Study claims privatisation cost more than BR - but now outperforms it

The privatised passenger railway could have cost £51 billion more to operate than if British Rail had remained in state hands, a new study suggests.

A Very Costly Industry - the cost of Britain’s privatised railway was written by John Stittle of Essex University and Sean McCartney of the University of London. It was published on May 20.

The £51bn figure represents a best-case scenario of British Rail reducing its costs by 2% per year from 1997-98, had unit costs remained stable at 1993-94 levels. Even so, the projected figure of £132.5bn is still less than the actual cost of running passenger services from 1997-98 to 2013-14 of £154bn, a difference of £21bn.

However, while under the ‘steady state’ scenario British Rail would have been more efficient than the privatised railway in most years from 1997-98 to 2010-11, the authors conclude that if passenger growth had been matched, the cost per year of the privatised railway would have been less in each year from 2011-12 to 2013-14. In the last year examined in the study, British Rail’s hypothetical costs are estimated as £10.2bn, while those of the current passenger railway were £9.3bn, excluding freight operators.

• To read a more in-depth version of this story, read RAIL 829, published on June 21.
• To read an EXCLUSIVE response from the Rail Delivery Group's Chief Executive Paul Plummer, read RAIL 829, published on June 21.