Network Rail spending with SMEs exceeds £2.5 billion for first time

For the first time, Network Rail’s spending with small and medium-sized enterprises (SMEs) has exceeded £2.5 billion.

In the 2019-2020 financial year, Network Rail spent 35.6 per cent of its total £7.1 billion expenditure with SMEs, spending a total of £2.52 billion. This figure exceeds the UK government target of 33 per cent of annual expenditure to be spent with SMEs by 2022. 

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 by more than five per cent, from 12.77 per cent in 2017-18 to 17.8 per cent in 2019-20.

Network Rail’s Commercial and Procurement Director, Clive Berrington, 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 that 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 that 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,” he added.

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).