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House builders set to benefit from announcement on rail funding

House builders are set to benefit by £200m a year from the government’s commitment this week to spend £48bn to keep rail services running between 2019-2024, new research reveals.

The government announced on Thursday that between 2019 and 2024 £48bn will be spent on Britain’s railwayIt means businesses in construction will continue to benefit from the increased output, reduced costs and better links between companies and their employees that rail provides.

By maintaining the network, this investment will ensure that the railway benefits the construction sector by £200m, the manufacturing sector by £800m every year and finance by £500m.  In total, sectors across the economy benefit by £8bn a year from the rail network.

Firms and producers benefit from clustering near rail links and from being located closer together, cutting travel time and improving the sharing of information and technology. They also benefit from the growth in the concentration of employment brought by rail, says the research by economic analysts Oxera. Business travellers and freight customers also benefit by avoiding road traffic congestion. 

The estimated benefits across British industry and business add up to more than £8bn (see table below). 

Sector 

Estimated benefits from rail (£m, per year)

Construction

200

Agriculture, mining and utilities  

300

Manufacturing  

800

Distribution, transport, accommodation & food  

2,600

Information and communication  

700

Finance  

500

Real estate  

500

Professional and business support services  

1,900

Public services  

600

Recreation and other services  

200

In addition to the investment to keep services runningbusinesses will benefit further as rail links get better with investment in large infrastructure projects to improve connections between cities and make services faster and more frequent.

In Manchester the Ordsall Chord project will link the city’s three main stations for the first time, with new links to Manchester Airport from across the north of England and improved journey times across the city and beyond.  

The Edinburgh-Glasgow Improvement Programme includes electrification of the mainline between Edinburgh and Glasgow and beyond, bringing faster and more frequent services, as well as improvements to stations and key junctions. 

In London the Thameslink Programme will connect Peterborough and Cambridge to Gatwick Airport and Brighton through a new tunnel linking the East Coast and Midland main lines, as well as delivering services with tube-like frequency through central London.  

Paul Plummer, chief executive of the Rail Delivery Group (RDG) – which brings together train operators and Network Rail to enable a better railway, said: “Rail is vital for Britain and that’s why rail companies together are investing to keep the railway running as well as ensure it is ready for the future, with better, faster rail connections, benefiting every sector of the economy. The railway breathes life into the economy, helping firms to win new business, create jobs and generate growth. Working together, rail companies are investing to better connect and support communities and businesses across Britain.” 

Steve Turner, Director of Communications of Home Builders Federation said: “New housing development leads to significant investment in an area as well as providing much-needed new homes. Good transport infrastructure is key to an area’s desirability and so investment in better rail links will directly influence a developer’s decisions to bring sites forward.”

Jerry McLaughlin, Director, Economics and Public Affairs at the Mineral Products Association said: “Investment in rail freight is critical to the mineral products industry and our customers. With 20m tonnes of aggregates and cement delivered by rail annually improved links are good for the economy, environment and society more broadly.

“Each trainload is equivalent to 75 long distance HGV return journeys and therefore the consequences of rail freight restrictions would be damaging for congestion, emissions and road safety. Mineral products businesses have invested heavily in rail infrastructure and in many cases industry rail depots includes facilities for manufacturing asphalt and concrete and processing recycled materials, therefore providing vital sources of key materials for the construction industry. In locations throughout the UK where these facilities exist, they will enable the building of the housing, infrastructure and other developments needed by our economy and society.”