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Semi-privatise Network Rail and scrap HS2 to save railways, think tank argues

Published 08/09/2016

A radical review of Network Rail has been urged.
A radical review of Network Rail has been urged.

Network Rail (NR) should be part privatised to reduce its burden on taxpayers, a right-wing think tank has argued.

A report by the Adam Smith Institute (ASI) claimed a number of measures are needed to strengthen the long-term future of the rail network.

NR, the public body which owns and operates Britain's railway infrastructure, has a net debt of £41.6 billion which appears on the Government's balance sheet.

The ASI urged the Government to replicate the privatisation of National Grid with an initial 49.9% sale of NR to long-term investing institutions.

It claimed the organisation is "far too unwieldy" and "unquestionably lacks the disciplines of private sector management".

The report called for the return of "vertical integration" in the rail network with smaller lines being progressively stripped from NR, and in the longer term regional railway companies emerging.

More competition between operators should be promoted, according to the institute. Fewer than 1% of passenger miles travelled in Britain are on lines where competition exists through open access concessions.

The ASI urged the Department for Transport (DfT) and the Office of Rail and Road regulator to "crack down hard on under-performing rail franchise holders", with the possibility of imposing substantial fines, the sacking of senior managers or even franchise withdrawal.

The institute also claimed the high-speed HS2 rail project - which has a budget of £55 billion based on 2015 prices - should be abandoned on the grounds of "excessive cost".

It added that a "far less grandiose" approach to investment was needed, such as focusing on the electrification of the TransPennine Railway and the Midland Mainline.

Report author Nigel Hawkins said: "Action to sort out Britain's railways is a priority. Radical decisions are needed to deliver financial competence, sensible investment and improved customer benefits into the system.

"Scrapping the shockingly expensive HS2, selling up to 49.9% of Network Rail and cracking down on under-performing franchises are priorities."

A spokeswoman for Network Rail said: " Network Rail debt is not a measure of Network Rail's performance. It is a measure of the investment that government has put into improving Britain's railway, a railway that is the fastest growing, the safest and one of the most reliable railways in Europe.

"Network Rail is not funded to pay off the debt."

A DfT spokesman said: "Action to sort out Britain's railways is clearly a priority, which is why this government is committed to investing in rail infrastructure.

"HS2 will have a transformational effect, increasing capacity and helping to rebalance the economy.

"We are also committed to electrification on routes where it will bring benefits to passengers.

"We are spending £13 billion on transport in the North by 2020, which will see passengers get more trains, more seats and more frequent rail services.

"Network Rail is undergoing a transformation to make our railways more reliable and provide better value for money."

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