Study calls for sweeping changes in UK railway system

A study commissioned by the UK government has found that privatisation of British railways has not helped to reduce costs per passenger, despite a 57 per cent rise in the number of travellers since 1996-97.

Former civil aviation authority chairman Sir Roy McNulty, revealing the findings of his long-awaited study into "value for money" on Britain's network, pinned the blame equally on the government and the industry for average rail costs being 40 per cent higher than elsewhere in Europe.

Among the most noteworthy recommendations of the report is a rationalisation of fares - with some rising sharply while others fall - and a single regulator for the industry as a whole. It suggests making the Office for Rail Regulation (ORR) an independent regulator.

The report called for £1 billion in costs to be stripped out of the industry, and for giving all involved a "better deal".

It also outlined changes to slash the £5.2 billion state subsidy, including phasing out of ticket offices in small stations, doing away with conductors, and giving train operators control of maintenance on some routes.

"The current £4.3 billion industry operating deficit - passenger revenues minus costs - equates almost exactly to the operating deficit of the industry in 1996-97, factored up for the 57 per cent growth in passenger numbers since that time and adjusted to 2009-10 prices," McNulty found.

Given the increase in passengers, "it might have been expected that unit costs would fall - bearing in mind that this is an industry with relatively high fixed costs," the report said.

McNulty also pointed out that fares in the UK were 30 per cent higher than in France, Holland, Sweden and Switzerland, while operating costs were 40 per cent higher than those countries.

"There is a clear imperative to give both farepayers and taxpayers a better deal," McNulty said. "This industry has a serious cost deficiency issue to address. Everyone concerned must be aware that passengers are paying above the odds."