Network Rail spent more than £2.5bn with SMEs for the first time in 2019-20, also exceeding the government target of 33% of annual expenditure to be spent with SMEs by 2022.
The number of SME’s and the percentage of direct spend with SME’s also rose, while a survey of Network Rail’s top 100 (by spend) tier 1 suppliers found that indirect spend with SMEs also rose to 17.8% in 2019-20 (an increase of 3.8% from 2017-18).
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 £30bn 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.
Now, newly released figures reveal that Network Rail spent 35.6% of its total £7.1bn expenditure with SMEs in the 2019-2020 financial year, exceeding the government target of 33% of annual expenditure to be spent with SMEs by 2022. In real terms, this equates to a total of £2.52bn and is the first time Network Rail has exceeded £2.5 billion in a single financial year.
The number of suppliers contracted directly by Network Rail was 4,246 in the 2019-2020 financial year, of which 3,051 (71.9%) 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 5% from 12.77% in 2017-18 to 17.8% 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.”
Details of Network Rail’s procurement pipeline is updated every four weeks and is available to view here on Network Rail’s website.