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The role of efficiency estimates in UK regulatory price reviews: the case of rail

Smith, A.S.J. (2004) The role of efficiency estimates in UK regulatory price reviews: the case of rail. Utilities Policy, 13 (4). pp. 294-301. ISSN 0957-1787

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Abstract

This paper reviews the methods that have been applied to assess the efficiency performance of Britain’s rail infrastructure provider since privatisation. The paper shows that a wide range of approaches has been adopted by the ORR. However, we argue that, in contrast to the other regulated sectors, the benchmarking methods developed in rail have not been sufficiently robust to restrain costs to efficient levels. We suggest that the main problem stems from a lack of external comparators based on hard data, such as international benchmarks or comparisons with previous experience under British Rail. Although the ORR obtained an external perspective through bottom-up consultant reviews, we suggest that such studies are not an adequate substitute for quantitative analysis. Looking forward we suggest that more work needs to be done to obtain a better understanding of the reasons for recent cost increases, and also to develop robust international benchmarks against which to judge Network Rail’s relative efficiency position. International comparisons are not straightforward, of course, and it is therefore important to start now, rather than wait until the next review of Network Rail’s finances, by which time it will be too late (again).

Item Type: Article
Copyright, Publisher and Additional Information: Copyright held by Elsevier Science. This version has been uploaded in accordance with their self-archiving policy.
Institution: The University of Leeds
Academic Units: The University of Leeds > Faculty of Environment (Leeds) > Institute for Transport Studies (Leeds)
Depositing User: Adrian May
Date Deposited: 15 Oct 2007 15:58
Last Modified: 06 Jun 2014 03:26
Published Version: http://dx.doi.org/10.1016/j.jup.2005.01.003
Status: Published
Publisher: Elsevier Science
Refereed: Yes
Identification Number: 10.1016/j.jup.2005.01.003
Related URLs:
URI: http://eprints.whiterose.ac.uk/id/eprint/3405

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