The purpose of this paper is to examine the degree to which Network Rail, the new not-for-profit infrastructure company owned by members, has provided a “fresh start” for Britain’s privatised railway system. Rail privatisation was predicated on the belief that surplus value could be created through redundancies and deskilling in a loss-making subsidy-dependent industry. Network Rail’s predecessor, Railtrack, followed a profit-maximising agenda and collapsed into insolvency in 2001, after several years of poor performance. Unlike Railtrack, Network Rail is not under pressure to pay dividends to shareholders, and so in theory can focus on the maintenance and renewal of the infrastructure. However, its reliance on debt rather than equity finance, combined with escalating infrastructure costs, means that its annual borrowing costs have reached £1 billion. Thus, the nominally private company is only viable because of substantial subsidy and explicit government support for its borrowing. Further, the bulk of its expenditure is on renewals work which is outsourced to contractors aiming to maximise surplus value. The paper uses critical financial analysis to show the extensive and continuing transfers from the taxpayers and passengers to the financial elite, highlighting distribution issues which have been largely missing from the policy debate over Network Rail’s creation.

Purpose – The paper aims to examine the role, funding and status of Network Rail, a very significant example of New Labour's attempt to operationalise the “third way”. The analysis of Network Rail is used to critique the “third way” approach to policy-making in Britain. Design/methodology/approach – The paper examines Network Rail, and the significant changes that have occurred since its creation, in the context of the claims originally made for the company by Transport Secretary Byers. It employs critical financial analysis and non-financial performance indicators to examine the “third way” approach to rail privatisation, drawing on the work of its leading supporter in the UK, Giddens, and its leading critic, Callinicos. Findings – The paper demonstrates that Network Rail is an expensive mechanism for channelling public money to private companies. It argues that the “third way” is really a smoke screen for the neo-liberal ideology, behind which there is a continuing transfer of wealth from taxpayers to the private sector. Research limitations/implications – The paper focuses on one significant example of the “third way” approach to policy making. It demonstrates the strength of the neo-liberal ideology, particularly the belief in the value of privatisation, in the UK. Practical implications – The findings of the paper have implications for public policy and for those affected by rail privatisation, including employees, passengers and taxpayers. Originality/value – Researchers and practitioners working in the area of public sector management and reforms should find the paper of value.

The New Labour government has favoured the deployment of Public-Private Partnerships (PPPs) to provide investment in transport infrastructure. The results of this policy on the railways have, however, been disappointing in terms of cost and efficiency. Public transport PPPs require complex contracts underpinned by regulatory mechanisms in order to maintain performance and safety standards. Moreover, risk transfer is difficult to achieve, as essential infrastructure cannot be left to the ultimate market discipline of bankruptcy.

This paper develops Whitehouse's 2003 examination of the creation of Network Rail, a case study of New Labour's attempt to operationalize the 'third way'. Significant changes have occurred since 2003 which make Network Rail's position as a private company with private sector debt appear increasingly anomalous. These changes include: the reclassification of the debt of another rail company from private to public, and the introduction of 'imputed debt' into public sector debt measurement; new funding arrangements for Network Rail which make it heavily dependent on public support; and important rail regulatory policy changes. The paper analyses these changes, and revisits White-house's conclusions. In particular, this paper challenges Whitehouse's contention that Network Rail's creation led to the de facto renationalization of the railway infrastructure at a reduced public cost. The paper demonstrates that Network Rail is a very expensive mechanism for channelling public money to private companies, and argues that the Labour government's attempt to maintain the company's private sector status as part of its third way approach is ultimately untenable.

In March 2006, the Rail Regulator made a controversial decision to award open access rights to a new train operator on the east coast route. A 10-year franchise had been granted to GNER on this route in 2005 on the assumption that there would not be competition from open access operators. This article examines this decision, concluding that it reflects confusion over responsibilities and the government's ambivalent attitude to rail privatization. Alternatives to the current 'malaise' are suggested

This article examines the brief and unsuccessful career of the privately-owned infrastructure company, Railtrack, and its part in the privatised railway system in the UK between 1996 and 2001. It discusses the decision of the British government to discontinue public support for Railtrack and to set up a new not-for-profit company, Network Rail, to replace it. The ongoing public debate over these events and the prospects for the new company are analysed. Two earlier, and broadly successful, examples of not-for-profit companies in British transport history, are briefly considered for comparative purposes - the Port of London Authority and the London Passenger Transport Board.

