Tony Prosser, Regulating a Fragmented Rail System in the Uk

1. Introduction.
2. The Fragmentation of British Rail.
3. Rail Regulation in the UK.
4. The Periodic Review Process and the Future of Independent Regulation.
5. Public Service and the System of Rail Franchising.
6. Customer Satisfaction and Costs.
7. Future Reforms.
8. Conclusion.


The UK has taken a very different path in the organisation of its railway system from that taken by other European countries, or indeed by the European Union. Under the Railways Act 1993 the rail industry was fragmented into a large number of different companies linked by contract. The infrastructure was owned and managed by Railtrack, a wholly privatised company, which collapsed in 2002 and was replaced by Network Rail. The latter was taken back into full public ownership in 2014 and it has now devolved most of its operations to regions and routes. Network Rail is regulated by the Office of Rail and Road, which undertakes extremely detailed examinations of its efficiency every five years, determining the amount of funds it requires. Passenger services are provided by companies holding 15 franchises based on routes and geographical areas; there is very little competition by ‘open access’ operators. The franchises are issued by the government’s Department for Transport through a mixture of competitive tendering and direct awards, and specify the services required in great detail. The system has experienced very serious problems of fragmentation and lack of coordination (for example in drafting timetables), and of a failure to transfer risk from government to the franchise holders. It has not succeeded in reducing costs to public funds, and customer service is patchy. The whole system is now under review, though what will replace it is uncertain.