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The Cost of Operating Britain's Privatized Railways

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  • Jean Shaoul

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.

Suggested Citation

  • Jean Shaoul, 2006. "The Cost of Operating Britain's Privatized Railways," Public Money & Management, Taylor & Francis Journals, vol. 26(3), pages 151-158, June.
    • Handle: RePEc:taf:pubmmg:v:26:y:2006:i:3:p:151-158
    DOI: 10.1111/j.1467-9302.2006.00516.x
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    Cited by:

    1. José A. Gómez-Ibáñez, 2016. "Open Access to Infrastructure Networks: The Experience of Railroads," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 49(2), pages 311-345, September.
    2. Jean Shaoul, 2010. "A Review of Transport Public–Private Partnerships in the UK," Chapters, in: Graeme A. Hodge & Carsten Greve & Anthony E. Boardman (ed.), International Handbook on Public–Private Partnerships, chapter 24, Edward Elgar Publishing.
    3. Carmen A. Li & John Stittle, 2014. "Privatisation and Franchising of British Train Operations," Australian Accounting Review, CPA Australia, vol. 24(1), pages 53-65, March.
    4. Jonathan Cowie & Sarah Loynes, 2012. "An assessment of cost management regimes in British rail infrastructure provision," Transportation, Springer, vol. 39(6), pages 1281-1299, November.
    5. Bowman, Andrew, 2015. "An illusion of success: The consequences of British rail privatisation," Accounting forum, Elsevier, vol. 39(1), pages 51-63.
    6. Robert Jupe, 2009. "New Labour, Public–Private Partnerships And Rail Transport Policy," Economic Affairs, Wiley Blackwell, vol. 29(1), pages 20-25, March.
    7. Smyth, Stewart & Cole, Ian & Fields, Desiree, 2020. "From gatekeepers to gateway constructors: Credit rating agencies and the financialisation of housing associations," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 71(C).
    8. McCartney, Sean & Stittle, John, 2012. "‘Engines of Extravagance’: The privatised British railway rolling stock industry," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 23(2), pages 153-167.
    9. McCartney, S. & Stittle, J., 2017. "‘A Very Costly Industry’: The cost of Britain’s privatised railway," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 49(C), pages 1-17.

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