This paper focuses on the performance and regulation of the train operating companies in Britain’s privatised railway system. It places regulation in context by examining rail privatisation, with particular scrutiny given to the theory and practice of the franchising process which established these companies. The record of the regulatory authority is assessed up to the announcement in 2004 of its planned abolition. This assessment employs critical financial analysis, and draws on non-financial performance indicators, in order to examine the extent to which it achieved its five main objectives: increasing the number of rail passengers; managing franchises in the interests of passengers; encouraging efficiency and economy in the provision of passenger rail services; encouraging investment in rail services; and securing a progressive improvement in the quality of rail services. The paper concludes that the regulatory authority’s performance was “deficient” as it only achieved the first of these objectives. It places this failure in context by highlighting the fundamental problem—the flawed concept of fragmenting and privatising a loss-making rail industry in the interests of British capitalism. The “stronger” regulation envisaged by the Blair Government is revealed as a smoke screen behind which there is a continuing transfer of wealth from taxpayers to the owners and providers of capital.

In July 2004, the Government published a white paper on‘The Future of Rail’, which outlined its planned third attempt to reform the railways. This article reviews the new blueprint for rail, in the context of the performance of the industry and its regulatory bodies. The changes proposed are analysed in terms of their likely effects on the infrastructure authority and the train companies. The author concludes that there are major problems with the white paper as key details are omitted, and the proposed changes are heavily reliant on private companies which have performed poorly. The Government has missed the opportunity to renationalize the infrastructure authority, a move which would reduce borrowing costs and bring direct control over infrastructure costs.

The article examines the labor and rail franchising policy of the British Labor Government. In opposition, the Labor Party initially opposed rail privatization on principle. By 1997, however, its approach was that privatization could be made to work given stronger regulation and an element of strategic leadership. The Strategic Rail Authority (SRA) was created to provide strategic direction for the rail industry and, after its absorption of the Office of Passenger Rail Franchising in 1999, it also became responsible for the regulation of the 25 Train Operating Companies. Government efforts to improve rail performance through the franchising system have proved to be problematic. The reasons for this include a complex but ineffective system of incentives and fines, the poor performance of the infrastructure authority and difficulties in bringing new rolling stock into service. Given these problems, the ultimate regulatory sanction is to terminate a poorly-performing train operating companies' franchise. This has happened once so far, when in 2003 Connex South East's franchise was removed and passed to a new public sector company, South Eastern Trains, a subsidiary of the SRA. The performance of South Eastern Trains has improved for four successive quarters. Despite the substantial improvements made by the public sector company, in January 2005 the SRA issued invitations to tender for the new Integrated Kent franchise covering services from Kent and East Sussex. There are several grounds for keeping South Eastern Trains within the public sector. The company has succeeded in improving performance, and so has complied with the what works principle. Another argument for maintaining at least one franchise in the public sector is that it could provide the basis for a gradual integration of the rail network

This paper examines the regulation of privatised industries, especially the railways. It focuses on the regulation of the infrastructure company, Railtrack, which collapsed into insolvency less than six years after its flotation. It analyses in detail the establishment of a key interface in the railway system, the track access charges, and discusses the extent to which Railtrack's collapse was a failure of regulation. The paper concludes that the key problem was not the regulatory system, but the fundamentally flawed concept of the rail privatisation, and discusses the implications for the success of privatisation and of Railtrack's successor, Network Rail.

