Competition, efficiency and productivity in the long-distance British passenger rail market

The Railways Act 1993 privatised the British rail industry and introduced competitive tendering and open access operation to the long-distance passenger sector. This paper discusses the different forms of competition this introduced, with the key research question posed is whether the reforms to the British long-distance passenger rail sector produced outcomes consistent with a competitive market. The tools used to address this issue are efficiency and productivity assessments. Covering the period 1996 to 2023, efficiencies are estimated using corrected ordinary least squares, before Malmquist productivity indices are calculated. The results show strong gains in productivity over most of the period for both franchised and open access operators, which would be consistent with competitive market pressures. A noticeable difference however is found between how these have been achieved between the two types of operator. The possible retention of open access operations and an independent rail regulator are then discussed in the context of the Railway Passenger Services (Public Ownership) Act 2024 and future British rail policy.