22 - Rail Regulation and Control in Britain — where next?

Abstract

This chapter describes how there is one certainty about the rail industry in Britain. That is that by the time of each Thredbo conference, ideas about how best to run it will have changed substantially since the last one. Already since the last conference, Britain has seen the birth of Network Rail as a “not for profit” company; a further complete change in franchising policy; and the Strategic Rail Authority implementing capacity utilization policies that imply much greater control of the timetable than hitherto since privatization. These changes follow what must be seen as one of the most major crises ever to befall a national rail system in the developed world. As a reminder to those who have not followed the story, the British rail system was split into passenger franchises, freight operating companies and an infrastructure company as well as many supporting companies and privatized over the period 1994-1997. Over the first few years of privatization traffic strongly grew and subsidies fell. In October 2000, a fatal accident at Hatfield was attributed to the state of the track; criminal charges of manslaughter are now being pursued against individual railway staff as well as corporate manslaughter against the companies concerned. Following this, severe speed restrictions were put into place across the network, and track renewals greatly accelerated. While this naturally led to a halt in the growth of traffic, there has been no serious decline, indeed both freight and passenger traffic have recovered to their pre-Hatfield levels. The real crisis to which these events have led is a crisis of costs, leading to a major increase in the level of government support. Support more than doubled between 2000-2001 and 2001-2002 through the introduction of substantial direct grants from the Strategic Rail Authority to Network Rail, and the SRA budget for 2003-2004 sees support both for services and for infrastructure doubling gain. In terms of the properties of the rail industry in Britain, this increase in costs is overwhelming the most important problem. However, there are other key which have also led to changes in the industry. The second key problem is the difficulty of obtaining a sensible timetable and an efficient allocation of track capacity. A third problem, very much linked to the first two, is that of determining what services it is sensible for the railway to provide and at what price. A fourth problem is giving the correct incentives to train operating companies to provide such services. Fifthly have been the problems surrounding long term investment. This paper will start by outlining these problems, and then consider how far developments over the last two years may have resolved them.