Monday 19 Oct 2020
Network Rail spending with SMEs exceeds £2.5bn in 2019-20
- Region & Route:
- First time Network Rail SME spending has exceeded £2.5bn in a single financial year
- In 2019-20, Network Rail spent 35.6 per cent of its expenditure with SMEs
- Network Rail ahead of government target to spend 33 per cent of expenditure with SMEs by 2022
Britain’s railway network is critical to the nation’s success as it supports and sustains economic growth and, in the light of Coronavirus, also its recovery. The railway connects workers to jobs, businesses to markets, and people to their families and friends. It also carries goods worth over £30 billion each year, bringing food to shops, building materials to construction sites, and fuel to power stations. Even for those who never use a train, the railway makes everyday life possible.
In the 2019-2020 financial year, Network Rail spent 35.6 per cent of its total £7.1 billion expenditure with small and medium-sized enterprises (SMEs), exceeding the government target of 33 per cent of annual expenditure to be spent with SMEs by 2022. In real terms, this equates to a total of £2.52 billion and is the first time Network Rail has exceeded £2.5 billion in a single financial year.
Rise in SMEs working directly with Network Rail
The number of suppliers contracted directly by Network Rail was 4,246 in the 2019-2020 financial year, of which 3,051 (71.9 per cent) were SMEs, reflecting an increase of 440 more SMEs than in 2017-18 (2,611).
Network Rail’s direct spend with SMEs increased more than five per cent from 12.77 per cent in 2017-18 to 17.8 per cent in 2019-20.
Clive Berrington, Network Rail commercial and procurement director, said:
“Our extensive supply chain network plays a vital part in helping us run a safe and efficient railway and accelerate innovation to make Britain’s railway even better for passengers and freight users.
“We have focused a lot in the past two years to ensure Network Rail is more accessible to the SME market. We now work directly with over 3,000 SMEs, ranging from technology companies that design innovative solutions to keep the railway running safely to catering companies that replenish our teams working through the night.
“Since establishing our SME action plan in 2019, we have also launched several initiatives to make Network Rail ‘easier to do business with’ and these results demonstrate we are on the right track. We have developed initiatives to make us more dependable and easier to work with by working smarter with our supply chain and involving them earlier in the planning phase to help us deliver work more efficiently. These initiatives include improved contracting strategies.”
Rail Minister, Chris Heaton-Harris, said:
“More than ever it is vitally important that we support smaller businesses right across the country.
“I’m delighted that Network Rail has gone above and beyond the targets we set them, supporting jobs and smaller businesses from engineering to the service industry.
“Our railways have long been the lifeblood of this country and supporting thousands of smaller businesses only adds to that.”
Indirect SME spend also increased
A survey of Network Rail’s top 100 (by spend) tier 1 suppliers found that indirect spend with SMEs rose to 17.8 per cent in 2019-20 (an increase of 3.8 per cent from 2017-18).
Details of Network Rail’s procurement pipeline is updated every four weeks and is available to view on Network Rail’s website: www.networkrail.co.uk/supply-chain
Notes to Editors
- Each year, Network Rail conducts a data gathering exercise to measure progress against the Government target of 33 per cent of expenditure to be with SMEs by 2022
- The 2019-20 indirect SME spend data gathering exercise was conducted with Network Rail’s top 100 (by spend) tier 1 suppliers and received a 97 per cent response rate
- The Network Rail SME action plan is available to read and download on the Network Rail website
- Alongside the SME action plan, a new commercial and procurement structure is in place at Network Rail since November last year (2019) as part of Putting Passengers First: five regional commercial and procurement teams are supported by a central team in Route Services. This means there is greater alignment over commercial categories, a consistent approach and empowerment of the regional teams that will lead to better visibility of the work bank
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About Network Rail
We own, operate and develop Britain's railway infrastructure; that's 20,000 miles of track, 30,000 bridges, tunnels and viaducts and the thousands of signals, level crossings and stations. We run 20 of the UK's largest stations while all the others, over 2,500, are run by the country's train operating companies.
Usually, there are almost five million journeys made in the UK and over 600 freight trains run on the network. People depend on Britain's railway for their daily commute, to visit friends and loved ones and to get them home safe every day. Our role is to deliver a safe and reliable railway, so we carefully manage and deliver thousands of projects every year that form part of the multi-billion pound Railway Upgrade Plan, to grow and expand the nation's railway network to respond to the tremendous growth and demand the railway has experienced - a doubling of passenger journeys over the past 20 years.