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Discuss whether the privatisation of British Rail has been successful. Evaluate whether the new structure is likely to be a more effective and efficient way if managing a national rail network.

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Introduction

Elizabeth Wood Discuss whether the privatisation of British Rail has been successful. Evaluate whether the new structure is likely to be a more effective and efficient way if managing a national rail network. [40] Privatisation was developed by Mrs. Thatcher's government as a way to re-introduce the profit motive to many of the industries that had been nationalised in the past. The poor performance of the nationalised industries meant that they were a heavy drain on the public finances. The government were looking for a way to restore the profit motive and make them more efficient. Privatisation - returning the companies to the private sector - was the method that was developed. As with many of the later privatisations, British Rail was privatised in a way, which separated the natural monopoly from the potentially competitive parts of the industry. The track and signalling are unavoidable monopoly that has been privatised as a separate company known as Rail Track. This company was heavily regulated to prevent it exploiting its market position. The operation of rail services on the monopoly track can be arranged in a more competitive way. ...read more.

Middle

British Rail's privatisation was ultimately a failure, demonstrated by the collapse of Railtrack. There was hope of improved customer service and opening the market up to competition. The collapse of Railtrack was not only a disappointment to the government, but also brought immense embarrassment. As for the shareholders of Railtrack, the announcement of it being put into administration was a tragedy after the faith and financial backing they had all placed in the company, bearing a huge financial loss to many. Now it is openly acknowledged that the fragmentation of the industry into a myriad of contractors all attempting to maximise shareholder value would inevitably create an incentive structure in which the name of the game was to pass the buck, cut costs indiscriminately and take risks with safety and service. The initial structure of the privatized British Rail was for Railtrack to take over British Rail's infrastructure; i.e. the track, signaling, the stations and extensive land and property assets. It is responsible for the operating timetable, and determines charges for train operating companies and raises capital for future investment. Twenty-five Train operating companies (TOCs) ...read more.

Conclusion

This is an opportunity to improve the control and management of the railways.. Any moves towards giving the regions an opportunity to direct their own destiny would be strengthened by greater transport powers. The transport secretary's proposals for speeding up planning are also expected to enhance regional power. The reform of the railways could democratize railways while, at the same time, improving them. The method by which the rail industry was fragmented made it difficult for Railtrack to be a success. It was inefficient, monolithic and hidebound by tradition. The skeleton of the advanced passenger train at Crewe is a monument to the problems that the public sector had in introducing new technology. British Rail's culture stifled the good management potential that was locked inside. Standards of service have yet to return to pre-Hatfield levels. However, an improvement in the efficiency of the railways is sure to occur due to a company being limited by guarantee but with public-interest objectives and no shareholders, allowing the rail industry to go forward removing dome of the inbuilt contradictions that have trapped it until now. Yet the main driving forces - increasing use of the railways, economic growth, rising road traffic congestion and regulated fares - remain in place. With step-by-step reform, the long-term prospects for Britain's railways are bright. ...read more.

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