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.
Features and benefits
- 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.
Rising passenger volumes are a notable success of the privatized passenger rail sector, however it is difficult to attribute this solely to privatization.
A combination of rail fares rising faster than average earnings growth and ageing rolling stock in some geographical areas has weakened the case for privatization.
Further reforms such as changing the structure of franchise agreements to give operators sole responsibility for rolling stock and removing government intervention on fares would make operators directly accountable to passengers.Your key questions answered
- 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?
- 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
- Prospective reforms for the UK rail franchise system
- Further Reading
- Ask the analyst
- About MarketLine