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Subsidy and productivity in the privatised British passenger railway.

Cowie, Jonathan



This paper gives an overview of subsidy reductions in the privatised passenger rail industry in Britain before focusing on productivity performance across the first four years under the privatised structure. Subsidy reductions are analysed in terms of the average annual percentage increase in passenger revenues and/or decreases in costs required to offset these reductions. Productivity is then examined through the use of a Tornqvist productivity index, with passenger train kilometres specified as the output, and labour, traction rolling stock and infrastructure specified as the inputs. For the network as a whole, it is found that total productivity has risen on average by four per cent per annum over the post-privatisation period. Most gains have been achieved through labour reductions and increases in output from improved utilisation of existing inputs. Compared with the performance of the nationalised British Rail, gains made since privatisation are not as high as those made in the later period of public sector management. It is therefore concluded that it is commercialisation, i.e. the move towards a more market orientated organisation, rather than ownership form per se, that has been the key component in productivity gains.


Cowie, J. (2002). Subsidy and productivity in the privatised British passenger railway. Economic issues, 7, 25-38

Journal Article Type Article
Publication Date Mar 1, 2002
Deposit Date Apr 24, 2008
Print ISSN 1363-7029
Peer Reviewed Peer Reviewed
Volume 7
Pages 25-38
Keywords Railways; Passenger traffic; Subsidy reductions; Productivity measures; Increased productivity; Decreased labour costs; Increased output; Commercial gains;
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