Chapter 8 Rail in Britain
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Britain has taken reform of the rail sector further than any other country, with complete separation of infrastructure from operations and privatisation of all train operations, using franchising in the case of passenger services. Great efforts have been made to ensure a competitive market for franchises, and to incentivise franchisees to achieve high quality services. A comparator model is used in the franchising process, and particularly on those occasions when direct awards are made, but this is based solely on the costs of the incumbent. Arguably a benchmarking approach using all passenger train operators would yield a more appropriate comparator, by examining industry best practice rather than just the incumbent. Regarding the infrastructure manager, the Regulator is responsible for determining what the efficient costs should be. More use of benchmarking has been made, both using top down econometric methods and bottom up in depth studies of particular issues. Initially top down methods were applied using international comparisons, but there are problems in getting comparable data and dealing with heterogeneity. More recently, efforts have concentrated on internal benchmarking between the different Network Rail routes and increased devolution of responsibilities to routes and regions has made this more useful. Whilst quality measures do not directly enter the benchmarking framework, the infrastructure manager faces a number of regulatory incentive and targeting mechanisms aimed at ensuring good performance and condition of the infrastructure. Despite these efforts, there is dissatisfaction with increasing costs both of infrastructure and train operations and with quality of service, especially reliability. Further changes are expected following a review led by Keith Williams, including a new body more closely integrating infrastructure and services, and a move to more use of concessioning services on gross cost contracts.

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