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.
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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:
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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
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