According to the ORR, the industry regulator, in 2023/24 taxpayer funding for the operational railway was £12.5 billion, 58% higher than the last full year before Covid. Capital expenditure aiming to enhance the existing network, together with spending on entirely new projects, not always well selected as HS2 indicates, totalled £9.6 billion. This is topped off with interest on a public debt of £60 billion accumulated by Network Rail since 2002 when railway infrastructure was effectively re-nationalised. In total, last year the railways billed the taxpayer £22.3 billion, equivalent to half the UK defence budget. Considering that passengers (many if not most, also tax payers) chip in an additional £10.4 billion through the fare box, it will be apparent that operating trains and attempting to improve 10,000 route miles, is a very expensive proposition.
Why are the railways so expensive? In part it is because of a legacy technology: steel rail rafted and bedded on large quantities of stone aggregate lie at its heart just as was the case nearly two centuries ago. Several hundred tonnes of rolling stock (staffed by well-paid, if not overpaid, crew) moving rapidly along rails, shake and distort the track’s underpinnings. With a safety regime of zero tolerance, constant line checking leads to constant maintenance. Costly in itself but made more so because, to minimise service disruption, most remedial work is undertaken at weekends or, as neighbouring insomniacs know well, late at night, using labour adequately compensated for the unsocial working hours involved. The travelling public do not as a rule see this nocturnal activity and therefore do not appreciate its extent, nor expense (over £8 billion p.a.).
Many argue that this is the price we must pay for an environmentally friendly form of transport. The Climate Change Committee’s figures show that emissions per passenger mile are very much lower for rail than for the car (but only a little better than for the bus). This however is an exaggerated difference. The focus is pollution coming from powering the (sometimes electric) train, compared with propelling an existing car stock that uses mostly petrol or diesel. It neglects emissions associated with engineering work involved keeping the track infrastructure safe, and that for rail involves using a great deal of material energy intensive in its manufacture (think steel rail, concrete sleeper and granite chippings).
Nevertheless, in the environmental stakes, the train wins hands down when it comes to well-used services, especially in crowded conditions of a daily commute. The environmental case crumbles however for the off-peak and rural railway. Here an energy hungry heavy vehicle conveys, at best, a smattering of customers. Add in the carbon (and financial) cost of maintaining track, signalling and stations (astonishingly over a hundred of which have on average 6 or fewer daily passengers) and the environmental case becomes at best rather weak, and increasingly so as the car stock becomes more electrically powered.
The extravagant call on public finances by the railway contrasts strongly with that Cinderella of the transport world, the bus. Despite its put-down image, the bus industry shifts annually nearly as many (generally poorer) passengers as does rail and for a fraction (about one-fifth) of rail’s operational subsidy. Its capital subsidy (mostly for investment in ‘green buses’) by comparison is also negligible
Despite the government continuously exhorting citizens to use public transport, and the increasing difficulty of using the car in cities, ridership generally is stagnating. Prior to Covid, train travel, measured by passenger journeys, had changed little over the preceding six years. Ridership collapsed during the pandemic, since when numbers have been slow to recover. Rail passenger journeys in 2023-24 remain well below the peaked-out pre-pandemic levels. What remains is increasingly leisure related, with commuting less common, a trend that also pre-dates Covid. Both stagnating passenger numbers over the last decade and changing journey purpose are fundamental shifts that, surprisingly, has garnered little general comment.
In these circumstances the inevitable question: can the taxpayer continue to afford a railway of current scale and size? Should the much cheaper, more progressive and similarly environmentally friendly, bus play a relatively more important role in providing public transport?
The government might economise by seriously examining its current proclivity to open more stations and lines. Its push to decarbonise much of the car stock by the early 2030s weakens the railway’s environmental advantage. For similar reasons, a review of lightly used services is called for. Following World War II and rail’s nationalisation in 1948, the British Transport Commission lost little time in setting-up a committee tasked with identifying lightly used lines suitable for closure. During the following 14 years, and before Beeching, 3,300 miles of route was chopped from the publicly owned and run railway. The Government’s decision to renationalise might at least present a similar opportunity for review.
Fallen ridership suggests also there is scope for reducing service frequencies. Frequencies escalated after rail privatisation, to some extent due to a lack of a sensible charging structure for use of congested tracks. A review and audit of services will no doubt justify the vast bulk of those existing, which then throws the spotlight on operational efficiencies and particularly on Network Rail’s maintenance and renewal policies including old Spanish practices engaged in by its unionised workforce.
Finally, HS2. At the end of February, the House of Commons Public Accounts Committee issued the latest damning report on what it referred to as a delivery “mess”. It went on: “We are sceptical of government’s ability to successfully deliver even a curtailed scheme, one which we already know will…bring very poor value for money”. Now might be the time to freeze all further contracts until a fundamental review is conducted, a review that is able to consider supplementary or alternative uses for the right-of-way (for gridding green electricity or trunking the supply of water for example).
In times of nostalgia especially, and for such a politically driven industry what is proposed here will no doubt prove a challenge to implement, but it is also a time when national economic circumstance and a search for economies in public spending suggest that even the totemic Great British Railways should make some budgetary sacrifice.
David Starkie is on the Executive Board of the Journal of Transport Economics and Policy. He writes here in a private capacity. His most recent book is Airport Enterprises: an economic analysis.
