The wheels keep on turning: Is the end of rail franchising in Britain in sight?. (September 2018)

• Record Type: Journal Article
• Authors: Preston, John
• Is Part Of: Research in transportation economics. Volume 69(2018)
• Page Start: 187
• Page End: 196
• Publication Date: 2018-09
• Subjects: Rail -- Franchising -- Contract -- Incentives; L51 -- L92; Transportation -- Periodicals; 388.05
• DOI: 10.1016/j.retrec.2018.04.005
• Languages: English
• ISSNs: 0739-8859

Abstract

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.