The Cost of Operating Britain's Privatized Railways

Abstract

Running a privatized and fragmented rail industry unable to recover its full operating and investment costs via the fare box under public ownership was inevitably going to generate extra costs: the returns to the providers of finance. This article produces evidence to show that the UK rail industry's costs have more than doubled since privatization (from £3.4bn in the last year before the restructuring of the industry to £7.4bn in 2003), partly because of the £800M returns to the providers of finance. This constitutes more than one-third of the rising annual subsidies, raising important questions of accountability for public money, whose reporting is far from clear. The author also explains how hard it is to get reliable information on the rail industry's subsidies and expresses concern that the reporting of billions of pounds of taxpayers' money and potential liabilities and future commitments is so opaque.