Why the system of rail privatisation in the UK has been a disaster

Michael Moran, one of the authors of a report on the system of rail privatisation in the UK, discusses its findings. Some important issues he raises are the manipulation of the licensing system so that public subsidies are essentially paid out to shareholders as dividends and Network Rail’s large and unsustainable debt, which has negative consequences for physical infrastructure and likely means that rail will one day have to be bailed out by the public. The core issue is the longstanding problem that rail cannot operate without some £10 billion of (direct and indirect) public subsidy because passenger income is insufficient to cover costs. Capturing the externalities of public transport lines on land and property values via taxation is a potential policy solution to the broken business model but is politically difficult and actively opposed by well organised lobbying efforts.