Transport Papers

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    Privatizing British Railways : Are There Lessons for the World Bank and its Borrowers?
    (World Bank, Washington, DC, 2004-09) Thompson, Louis S.
    The privatization of British Railways (BR) has been deeply controversial. Having concluded that the old BR had run out of financial and managerial steam, the Conservative Government of John Major embarked in 1992 on a radical reform program involving the breakup of the formerly unitary system into over a hundred parts and their subsequent privatization. The Bank's railway borrowers often react to the British experience (and the similar policies in the European Union requiring infrastructure separation) by arguing either that the situation in the U.K. was so particular that it has little application anywhere else, or by asserting that the U.K experience was a "failure" and should be ignored: this report argues that neither assertion is true. Though the assertions are convenient, governments cannot ignore their railways for all the reasons outlined in a long series of World Bank reports on railway restructuring. Aside from the sheer financial and economic burden of an inefficient railway, the non-market benefits of rail services in urban transport, in relieving highway congestion and pollution management, and in accident reduction, mandate government intervention if they are to be maximized. Accepting the specifics of the U.K. conditions, and with the acknowledged benefit of hindsight, this report aims to draw some useful conclusions. In short, both restructuring and private sector involvement remain viable options; but, neither is a panacea and implementing either requires care.