Edinburgh Napier University

  Over the last decade, British railway engineering has come under increased scrutiny, with general perceptions of massive maintenance cost escalations and a general lack of control over these costs. Very little however has appeared in the academic literature on the subject. This paper examines these two issues through an examination of the infrastructure costs over the period 1980 to 2008. This period saw three different infrastructure management regimes in place - the nationalized British Rail (1980 – 1994), the privatized Railtrack (1996 to 1998) and the not for profit Network Rail (2002 to 2008). Infrastructure costs are broken down into operating, signalling and management costs. The results show that in all categories costs have increased since privatisation, but in most cases these increases are considerably short of most of the figures reported in the press. Furthermore, some of these cost increases actually began under the nationalised structure. The one major exception however is management costs, which have rocketed. This is found as clear evidence of x-inefficiency in infrastructure provision, however rising operational costs are found to be due to imperfect competition in sub contractor markets driving up costs. The paper concludes that rail infrastructure provision may well now have the worst of both worlds, with the subsidy of the public sector sustaining imperfect competition in the private sector.