stock. GBR is intending to rely upon its unified management to have greater control over the timing of projects, including for train fleet replacement, refurbishment and life extensions to manage fleet transitions; grouping interventions; and aligning infrastructure programmes. Whilst GBR therefore does not guarantee future procurements, it is intending for the FIP to deliver a more consistent pipeline, reducing historic volatility and support a more stable flow of work for the rolling stock supply chain.

From the perspective of manufacturers, this will (hopefully) mean greater market predictability, better planning and less resources being wasted.
  

Aligning rolling stock with infrastructure investment

Rolling stock must be evaluated in conjunction with the infrastructure it uses. Investment decisions regarding electrification, signalling, depots, maintenance facilities and railway technologies all directly influence the types of trains that manufacturers choose to develop and the technologies they prioritise. Historically, changing infrastructure priorities have sometimes created uncertainty for manufacturers.

The 2018 Strategy highlighted the impact of changes to the electrification programme, noting the resulting increase in demand for bi-mode rolling stock while recognising that longer-term alternatives, including battery and hydrogen technologies, would require significant further innovation. Since then, technological development has accelerated considerably. Manufacturers are investing in BEMUs, hydrogen propulsion (although this has perhaps lessened in recent years), digital signalling compatibility, predictive maintenance technologies and increasingly more advanced onboard systems designed to improve operational efficiency and passenger experience. However, these investments inevitably require confidence that supporting infrastructure will develop alongside rolling stock capability.

The Strategy explicitly seeks to integrate rolling stock and infrastructure planning, stating that trains and infrastructure will be planned as a single system. To this end, decisions on rolling stock, electrification, traction power, digital signalling, depots and maintenance will be aligned to improve value and reduce risk. Greater alignment between future fleet strategies and infrastructure planning will likely provide manufacturers with the ability to make more informed investment decisions while reducing the risk of developing technologies that cannot be deployed at scale.
   

Encouraging innovation through long-term certainty

Innovation has become an increasingly important differentiator within the rolling stock market in recent years. Manufacturers are no longer competing solely on performance or manufacturing cost, as an increasing emphasis is placed upon lifecycle maintenance, energy efficiency, digital capability, accessibility, cybersecurity, passenger experience and environmental performance. These innovations often require significant upfront investment before any commercial return can be realised.

The Government's wider programme of rail reform consistently identifies innovation, productivity and long-term economic growth as strategic objectives, whilst acknowledging that increased certainty over the future direction of the railway could encourage greater private sector investment and innovation.

From a manufacturer's perspective, long-term visibility may almost be as valuable as immediate procurement opportunities. Confidence regarding future standards, infrastructure priorities and fleet replacement programmes enables manufacturers to invest in research and development that may ultimately deliver lower operating costs, improved reliability and greater value for passengers and taxpayers alike. For manufacturers, innovation should not be viewed solely through the lens of new train designs. Digital asset management, predictive maintenance, artificial intelligence, remote diagnostics and data-driven fleet optimisation increasingly form part of the wider service offerings of manufacturers. Greater certainty and continued investment across these areas will ultimately enable manufacturers to provide holistic lifecycle solutions rather than simply supplying new rolling stock.

The increasing use of train-borne monitoring, battery-electric technology and electric traction are all mentioned in the Strategy, with an acknowledgement of the flexibility, environmental benefits and potential cost benefits that are possible by using these technologies. The Strategy also provides that GBR will use its collective scale to meet the demand for connection point locations, innovative supply models and the strategic timing of connections, as opposed to dealing with these on a project-by-project basis. The Strategy also places a strong emphasis on digital capability, predictive maintenance and cyber resilience, with requirements for ETCS, Wi-Fi and futureproofing identified as standard features for both new and refurbished fleets.

The movement away from project-by-project changes to whole network integration is promising; however, it remains to be seen whether innovation will continue to only be taken on board at the point of renewal or if a consistent approach will be adopted moving forward. Either way, manufacturers will need to ensure they have the capability to continue developing the designs and specifications for their fleets to meet the innovations that are envisaged under GBR.
  

Decarbonisation and traction choices

The Strategy sets out a clear direction for decarbonisation, with a progressive move away from diesel towards BEMUs supported by targeted electrification. Full electrification remains preferred where justified, but the main approach is battery-led, with hydrogen and other alternatives to be considered only where appropriate. This provides manufacturers with a much clearer signal on future traction requirements and the likely technologies they will be required to prioritise.

There is an interesting gap in the Strategy which does not acknowledge a future for pure diesel or diesel battery fleets (whether procured new, or with the option to convert). This leaves some uncertainty, therefore, for fleets which are currently in the procurement process in the market and what the future is for existing fleets – some of which are relatively new.
  

