What is it about?
A crucial feature of rail privatisation in Britain was franchising. Passenger services were franchised in competitive bidding processes to train operators which were meant to function with declining subsidy. The article adopts the framework of social cost-benefit analysis to examine rail privatisation's impact on three key groups: consumers, producers and government.
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Why is it important?
The article establishes that privatisation did not achieve all the supposed benefits. Further, franchising only appears to be profitable through the use of calculative accounting practices, whereby franchised train operators are portrayed as discrete business entities, whereas they are supported by very substantial, ongoing direct and indirect government subsidies.
Perspectives
British Rail was subject to a strict financial regime by the Conservative Governments of the 1980s. It undertook major organisational reforms which led to very significant improvements in both productivity and punctuality. Privatisation fragmented the integrated network which had been operated by British Rail, and both the industry and the government are losers as privatisation increased both costs and subsidy.Further, the rail franchising business sector which has resulted two decades after privatisation is a very curious one, dominated as it is by subsidiaries of overseas State-owned railways such as France and Germany.
Robert Jupe
University of Kent
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This page is a summary of: ‘A highly successful model’? The rail franchising business in Britain, Business History, March 2017, Taylor & Francis,
DOI: 10.1080/00076791.2016.1270268.
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