Successes and Failures in Regulating and Deregulating Utilities

Successes and Failures in Regulating and Deregulating Utilities

Evidence from the UK, Europe and the USA

Edited by Colin Robinson

This book is the latest annual review of utility regulation and deregulation, published in association with the Institute of Economic Affairs and the London Business School

Chapter 5: What to do about the railways?

Chris Nash

Subjects: economics and finance, competition policy, public finance, public sector economics


Chris Nash* 1 INTRODUCTION A recent Italian prime minister is supposed to have said: ʻThere are two kinds of madman; those who think they are Napoleon and those who think they know how to run the railways.ʼ The future of the railways in Britain has recently become clearer, and in some respects I think a sensible way forward has been found. But few would deny that problems remain, and that ʻwhat to do about the railwaysʼ remains a very serious issue. Part of the problem is that, to my mind, railways have many unique characteristics, which means that policies which may work well for other network industries become highly problematic when applied to this industry. This was not always recognized at the time of privatization and has helped lead to one set of acute problems at the present time: those of achieving a sensible timetable and an efficient use of capacity. A second key issue remains the scale of increases in costs, and particularly those of major projects, in recent years. A third one, very much linked to the first two, is that of determining what services it is sensible for a railway to provide and at what prices. A fourth one is giving the correct incentives to train-operating companies to provide such services. Finally, there have been the problems surrounding long-term investment. This identification of issues relies partly on my own knowledge of the industry, but also rests heavily on those identified in the recent Mercer report (Mercer, 2002)...

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