Competition in the UK passenger railway industry: prospects and problems

The promotion of competition between passenger train operators was a key aim of the 1992 - 97 Conservative Government when it privatized British Rail. Although the potential for competition in the market was constrained through regulation at the time of the sale, competition for the market became intense. Regulatory controls are now being relaxed and the promotion of competition remains central to the present Labour Government's rail strategy, particularly in the form of a redefined and reinvigorated franchising programme. It seems to be generally accepted in policy-making circles that it is both possible and desirable to encourage competition in the UK's railway industry on the grounds that it can further enhance service quality across the network. This paper highlights some qualifications to this position and suggests that, for various reasons, a strong policy emphasis on market liberalization may be impractical or unsuitable, at least in the short to medium term.