This paper analyses the privatisation of Britain’s railways, starting with the original legislation and ending with the insolvency of the infrastructure owner, Railtrack. It examines the performance of the privatised system, focusing on the three key benefits which the Major Government claimed for privatisation: greater efficiency; improved quality for consumers; reduction in public subsidy. It examines the performance of Railtrack, but also considers the behaviour of government, regulators and train operating companies. Attention is given to the importance of ideology in the privatisation, and to the broader role of privatisation in government policy. The paper argues that privatisation was fundamentally flawed, as it was impossible for the system to generate sufficient profits to deal with the demands upon it. Privatisation failed in all areas as it produced an inefficient system with higher costs, poorer quality of service, and increased public subsidy

In July 2000, the Government published Transport 2010, its ten-year plan to improve Britain's transport. This article reviews the proposals to improve the railway system, and examines their likely effects on investment by the railway companies and on passenger safety. The plan is analysed in the context of the structure of the privatized railway industry and its regulatory bodies, with particular reference to the performance of Railtrack (now in administration). The authors conclude that the Government was over-confident in believing that a defective privatized structure could deliver the expansion it wanted. The article shows that the Government has been relying on inadequate and under-performing instruments, over some of which it had little control. This will probably continue unless Railtrack is restructured and taken back into public ownership. Progress so far has been limited, and the prospects of success are not good. [ABSTRACT FROM AUTHOR]

This paper examines the related problems of the capitalization and financial performance of the railway companies in the inter-war period. It examines the critics' view that the railways were over-capitalized, and places the debate in context by analysing the dividend and accounting policies of the companies and the consequences for investment. It also examines the conflicting views of railway management and shareholders over capital expenditure. The paper concludes that the railways were both financially over-capitalized and physically under-capitalized, and so faced very serious financial problems that were incapable of resolution within the existing ownership structure.

This paper employs a Latourian framework to analyse the informal and formal lobbying of the Accounting Standards Board (ASB) over its flagship standard on cash flow statements. The purpose of the analysis is to reveal how the self-referential rhetoric of key lobbyists, such as companies and auditors, was used to “enrol” the ASB into amending its standard in line with the transformative practices of some large companies. The issue of whether net debt should be included on cash flow statements is analysed in detail, as it reveals how a small group of companies were able to enrol the ASB into accepting their translated definition of “cash”. The paper concludes that, given that the ASB essentially relies on voluntary compliance, it responded to the rhetoric of key allies in the standard-setting process in order to maintain its position as an obligatory passage point and so retain support for its project to reform accounting.

This paper examines the role and status of Network Rail, a very significant example of New Labour’s attempt to operationalize the ‘third way’. A number of significant changes have occurred since its creation which make Network Rail’s position as a private company with private sector debt appear increasingly anomalous. These changes include: the reclassification of the debt of another rail company from private to public, and the introduction of ‘imputed debt’ into public sector debt measurement; new funding arrangements for Network Rail which make it heavily dependent on public support; and important rail regulatory policy changes. The paper demonstrates that Network Rail is a very expensive mechanism for channelling public money to private companies, and argues that the Labour Government’s attempt to maintain the company’s private sector status as part of its third way approach is ultimately untenable.

The paper examines the brief and unsuccessful career of the privately-owned infrastructure company, Railtrack, and its part in the privatised railway system in the UK between 1996 and 2001. It discusses the decision of the British government to discontinue public support for Railtrack and to set up a new not-for-profit company, Network Rail, to replace it. The ongoing public debate over these events and the prospects for the new company are analysed. Two earlier, and broadly successful, examples of not-for-profit companies in British transport history, are briefly considered for comparative purposes - the Port of London Authority and the London Passenger Transport Board.

This paper examines the regulation of privatised industries, especially the railways. It focuses on the regulation of the infrastructure company, Railtrack, which collapsed into insolvency less than six years after its flotation. It analyses in detail the establishment of a key interface in the railway system, the track access charges, and discusses the extent to which Railtrack's collapse was a failure of regulation. The paper concludes that the key problem was not the regulatory system, but the fundamentally flawed concept of the rail privatisation, and discusses the implications for the success of privatisation and of Railtrack's successor, Network Rail.