Taking the strain

Taking the strain

Risk-sharing in UK rail franchising

The current rail franchise system in the UK has protected many franchisees from falling revenues during the recession, but at considerable cost to the taxpayer, and also blunting the franchisees’ incentive to invest. The new Government has ordered a further review over the summer, postponing three imminent rail franchise competitions until late 2010.

Drawing on Frontier’s experience of designing incentive mechanisms in transport and other regulated industries, this bulletin examines the issues the review must address, and how it may give pointers to how other public-private partnerships may develop.

 

Taking the strain