TSSA, together with the other transport unions, comissioned independent academics from Transport for Quality of Life to undertake a major research project looking at the problems of the current privatised and fragmented structure of our railways, and at possible solutions.
The researchers noted:
There is a widespread concern – shared across the political spectrum – that we are not getting good value from the substantial sums of public money that are invested in the railways every year. Since privatisation, the cost to the public purse of running the railways has risen by a factor of between two and three times. The most cautious view is that the public money going into the railways has increased from around £2.4 billion per year before privatisation (in the period 1990/91 to 1994/95), to approximately £5.4 billion per year in the period 2005/06 to 2009/10 (all at 2009/10 prices). Over the same period, the money going into the railways from passenger fares has also increased in real terms.
Much of the increase in cost may be attributed to fundamental problems with the complex privatised railway structure created by the Conservative Government in 1994. Key reasons for the increase in cost include higher interest payments in order to keep Network Rail’s debts off the government balance sheet; debt write-offs; costs arising as a result of fragmentation of the rail system into many organisations; profit margins of complex tiers of contractors and sub-contractors; and dividend payments to private investors. Taken together, these represent a cumulative cost since privatisation of more than £11 billion of public funds, or around £1.2 billion per year. This should be considered a minimum figure, as it includes only those costs which may be most readily quantified.
To put these figures in context, if all unnecessary costs were eliminated and the resultant saving was used entirely to reduce fares, it would equate to an across-the-board cut in fares of 18% (or a substantially larger cut in fares that are price-regulated because of their social importance).
Read the report: Rebuilding Rail report