Financial Outcomes of Rail Privatisation in Britain



Financial Outcomes of Rail Privatisation in Britain

Authors

WHITE P, University of Westminster, UK

Description

The British case of rail privatisation offers a rather extreme and complex example, in which not only have infrastructure and operations been separated, but also the provision of rolling stock, and the passenger operation has been split into 25 franchises

Abstract

The British case of rail privatisation offers a rather extreme and complex example, in which not only have infrastructure and operations been separated, but also the provision of rolling stock, and the passenger operation has been split into 25 franchises. In principle, there is also 'open access' operation, although this is very limited at present and its future rate of growth is uncertain.

In summary, the main components are :

(a) Railtrack. Provides track, signalling and infrastructure to rail operators, and also electric traction supply. Privatised through public share floatation May 1996.

(b) The rolling stock leasing companies (ROSCOs). The existing passenger feet was split between three companies, who lease stock to the train operating companies.

(c) Train Operating Companies (TOCs). The existing passenger network was split into 25 franchise areas, each now operated by private companies (many of whom have more than one franchise). One franchise (the 'Island Line', on the Isle of Wight off the south coast) is 'vertically integrated', i.e. the operator is also responsible for the infrastructure. However, it is very small indeed (some 14 route-lun). The franchising process is handled by the Office of Passenger Rail Franchising (OPRAF), which also monitors service performance.

In addition to the franchising of the then existing British Rail services, two other 'franchises' may be defined. European Passenger Services (EPS), responsible for the 'Eurostar' high-speed passenger services between London, Paris and Brussels, was transferred from British Railways Board (BRB) to central government ownership in 1994 (before operations began) 'for nil consideration' and subsequently to the London & Continental consortium, who were to have been responsible for building and operating the Channel Tunnel Rail Link (CTRL), providing a high-speed line between London and the Tunnel in place of existing routes (this has been replaced by a scheme in which Railtrack are heavily involved in provision of new infrastructure, while operations have been transferred to a business run by National Express and British Airways. Waterloo International station has reverted to public ownership.

Within London, the Docklands Light Railway (DLR) was placed under a form of franchise operation from April 1997, with both infrastructure maintenance and train operation handled by a single company.

Apart from companies running only trunk inter-city routes (such as Great North Eastern Railway, GNER), most ex-BR franchises cover a mixture of local and longer- distance services (for example, ScotRail, which provides almost all services within Scotland).

(d) Freight. Most operations have been sold to English, Welsh and Scottish Railways (EWS), a subsidiary of the Wisconsin Central company of the USA. It acquired the three bulk freight trainload companies; Rail Express Systems (whose main operation is the postal train network); and subsequently Railfreight Distribution (from November 1997), the company handling wagonload traffic, mainly through the Channel Tunnel.

Unlike passenger operators, EWS and the other significant freight operator (Freightliner) own their locomotives and rolling stock outright. Access charges are relatively modest, comprising only about 7% of Railtrack's total income, compared with about 87 % from passenger operators.

Within the practicable length of this paper, other operational details, and the associated regulatory framework, are not considered in detail. Further information may be found in another paper by the author (White 1998), and in other authors such as Harris and Godward (1997). Many of the underlying issues were also examined in papers at last year's European Transport Forum, notably those by Bolt (1997), Siraut (1997) and Harris (1997), to which reference may be made for further information.

Publisher

Association for European Transport