The Restructuring and Privatisation of British Rail: Was it really that bad?
AbstractFollowing the government’s decision to place Railtrack into administration (October 2001), attention has focused on what went wrong with privatisation, and how crucial network investment will be financed in future. This paper uses a social cost-benefit analysis framework to assess whether the restructuring and privatisation of British Rail has produced savings in operating costs. The paper shows that major efficiencies have been achieved, consumers have benefited through lower prices, whilst the increased government subsidy has been largely recouped through privatisation proceeds. We find that output quality has also improved (pre-Hatfield). The achievement of further savings will be key to delivering improved rail services in the future. This paper finds that a privatised structure, where shareholders demand a return on their investment, has led to significant improvements in operating efficiency - it remains to be seen whether the new regime, with a not-for-profit infrastructure owner, will deliver the same efficiency improvements.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Faculty of Economics, University of Cambridge in its series Cambridge Working Papers in Economics with number 0118.
Date of creation: Nov 2001
Date of revision:
Contact details of provider:
Web page: http://www.econ.cam.ac.uk/index.htm
Cost benefit analysis; railway; privatisation and restructuring; efficiency;
Other versions of this item:
- Michael G. Pollitt & Andrew S. J. Smith, 2002. "The restructuring and privatisation of British Rail: was it really that bad?," Fiscal Studies, Institute for Fiscal Studies, vol. 23(4), pages 463-502, December.
- H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
- L92 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Railroads and Other Surface Transportation
This paper has been announced in the following NEP Reports:
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.:
- Antonio Estache & O. Chisari & C. Romero, 1999.
"Winners and Losers from the Privatization and Regulation of Utilities: Lessons from a General Equilibrium Model of Argentina,"
ULB Institutional Repository
2013/44005, ULB -- Universite Libre de Bruxelles.
- Chisari, Omar & Estache, Antonio & Romero, Carlos, 1999. "Winners and Losers from the Privatization and Regulation of Utilities: Lessons from a General Equilibrium Model of Argentina," World Bank Economic Review, World Bank Group, vol. 13(2), pages 357-78, May.
- Antonio Estache & Gines De Rus, 2000.
"Privatization and Regulation of Transport Infrastructure : Guidelines for Policymakers and Regulators,"
World Bank Publications,
The World Bank, number 15199.
- Antonio Estache & Ginés de Rus, 2000. "Privatization and Regulation of Transport Infrastructures: Guidelines for Policymakers and Regulators," ULB Institutional Repository 2013/44116, ULB -- Universite Libre de Bruxelles.
- Lalive, Rafael & Schmutzler, Armin, 2011.
"Auctions vs Negotiations in Public Procurement: Which Works Better?,"
CEPR Discussion Papers
8538, C.E.P.R. Discussion Papers.
- Rafael Lalive & Armin Schmutzler, 2011. "Auctions vs negotiations in public procurement: which works better?," ECON - Working Papers 023, Department of Economics - University of Zurich.
- Russell Pittman, 2002. "Chinese Railway Reform and Competition: Vertical or Horizontal Restructuring?," Development and Comp Systems 0204004, EconWPA.
- Lalive, Rafael & Schmutzler, Armin, 2008.
"Exploring the effects of competition for railway markets,"
International Journal of Industrial Organization,
Elsevier, vol. 26(2), pages 443-458, March.
- Rafael Lalive & Armin Schmutzler, 2005. "Exploring the Effects of Competition for Railway Markets," SOI - Working Papers 0511, Socioeconomic Institute - University of Zurich, revised Apr 2007.
- Luisa Affuso & Alvaro Angeriz & Michael Pollitt, 2009. "The Impact of Privatisation on the Efficiency of Train Operation in Britain," Working Papers 28, Queen Mary, University of London, School of Business and Management, Centre for Globalisation Research.
- Prandini, Alberto, 2007. "Good, BETTA, best? The role of industry structure in electricity reform in Scotland," Energy Policy, Elsevier, vol. 35(3), pages 1628-1642, March.
- David Parker, 2004. "The UK's Privatisation Experiment: The Passage of Time Permits a Sober Assessment," CESifo Working Paper Series 1126, CESifo Group Munich.
- Khan, Iram, 2006. "Public vs. private sector : an examination of neo-liberal ideology," MPRA Paper 13443, University Library of Munich, Germany.
- Vickerman, Roger, 2004. "Maintenance incentives under different infrastructure regimes," Utilities Policy, Elsevier, vol. 12(4), pages 315-322, December.
- Smith, Andrew S.J., 2005. "The role of efficiency estimates in UK regulatory price reviews: The case of rail," Utilities Policy, Elsevier, vol. 13(4), pages 294-301, December.
- Smith, Andrew S.J., 2012. "The application of stochastic frontier panel models in economic regulation: Experience from the European rail sector," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 48(2), pages 503-515.
- Siew Hoon Lim & C.A. Knox Lovell, 2009. "Profit and productivity of US Class I railroads," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 30(7), pages 423-442.
- Smith, Andrew S.J. & Wheat, Phill E. & Nash, Chris A., 2010. "Exploring the effects of passenger rail franchising in Britain: Evidence from the first two rounds of franchising (1997-2008)," Research in Transportation Economics, Elsevier, vol. 29(1), pages 72-79.
- Kennedy, J. & Smith, A.S.J., 2003. "Assessing the efficient cost of sustaining Britain’s rail network: perspectives based on Zonal comparisons," Cambridge Working Papers in Economics 0317, Faculty of Economics, University of Cambridge.
- Preston, John, 2008. "A review of passenger rail franchising in Britain: 1996/1997-2006/2007," Research in Transportation Economics, Elsevier, vol. 22(1), pages 71-77, January.
- Abay Mulatu & Nicholas Crafts, 2005. "Efficiency among private railway companies in a weakly regulated system: the case of Britain's railways in 1893-1912," Economic History Working Papers 22552, London School of Economics and Political Science, Department of Economic History.
- Preston, John & Robins, Dawn, 2013. "Evaluating the long term impacts of transport policy: The case of passenger rail privatisation," Research in Transportation Economics, Elsevier, vol. 39(1), pages 14-20.
- Wolf, C. & Pollitt, M.G., 2009. "The Welfare Implications of Oil Privatisation: A Cost-Benefit Analysis of Norway’s Statoil," Cambridge Working Papers in Economics 0912, Faculty of Economics, University of Cambridge.
- Anthony E. Boardman & Claude Laurin & Mark A. Moore & Aidan R. Vining, 2009. "A Cost-Benefit Analysis of the Privatization of Canadian National Railway," Canadian Public Policy, University of Toronto Press, vol. 35(1), pages 59-83, March.
- Nash, Chris, 2008. "Passenger railway reform in the last 20 years - European experience reconsidered," Research in Transportation Economics, Elsevier, vol. 22(1), pages 61-70, January.
- Bernardino, João & Hrebícek, Zdenek & Marques, Carlos, 2010. "Applying social marginal cost pricing in rail PPPs: Present state, drawbacks and ways forward," Research in Transportation Economics, Elsevier, vol. 30(1), pages 59-73.
- Hakam Kamleh, 2005. "La nouvelle organisation ferroviaire britannique : sur la frontière entre intégration et désintégration," CAE Working Papers 28, Aix-Marseille Université, CERGAM.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Howard Cobb).
If references are entirely missing, you can add them using this form.