A Presentation on

BRITISH RAILWAYS

MCM:614- INFRASTRUCTURE DEVELOPMENT PROJECTS

UNDER GUIDANCE OF :
PROF. D. ROY

SUBMITTED BY-
JACKSON CHRISTIAN (G04108)
DEEPAK KUMAR (G04110)
SAPTARSHI GHOSH (G04113)
ROHAN KAPLE (G04117)
HIREN PATEL (G04130)
KEYUR PATIDAR (GO4134)
KUNDAN RATHOD (G04138)
 Overview
• In Britain, practically all the capital for
railway construction came from private
sources, overwhelmingly from
individuals. This was unlike everyplace
else in the world (including the U.S.),
where governments were heavily
involved in financing the construction of
this infrastructure.

• By the end of 1850, British investors had

put about £250 million into their
country’s railways, almost half of their
GDP, equivalent to about $7 trillion for
the United States today.
• A few years after the Railway Mania
had wound down, Britain got
involved in the Crimean War of
1853–1856. Its cost to Britain is
estimated at about £70 million,
about what British investors had lost
on railways.

• The size of the British Army during

this war reached about 250
thousand, twice its more normal
strength in the 1840s. That was just
about the size of the labor force
constructing railways in 1847 (when
there were also another 50 thousand
workers on railways in service)
 Status
• 15,795 kilometres of track that connect most towns of any size
in mainland Britain.

• London is the hub of the rail network where there are 14

‘terminals, from which the principal lines that link London
with other parts of Great Britain run.

• There are also a lot of ‘metro’ systems such as the Newcastle

Metro, Glasgow Underground and Docklands Light Railway
(DLR) in London, and modern tram systems such as those in
Sheffield, Manchester, Birmingham, Croydon and
Nottingham.
• Northern Ireland has its own rail
system – Northern Ireland
Railways (NIR) has four main
routes, radiating from Belfast
which serve a number of major
cities and towns and some
coastal regions.

• Finally, there is the Eurostar

(passenger only) and Eurotunnel
(vehicle with passenger) services
through the Channel Tunnel.
Eurostar services operate from
London St Pancras International
and Ashford International
stations to Paris, Lille, Brussels
and other destinations.
 UK Rail – Facts & Figures
The UK rail network is the fastest growing railway in Europe, with passenger
growth in excess of 50% since the franchise network was completed in 1997
 15,795 route kilometers
An Extensive and Accessible  2,500 stations
Railway Network  44% of population live within 25 minutes walk of a station

 1.27 billion passengers in 2008/09

Passenger Demand at
Post-War Record Levels
 3.5 million passengers per day in 2008/09
 20,000 trains per day
 50+% growth in journeys since 1997/98
 104 million long-distance rail journeys made in 2007/08 vs 25
million domestic air journeys

 £5 billion invested in new rolling stock since 1996

Massive Investment &  Average age of fleet less than 15 years
Improvement Programmes  More than £30 billion invested in infrastructure since 1995/96

 Passenger rail contributes 0.5% of total UK CO 2 emissions

Low Environmental Impact (vs 13.4% for road passenger transport)
 Average CO2 emissions per passenger mile significantly
lower than those for short-haul air, car and bus transport
 Timeline
• Until 1992
– A public system with British Rail, the public, monopolistic rail operator since
1948

• In 1993, promulgation of the Railways Act

– Privatisation of British Rail set in motion by John Major's Conservative
government
– Re-organisation of the rail network :
 the establishment of a single infrastructure management company
(Railtrack, subsequently Network Rail) in 1994; and
 the letting of 24 regional train operating franchises of varying durations
from 1996 onwards to service the passenger market.

• The franchise network was completed in 1997 :

– The franchise network was completed in 1997. Franchises are subject to review
and re-award after a defined number of years, which differs across franchises.
Transitional Page
 Your Topic Goes Here
• Your subtopics go here
 Key Events
• From 1948 to 1997, British Rail was solely responsible for the state railways of
Britain, transforming a collection of exhausted, post-war steam operators into the
modern network we know today. 
• The history of British Rail is the story of post-war rail travel in the UK. British
Railways, known from the 1960s simply as British Rail, operated most of Britain’s
trains from 1948 to 1997. Formed from the nationalisation of the "Big Four" UK
railway companies – LNER, LMS, GWR and SR – BR became an independent
statutory corporation in 1962 (the British Railways Board) and oversaw the
transformation of the UK rail network until its privatisation in the 1990s.
 Key Events
• Nationalisation to Rationalisation
The decades after nationalisation in 1948 brought wholesale change to the
national railway network, as governments committed to the elimination of
steam traction in favour of diesel and electric power. Over time, with the
growth of the road haulage sector, passengers replaced freight (especially
coal transport) as the railways’ main source of income, and, as
rationalisation took hold in the 1960s, one third of the pre-1948 network
was closed.