Balancing new fleets with whole-life asset management

Whilst discussions surrounding rolling stock often focus on new train procurement, manufacturers increasingly operate across the entire lifecycle of rolling stock assets.

The 2018 Strategy recognised the commercial implications of displaced but serviceable fleets, highlighting opportunities for refurbishment and redeployment alongside new procurement. As fleets become more complex and operational lives continue to extend, decisions regarding refurbishment, mid-life upgrades and life extension programmes become just as commercially significant as decisions regarding new build programmes.

Manufacturers are therefore likely to welcome the greater clarity in the Strategy regarding the balance between replacement, refurbishment and fleet modernisation over the coming decades. A longer-term strategic approach supports better utilisation of existing assets whilst allowing manufacturers to plan investment across both new production and lifecycle support services.

The Strategy confirms that refurbishment, retrofit, and life extension will be used more actively as strategic tools, rather than just relying on the procurement of new builds. GBR will manage the national fleet as a portfolio, aligning procurement, refurbishment, and replacement with infrastructure and operational needs. The concept of “fleet families” is acknowledged in the Strategy, which is intended to reflect a move towards a smaller number of standardised train types aligned to passenger markets, with an emphasis on common design principles, capabilities and interfaces. The standardisation offered by these “fleet families” is intended to support innovation, reduce costs and enable more efficient maintenance and redeployment. The Strategy also makes the commitment that GBR will treat depots, maintenance, materials and logistics as core parts of the system to improve reliability and will move to more condition-based and predictive maintenance.
  

Navigating legal and regulatory complexity

Alongside these commercial pressures, manufacturers are also contending with a shifting legal and regulatory landscape as GBR takes shape.

The Procurement Act 2023 represents the most significant overhaul of public procurement in the rail sector in a generation, and its practical application to GBR-era competitions is still largely untested. Manufacturers want clarity on how framework agreements, joint procurements across former franchise boundaries and standardised specifications are structured under the new regime, particularly where risk allocation between manufacturer, financier and operator has yet to be settled.

Contractual arrangements carry their own complexity. As rolling stock increasingly incorporates predictive maintenance software, onboard diagnostics and connectivity, questions of intellectual property ownership, data rights and long-term liability for software performance now sit alongside more familiar concerns such as warranty periods and defect liability regimes.

While the Strategy does not explicitly go into detail on the formation of framework agreements, contracts or legal mechanisms relating to procurement, it does outline the broader procurement strategy of GBR, and the move towards standardisation of procurement under GBR. GBR is intended to act as a single, coordinated buyer for new train fleets, replacing fragmented operator-led procurement with a national market interface. GBR’s procurement strategy will focus on whole-life value, with a minimum 20% social value weighting for contracts over £5 million, in line with government policy from January 2027. The Strategy also signals a more strategic approach to train ownership and financing, with direct ownership by GBR, leasing and other models to be considered on a case-by-case basis. Given the substantial impact they can have on the evaluation of tenders for the procurement of new rolling stock, manufacturers will be particularly cognisant of the increasing value of social value requirements and the financing approach adopted by GBR for any new rolling stock orders.

There is another interesting area that is missing in the Strategy, which was the subject of debate and consultation prior to the Strategy being issued. And that is how the procurement of new build rolling stock will be allocated or shared amongst the rolling stock manufacturer community currently in the UK. The UK has a vibrant market, with a number of manufacturers having a manufacturing presence across the home nations. During consultation, there was a reference to rolling stock being shared on a “cab rank” basis, with all of the manufacturers being able to get their fair share of the market. However, this is not mentioned in the Strategy, and it therefore remains to be seen how this will work in practice.
  

Looking ahead

The Strategy has arrived at an important moment for the railway industry.

Alongside the creation of Great British Railways (due to stand up in 2027), the 2025 Railways Bill and the wider programme of rail reform provide clearer direction for one of the industry's most significant private-sector stakeholders.

Manufacturers should welcome greater transparency regarding future fleet replacement programmes, infrastructure priorities, decarbonisation objectives and procurement sequencing. The potential to support investment, strengthen supply chains, encourage innovation and improve the resilience of the UK rail manufacturing sector has been laid out in the ambitious goals envisaged by GBR under the Strategy.

Whether GBR can meet the goals set for it within the Strategy remains to be seen. Notwithstanding, the publication of the Strategy marks a significant step towards the realisation of GBR’s ambitions with respect to the management of rolling stock and infrastructure under an integrated railway network. If realised, the commitment to integrated long-term planning for rolling stock and infrastructure is an important step towards a more predictable, collaborative and commercially sustainable railway - one in which manufacturers can invest and play a central role in with greater confidence.