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Evaluating the long term impacts of transport policy: The case of passenger rail privatisation

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  • Preston, John
  • Robins, Dawn

Abstract

Britain's national rail system was ‘privatised’ as a result of the 1993 Railways Act, with most of the organisational and ownership changes implemented by 1997. This paper examines the long term impacts of these changes. A key issue when examining long term changes is that of the counterfactual – what would have happened if the changes had not occurred? A simple econometric model of the demand for passenger rail services was developed and used in conjunction with extrapolative methods for key variables such as fares and train km to determine demand-side counterfactuals. Extrapolative methods were also used to determine counterfactual infrastructure and train operation costs. Although our results are sensitive to the assumptions we have made concerning the counterfactual they suggest a number of impacts. Since privatisation, rail demand has grown strongly but our analysis indicates that transitional disruptions suppressed demand by around 9% over a prolonged period (1992/3 to 2005/6), whilst the Hatfield accident reduced demand by about 5%, albeit over a shorter period (2000/1 to 2006/7). A welfare analysis suggests that although consumers seem to have gained as a result of privatisation, for most years this has been offset by increases in costs. An exception is provided by the two years immediately before the Hatfield accident. Overall the loss in welfare since the reforms were introduced far exceeds the net receipts from the sale of rail businesses. Thus although the reforms have had advantages in terms of lower fares and better service levels than otherwise would have been the case, this appears to have been offset by increased infrastructure and train operations costs. The source of these high costs remains an area of speculation but appear to be related to aspects of both market and regulatory failure.

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  • 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.
  • Handle: RePEc:eee:retrec:v:39:y:2013:i:1:p:14-20
    DOI: 10.1016/j.retrec.2012.05.019
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    1. Matthias Aistleitner & Christian Grimm & Jakob Kapeller, 2018. "Auftragsvergabe, Leistungsqualitaet und Kostenintensitaet im Schienenpersonenverkehr. Eine internationale Perspektive," ICAE Working Papers 86, Johannes Kepler University, Institute for Comprehensive Analysis of the Economy.
    2. Ida, Yoram & Talit, Gal, 2015. "Regulation of public bus services: The Israeli experience," Transport Policy, Elsevier, vol. 42(C), pages 156-165.
    3. Giulio Mattioli, 2017. "‘Forced Car Ownership’ in the UK and Germany: Socio-Spatial Patterns and Potential Economic Stress Impacts," Social Inclusion, Cogitatio Press, vol. 5(4), pages 147-160.
    4. Preston, John, 2018. "The wheels keep on turning: Is the end of rail franchising in Britain in sight?," Research in Transportation Economics, Elsevier, vol. 69(C), pages 187-196.
    5. Cowie, Jonathan, 2014. "Performance, profit and consumer sovereignty in the English deregulated bus market," Research in Transportation Economics, Elsevier, vol. 48(C), pages 255-262.
    6. Hirschhorn, Fabio & Veeneman, Wijnand & van de Velde, Didier, 2019. "Organisation and performance of public transport: A systematic cross-case comparison of metropolitan areas in Europe, Australia, and Canada," Transportation Research Part A: Policy and Practice, Elsevier, vol. 124(C), pages 419-432.
    7. Vigren, Andreas, 2016. "Competition in Swedish passenger railway : entry in an open-access market," Working papers in Transport Economics 2016:18, CTS - Centre for Transport Studies Stockholm (KTH and VTI).
    8. Mattioli, Giulio & Lucas, Karen & Marsden, Greg, 2017. "Transport poverty and fuel poverty in the UK: From analogy to comparison," Transport Policy, Elsevier, vol. 59(C), pages 93-105.
    9. van de Velde, Didier & Augustin, Katrin, 2014. "Workshop 4 Report: Governance, ownership and competition in deregulated public transport markets," Research in Transportation Economics, Elsevier, vol. 48(C), pages 237-244.
    10. Carlo Vittorio FIORIO & Massimo FLORIO & Giovanni PERUCCA, 2011. "Consumers’ satisfaction and regulation of local public transport: evidence from European cities," Departmental Working Papers 2011-26, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    11. Tomeš, Zdeněk & Kvizda, Martin & Nigrin, Tomáš & Seidenglanz, Daniel, 2014. "Competition in the railway passenger market in the Czech Republic," Research in Transportation Economics, Elsevier, vol. 48(C), pages 270-276.
    12. Pittman, Russell, 2016. "Reforming and Restructuring Ukrzaliznytsia: A Crucial Task for Ukrainian Reformers," MPRA Paper 76028, University Library of Munich, Germany.
    13. Fröidh, Oskar & Byström, Camilla, 2013. "Competition on the tracks – Passengers’ response to deregulation of interregional rail services," Transportation Research Part A: Policy and Practice, Elsevier, vol. 56(C), pages 1-10.
    14. Preston, John, 2016. "Deja Vu all over again? Rail franchising in Britain," Research in Transportation Economics, Elsevier, vol. 59(C), pages 107-115.
    15. Cui, Shana & Pittman, Russell & Zhao, Jian, 2018. "Restructuring the Chinese Freight Railway: Two Scenarios," MPRA Paper 88407, University Library of Munich, Germany.
    16. Fröidh, Oskar & Nelldal, Bo-Lennart, 2015. "The impact of market opening on the supply of interregional train services," Journal of Transport Geography, Elsevier, vol. 46(C), pages 189-200.
    17. van de Velde, Didier, 2014. "Market initiative regimes in public transport in Europe: Recent developments," Research in Transportation Economics, Elsevier, vol. 48(C), pages 33-40.

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    Keywords

    Passenger rail; Privatisation; Welfare analysis;

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