• High Speed
In the 1970s, British Rail began investing in High Speed Trains and by
1990 both main coastal express routes, the East and West Coast Main Lines
had been electrified between London and central Scotland.
 Key Events
• 1955 Modernisation Plan
The report latterly known as the "Modernisation Plan" was published in
December 1954. In 1955 the programme (costing £1.2 billion) was authorised
by the government. It was intended to bring the railway system into the 20th
century.   The aim was to increase speed, reliability, safety, and line capacity
through a series of measures that would make services more attractive to
passengers and freight operators, thus recovering traffic lost to the roads.
Important areas included:

• Electrification of principal main lines, in the Eastern Region, Kent,

Birmingham and Central Scotland
• Large-scale dieselisation to replace steam locomotives
• New passenger and freight rolling stock
• Resignalling and track renewal
• Closure of a small number of lines unnecessary in a nationalised network, as
they duplicated other lines
 Key Events
• The Beeching Report
Following a 1950s modernisation plan designed to take Britain’s railways from the
19th to the 20th century, Doctor Richard Beeching’s 1963 report, ‘The Reshaping
of British Railways’, recommended the closure of a third of passenger services and
more than 4000 of the 7000 stations.

• Privatisation
In 1982, British Rail passenger services were split into three core sectors: InterCity,
NetworkSouthEast and Regional Railways. Then, between 1994 and 1997, British
Rail was privatised, as track and infrastructure passed to Railtrack in 1994 and,
later, passenger services were franchised in 25 blocks to private-sector operators.
Freight services were sold outright. Overall, ownership and operation of the
network became highly fragmented, as operations were split between more than
100 companies.
• Legacy: The BR Logo
The famous British Rail ‘double arrow’ logo, formed of two white arrows on a red
background, lives on to this day on street signs and railway tickets.
 Train Operating Companies
• 24 train companies that serve the length and breadth of the UK

• The TOCs operate under a license

• There are divided in 3 categories :

– 9 TOC operate long distance traffic
– 6 TOC operate regional traffic
– 9 TOC operate London & Southeast traffic
Long Distance Traffic
Regional Traffic
London & Southeast Traffic
 Services
• Train Companies run many different types of
trains across the rail network, offering a range
of facilities.
• All trains are totally non-smoking and offer
standard seating.
• Some trains offer additional facilities such as:
– First Class seating
– Catering
– Seat reservations
• 1st class Anytime tickets provide access to
Lounges.
• WiFi and power points for laptops and mobile
phone chargers are available on some trains.
• Modern trains are equipped with visual
information displays and automatic
announcements are made to keep you informed
throughout your journey.
 Station Facilites
• Station facilities in the UK vary but below are a range of facilities that can
be found at many of the major terminals:
– Pay Phone Tourist Information Office
– ATM Bureau de Change
– Shops Public WiFi
– Trolleys Showers
– First Class Lounge Waiting Rooms
– Baby Changing Wheelchair-accessible Toilets
– Toilets Seating Area
– Information kiosk Help Point
– Customer Information System Web Kiosk
 UK Rail Organisation
The Railway Act establish a new regulatory framework to oversee the
activities of and relationships between the various stakeholders

Department for Transport

Passenger funding
Focus

Also: Passenger Transport Executives,

Welsh Assembly, Transport Scotland,
Transport for London

Franchise
Office of High Level
Agreements Rail Output
Regulation Statement

Track Access Network

TOCs Agreement
Rail

ATOC
 UK Railway Organization
• Office of Rail Regulation (ORR) :
– Regulates Network Rail’s stewardship of the network
– Licenses the operators of railway assets and approves agreements and
charges for access to the network
– Following the enactment of the Railways Act 2005, ORR has also
taken over the safety regulation role of the industry
• Network Rail :
– Owns, maintains and develops the railway infrastructure, including its
track, signaling, electrification equipment and structures
(bridges/tunnels/level crossings)
– Successor organisation to original infrastructure manager, Railtrack
• Train Operating Companies (TOCs) :
– Manage the provision of day-to-day train services and champion
passengers’ interests
– They provide and run train services and the majority of railway stations
 ATOC
• ATOC
– It stands for “Association of Train Operating Companies”
– It’s an unincorporated association owned by its members, set up in
1994 by the Train Operating Companies (TOC) formed during
privatization of the railways under the Railways Act 1993.
– It’s a body which represents around 24 train operating companies that
provide passenger railway services on the privatized British railway
system

• As the “official voice of the passenger rail industry”, ATOC

– Coordinates of joint activities for its members (TOCs)
– Manages & promotes of the National Rail brand
– Provides support services to travel agents
– In particular, on the international markets ATOC is in charge of the
distribution, promotion and marketing of the TOC Sales.
International Markets Specificities
• Until 2009 the only British product line to be sold on the international
market was the BritRail one, distributed by ACP :
– Britrail Passes
– BritRail OT (zoned priced)

• As of now, the domestic fare range can be sold on international markets

and Rail Europe is one of the 3 accredited distributors of this range in its
markets.

