Is the UK rail franchise system a model railway?

Critics of the current UK rail franchise system lambaste the subsidies given to Train Operating Companies, and point to annual fare rises in excess of inflation, a lack of genuine competition on individual routes and overcrowded commuter trains. This case study examines the successes and limitations of the UK rail franchise system introduced in 1993, and potential future reforms to the system.

Scope

Assesses the performance of the rail franchise system from the perspective of both passengers and the UK Government.

Considers potential reforms to the UK rail franchise model.

Reasons to buy

What are the respective successes and failures of the UK rail franchise system?

Have passengers benefited from privatization?

Could the UK model be replicated in other countries?

Companies mentioned

None

Table of Contents

OVERVIEW

Catalyst

Summary

THE STRUCTURE OF THE RAIL FRANCHISE SYSTEM

A system based on the Railways Act 1993

SUCCESSES OF THE UK RAIL FRANCHISE SYSTEM

Placing the passenger rail sector on a commercial footing

Passenger volumes have risen rapidly

Direct subsidy payments to operators have fallen

Privatization has placed the industry on a commercial footing

LIMITATIONS OF THE UK RAIL FRANCHISE SYSTEM

Advantage of privatization to consumers has been undermined

Systemic failure of franchise tendering

Rising fares have undermined benefit of privatization to passengers

Comparing fares to other European countries is problematic

Renewal of rolling stock remains a key issue

A lack of genuine competition limits the benefits of privatization

The concentration of operators tendering raises concern

Dominance of large transport groups may harm competition

IS THE UK RAIL FRANCHISE SYSTEM A MODEL RAILWAY?

Objectively comparing systems is not a straightforward task

Reform would have been difficult to achieve without privatization

UK rail franchise system is not definitively superior compared to the passenger rail systems of other European countries

The UK rail franchise system is unlikely to be adopted in full internationally

SIGNIFICANT SCOPE FOR IMPROVEMENT REMAINS

Future prospective reforms for the UK rail franchise system

Transferring responsibility for rolling stock to operators will increase accountability and drive up standards

Removing fare regulation from Government will improve transparency

Competition is merited and necessary on selected mainline routes

Granting operators further freedoms will increase the pace of innovation

CONCLUSIONS

Prospective reforms for the UK rail franchise system

APPENDIX

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