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The wheels keep on turning: is the end of rail franchising in Britain in sight?

The wheels keep on turning: is the end of rail franchising in Britain in sight?
The wheels keep on turning: is the end of rail franchising in Britain in sight?
The regime of passenger rail franchising in Britain has been in place for over 20 years. The developments have been reported at past Thredbo Conferences, including by the author in 2007 and 2015. The franchising regime has been remarkably resilient and has been through at least five phases. Using the concept of regulatory cycles, this paper reviews the prospects for a sixth and possibly final phase.

Rail statistics are reviewed and a welfare analysis of rail reforms in Britain is undertaken, building on and updating work presented in 2011. This suggests that franchising has been modestly welfare enhancing over the substantive phases of franchising to date, even though the transaction costs associated with franchising are substantial and apparently increasing.

However, there remain concerns. Train operating costs remain high. There are also concerns about the costs that the vertical separation of operations and infrastructure impose on the system and there are plans for experiments with forms of integration. The competitive picture is evolving, in part in response to the commissioning of High Speed 2 and the Competition and Markets Authority’s recommendations. Given this backdrop, this paper will consider some of the pros and cons of further changes to the franchising regime.
Rail, Franchising, Contract, Incentives
0739-8859
Preston, Jonathan
ef81c42e-c896-4768-92d1-052662037f0b
Preston, Jonathan
ef81c42e-c896-4768-92d1-052662037f0b

Preston, Jonathan (2018) The wheels keep on turning: is the end of rail franchising in Britain in sight? Research in Transportation Economics. (doi:10.1016/j.retrec.2018.04.005).

Record type: Article

Abstract

The regime of passenger rail franchising in Britain has been in place for over 20 years. The developments have been reported at past Thredbo Conferences, including by the author in 2007 and 2015. The franchising regime has been remarkably resilient and has been through at least five phases. Using the concept of regulatory cycles, this paper reviews the prospects for a sixth and possibly final phase.

Rail statistics are reviewed and a welfare analysis of rail reforms in Britain is undertaken, building on and updating work presented in 2011. This suggests that franchising has been modestly welfare enhancing over the substantive phases of franchising to date, even though the transaction costs associated with franchising are substantial and apparently increasing.

However, there remain concerns. Train operating costs remain high. There are also concerns about the costs that the vertical separation of operations and infrastructure impose on the system and there are plans for experiments with forms of integration. The competitive picture is evolving, in part in response to the commissioning of High Speed 2 and the Competition and Markets Authority’s recommendations. Given this backdrop, this paper will consider some of the pros and cons of further changes to the franchising regime.

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TheWheelsKeepon Turning(Paper)v3 - Accepted Manuscript
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More information

Accepted/In Press date: 10 April 2018
e-pub ahead of print date: 19 May 2018
Keywords: Rail, Franchising, Contract, Incentives

Identifiers

Local EPrints ID: 419506
URI: http://eprints.soton.ac.uk/id/eprint/419506
ISSN: 0739-8859
PURE UUID: 1290472b-a3ae-4b54-a5ad-dda78b027c85
ORCID for Jonathan Preston: ORCID iD orcid.org/0000-0002-6866-049X

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Date deposited: 13 Apr 2018 16:30
Last modified: 07 Oct 2020 05:39

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