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An assessment of cost management regimes in British rail infrastructure provision

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  • Jonathan Cowie

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  • Sarah Loynes
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    Abstract

    Over the last decade, British railway engineering efficiency has come under close scrutiny, with general perceptions of massive maintenance cost escalations and a general lack of control over these costs. This is exemplified by headline figures such as Roger Ford’s perceptions of a 50% rise in maintenance costs since privatisation (Mod Railw 638:8, 2001 ), or the more recent figure of a doubling in all rail costs since privatisation presented by Shaoul (Public Money Manag 26:151–158, 2006 ). Little, however, has appeared in the academic literature on the subject. This paper considers these issues through an examination of British railway infrastructure costs over the period 1980–2009, which has seen three different infrastructure management regimes in place—the nationalised BR (1980–1994), the privatised Railtrack (1995–2001) and the not for dividend Network Rail (2002–2010). Infrastructure costs are examined in total for all operating costs (including maintenance but excluding renewals and depreciation), and under two sub categories, signalling and management costs. The results show that in the case of total operating costs, by the end of the period (up to 2010) these had returned to pre-privatisation levels. The results also show that costs increased significantly following privatisation due to imperfect competition in sub contractor markets, but large declines in the last 6 years have eradicated most of these costs increases, although still do not match the best achieved under full public sector management. Management costs associated with the infrastructure on the other hand have increased significantly. Copyright Springer Science+Business Media, LLC. 2012

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    File URL: http://hdl.handle.net/10.1007/s11116-012-9389-6
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    Bibliographic Info

    Article provided by Springer in its journal Transportation.

    Volume (Year): 39 (2012)
    Issue (Month): 6 (November)
    Pages: 1281-1299

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    Handle: RePEc:kap:transp:v:39:y:2012:i:6:p:1281-1299

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    Web page: http://www.springerlink.com/link.asp?id=103007

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    Keywords: Rail infrastructure management; X-inefficiency; Privatisation; Imperfect competition;

    References

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    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    1. Jonathan Cowie, 2009. "The British Passenger Rail Privatisation: Conclusions on Subsidy and Efficiency from the First Round of Franchises," Journal of Transport Economics and Policy, London School of Economics and University of Bath, vol. 43(1), pages 85-104, January.
    2. Christian Growitsch & Heike Wetzel, 2009. "Testing for Economies of Scope in European Railways: An Efficiency Analysis," Journal of Transport Economics and Policy, London School of Economics and University of Bath, vol. 43(1), pages 1-24, January.
    3. Smith, Andrew & Wheat, Phill & Smith, Gregory, 2010. "The role of international benchmarking in developing rail infrastructure efficiency estimates," Utilities Policy, Elsevier, vol. 18(2), pages 86-93, June.
    4. Jean Shaoul, 2006. "The Cost of Operating Britain's Privatized Railways," Public Money & Management, Chartered Institute of Public Finance and Accountancy, vol. 26(3), pages 151-158, 06.
    5. Guido Friebel & Marc Ivaldi & Catherine Vibes, 2010. "Railway (De)Regulation: A European Efficiency Comparison," Economica, London School of Economics and Political Science, vol. 77(305), pages 77-91, 01.
    6. Jean Shaoul, 2006. "The Cost of Operating Britain's Privatized Railways," Public Money & Management, Taylor & Francis Journals, vol. 26(3), pages 151-158, June.
    7. Pedro Cantos & José Manuel Pastor & Lorenzo Serrano, 2010. "Vertical and Horizontal Separation in the European Railway Sector and its Effects on Productivity," Journal of Transport Economics and Policy, London School of Economics and University of Bath, vol. 44(2), pages 139-160, May.
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