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'A Very Costly Industry': the cost of Britain's privatised railway

McCartney, S and Stittle, J (2017) ''A Very Costly Industry': the cost of Britain's privatised railway.' Critical Perspectives on Accounting. 1 - 17. ISSN 1045-2354

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Abstract

This paper is concerned with the financial performance of the British passenger rail industry since privatisation in the mid-1990s. This experiment, which not merely transferred a state-owned and fully integrated industry into the private sector, but dismantled it into over 100 separate entities, has generated considerable and highly critical academic literature. A major contention of this literature is that, contrary to the predictions of its proponents, privatisation has largely failed to improve efficiency and has actually increased costs, or more exactly, costs are higher than they would have been, had privatisation not taken place. However, although various writers have put forward diverse arguments to support this position, robust data on the overall costs of the (now highly fragmented) industry have been lacking. Further, a proper assessment of the additional costs (or otherwise) of privatisation can only be made in light of ?counterfactual? estimates (necessarily speculative) of the costs of the state-run industry if privatisation had not occurred. This paper aims to fill this literature gap by: (1) constructing a robust series of the overall operating costs of British passenger rail services since privatisation, (2) projecting, using reasonable assumptions, what operating costs would have been if privatisation not taken place, and (3) estimating the increase in such costs arising since privatisation. The results, whilst they can only be broadly indicative, are nevertheless clear. Even after conservative assumptions, rail privatisation has resulted in considerable additional costs: it was a major public policy error.

Item Type: Article
Uncontrolled Keywords: privatisation, British, railways, costs
Subjects: H Social Sciences > HD Industries. Land use. Labor
H Social Sciences > HE Transportation and Communications
H Social Sciences > HF Commerce > HF5601 Accounting
J Political Science > JN Political institutions (Europe) > JN101 Great Britain
Divisions: Faculty of Social Sciences > Essex Business School
Faculty of Social Sciences > Essex Business School > Essex Accounting Centre
Depositing User: Jim Jamieson
Date Deposited: 23 May 2017 08:52
Last Modified: 20 Nov 2018 02:00
URI: http://repository.essex.ac.uk/id/eprint/19702

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