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German industrial giant Siemens is urging Labour to let it upgrade underperforming rail routes, as the Chancellor explores cheap ways of modernising the network.

Under its proposals, Siemens would overhaul signalling systems and electrify diesel-only lines, while guaranteeing the number of trains on revamped routes.

Its lobbying effort includes asking Rachel Reeves to allow it to fund projects through public-private partnerships (PPPs), utilising the Munich-based firm’s financial arm.

Such arrangements would see Siemens fund work upfront and recoup costs through contract fees or charges levied from taxpayers.

The suggestion comes as Ms Reeves prepares for a spending review in the spring that the Treasury has warned will require 5pc efficiency savings across government departments while favouring projects that advance Sir Keir Starmer’s “plan for change.”

Siemens said its proposals, to be submitted by a deadline early next month, would boost capacity and help trains run on time.

Rob Morris, chief executive of Siemens Mobility UK, said: “We have the capability to bring finance together and allow clients to overcome the initial cost of investment. Everything comes down to the risk profile and we have confidence in our technology and taking on that risk.”

The prospect of Siemens covering upfront costs on the project is likely to be an attractive option to the Chancellor given the tight constraints on public finances.

However, a PPP deal might prove controversial within Labour ranks given the series of scandals that arose from the private finance initiative (PFI) model embraced by Tony Blair and Gordon Brown for schools, hospitals and prisons.

While pitched as a quick way of providing vital infrastructure, the approach is generally viewed as hugely expensive and delivering a poor standard of public services.

Still, Siemens has long bankrolled overseas contracts in areas such as power turbines and rail signalling, the crucial system of traffic lights that ensures trains run safely and swiftly.

The German company said that since it would be building and financing projects rather than involving third parties, there would be less risk than with the PFI experiment, in which companies managed operations where they had next to no expertise.

Siemens Financial Services, formed in 1997, held €33bn (£27bn) in total assets as of September.

Siemens will pitch the use of battery-powered trains as a quick fix for cutting carbon emissions on branch lines and other routes unlikely to be earmarked for full electrification.

The mobility division, which employs about 5,000 people in Britain, said the trains would provide further work at its new plant in Goole, East Yorkshire, which is assembling more than 800 Piccadilly Line carriages under a contract worth £2bn.

The trains would require limited electrification of stations in order to recharge, which Siemens said it could undertake via a PPP agreement.

It said that with installation times as short as 18 months, battery power could quickly eliminate diesel trains on important corridors such as the Chiltern Line between London Marylebone and Birmingham, West Midlands, and the Transpennine network in northern England.

The company is eager to explore options for re-signalling and has identified up to 40 rural routes where the introduction of modern digital technology could help slash operating costs.

Siemens could provide the financing, Mr Morris said, and would also offer “signalling as a service,” with performance-related payments based on the number of train paths provided.

He said: “We’d install our technology and get paid for those paths. If they’re not there, we don’t get paid.”

Another Siemens division, rail software developer Sqills, could play a role in overhauling ticketing systems by introducing demand-led airline-style pricing, the company will suggest.

One complication of the Siemens plan is that exposure to PPP liabilities would most likely remain on the public balance sheet under current fiscal rules.

David Davis, the MP for Goole and Pocklington, speaking at the opening of the Siemens plant in October, said he would be wary about affording private finance too great a role in infrastructure funding.

He said: “Siemens has a reasonable chance of delivering value, but you have to look at it on a case-to-case basis. People are not going to want to pay higher fares for it.”