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COMMENT


Rail competition works: it’s time to give privatisation a second chance


Tony Lodge, research fellow at the Centre for Policy Studies, makes the case for privatisation in the railway industry.


“Our objective is to improve the quality of railway services by creating many new opportunities for private sector involvement. This will mean more competition, greater efficiency and a wider choice of services more closely tailored to what customers want.”


railway network in the now famous ‘Beeching’ review. Demand for rail travel declined steadily from 1955 to 1982 and was again falling in the early 1990s.


Consequently, it is important to contrast the challenges facing the railways in the early 1990s, compared with today.


Faced with a gradual but supposed terminal passenger decline, the Government wanted to deliver private investment, more passenger choice and more competition.


T


wenty years ago the above quote from the then transport secretary, John MacGregor (pictured giving evidence to the Transport Select Committee in 1993), formed the backbone of Tory ideology for one of the most controversial and politically difficult of all the privatisations of the Thatcher and Major period.


The decision to privatise British Rail was not taken lightly. A small Tory majority, opposition from the powerful rail unions, the John Smith-led Labour Party and various so-called ‘passenger groups’ threatened to undermine one of the most radical of all Tory sell-offs.


During the 1960s and 70s both political parties decided that rail demand was doomed to decline and moved to close a third of the


In parallel it wanted to detach the politics of rail from Whitehall, as it had with other nationalised industries.


Applying competition on a wider scale


Today, albeit 20 years late, the ambitions in the minister’s quote are upheld in new research and official statistics; rail competition is finally delivering for passengers, but on too small a scale. The policy was and remains right, but it must now be more widely applied.


TABLE 1


Whilst the Conservatives hoped and planned for the emergence of up to 100 rail companies, which would compete for business over one private infrastructure system, the reality has emerged where fewer companies bid for


Below: First Hull Trains refurbished Alstom Class 180 at King’s Cross. Lodge argues that competition from open-access operators improves franchised operator performance and holds down fares.


franchises to operate rail services over a fixed long timescale.


The winner is the company seeking the lowest subsidy or offering the highest premium with other pledges of service and investment. Importantly, most franchise winners will not face any long distance non-franchised competition.


Critics complain, with some justification, that privatisation has allowed modern day passenger monopolies – or railopolies – to emerge.


In comparison, competition has been hugely successful for rail freight, which was privatised alongside the passenger sector. It has benefitted from strong on-rail competition which has led to investment in new rolling stock, high levels of productivity and reduced costs to satisfy customer demand (see Table 1, below).


So what about the passenger sector?


Source: ‘Realising the Potential of GB Rail’, DfT May 2011


Open access


Since 1993 the rail network has witnessed unprecedented growth.


Passenger traffic has doubled with UK rail passenger numbers growing faster than all other European countries. It is expected to double again by 2030.


The explosion in demand for rail in the last two decades has reversed all previous predictions.


More people are travelling by train than at any time since 1929 on a rail network half the size and enjoying the highest levels of safety on record.


20 | rail technology magazine Feb/Mar 13


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