• The domestic fare range is the same as the range offered in UK (with a few
exceptions : season tickets and discounted cards) and offers much more
competitive prices.
OBJECTIVES FOR PRIVATISATION
• Official objectives were:
– Provide greater incentives
– Allow choices through competition
– Give railway managers the freedom to manage
– Set clear and enforceable quality standards
– Reflect regional or local identities
– Improve efficiency and reduce costs
• Real objective was desire to use private sector funding and to reduce
subsidies
• Labour’s threats to re-nationalise increased risks of investing and led the
Government to moderate competition
• Political necessity made privatisation itself the objective rather than the
means
UK RAIL INDUSTRY STRUCTURE,
1997
Rail Regulators
(OPRAF AND ORR)

Twenty-five
passenger
train
Three rolling stock operating
Lease Provides
companies companies
rolling access
(ROSCOS) (TOCs)
stock to
Own rolling stock run passenger network Infrastructure
trains maintenance
Provides
Services companies
Maintain
infrastructure
Provide RAILTRACK
Services Manages the
railway Provide Track renewal
infrastructure Services companies
Renew track

Heavy Provides
maintenance access Other
suppliers Provide to Provide services
Six freight
Maintain rolling Services network Services providers
operators
stock
(TOCs)
freight trains
Regulators
Players
Activities
SOME WEAKNESSES OF THE
PRIVATISATION PROGRAMME
• There was no framework for strategic planning of the industry
as a whole
• Most franchises were for only seven years, inhibiting long-term
planning and investment by operators
• Performance standards generally were based on low historic
standards and failed to look forward to the rising expectations
of passengers
• The industry structure did not anticipate the need for significant
investment to cope with sharply increased passenger and freight
traffic
• There were no proper incentives for private companies to invest
in expansion
 UNANTICIPATED DEMAND
• Railtrack sold with the expectation that rail traffic would remain
constant
• All 25 franchises forecast improving financial performance over time in
their bids
• As fares were controlled could only come through increase in traffic
• Lack of co-ordination in bid process
• Nobody did any work to see whether the aggregate of that growth could
be fitted onto the network
• In the event 21% growth in three years
 STRUCTURE OF
• Monopoly
RAILTRACK
– “Lacks Competition”
– “Unable to benchmark performance”
• Overly-regulated
– “Government intervention through the regulators”
– “Access charges distort competition, which resulted in over 90% of Railtrack’s
income coming from fixed charges, and a lack of customer focus”
• Poorly incentivised
– “Not incentivised the right way, eg Railtrack is monitored on punctuality, but as
they estimate 1% increase in the amount of trains would lead to 2.5% increase in
congestion-related delays, there is little incentive on Railtrack to ease the
congestion by adding more trains”
 FLAWED REGULATION

• Privatisation involved:
– Single regulator
– Investment funded by privatised companies

• Privatisation of rail far more complex involving

– Two “Regulators” – ORR and OPRAF and separate bodies
for safety
– Privatised infrastructure monopoly
– Privatised TOCs
– Investment funded by both private and public sector
 FLAWED REGULATION
• ORR
– created to regulate a privatised monopoly – Railtrack
– controls what Railtrack can charge TOCs
– controls what rate of return Railtrack can earn
– both determinants of what Railtrack can invest on its own account
• OPRAF
– created to manage the franchise process
• Treasury/DETR
– determines what can be invested from public purse
 FLAWED REGULATION
• Government wanted more investment in rail but one of chief investment vehicles
(ie Railtrack) was outside its direct control.
• Railtrack’s financial position damaged by ORR’s fines and threats
• If 20 year franchises agreed, TOCs effectively become long-term monopolies
which themselves require regulation
• Support for combining OPRAF and ORR
• Hatfield exposed enormous fault lines in the process of regulation
• Railtrack’s ability to raise money severely weakened – an ability which the
Government was relying on to help finance the forward investment programme
 Impact of Rail Disasters

• Southall, Ladbroke Grove, Hatfield and

Potters Bar train crashes in 2000 to 2002
• Chaos affected the rail industry at that time
• Significant numbers of people began to travel
by plane within the UK
 Conclusion
• Hence we can safely conclude that the market
in the 1840s was inefficient, grossly so,
comparably to the market at the time of the
telecom bubbles a decade ago. Investors in the
British Mania, and even the vast majority of
opponents of this bubble, did not see very
clear signs that expected revenues and profits
were not going to materialize.
• Serious planning required to achieve the right
structure for the desired future shape of the
business.
• Achieve alignment between the different parts
of the business if they are to be privatised
separately.
• To PPP or not to PPP?
ANY QUESTION ?????