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

Preston, John and Robins, Dawn (2013) Evaluating the long term impacts of transport policy: the case of passenger rail privatisation [in special issue: THREDBO 12: Recent developments in the reform of land passenger transport] Research in Transportation Economics, 39, (1), pp. 14-20. (doi:10.1016/j.retrec.2012.05.019).


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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.

Item Type: Article
Digital Object Identifier (DOI): doi:10.1016/j.retrec.2012.05.019
ISSNs: 0739-8859 (print)
Keywords: passenger rail, privatisation, welfare analysis
Subjects: H Social Sciences > HE Transportation and Communications
H Social Sciences > HB Economic Theory
T Technology > TF Railroad engineering and operation
Organisations: Transportation Group
ePrint ID: 350339
Date :
Date Event
March 2013Published
Date Deposited: 25 Mar 2013 14:41
Last Modified: 17 Apr 2017 15:49
Further Information:Google Scholar
URI: http://eprints.soton.ac.uk/id/eprint/350339

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