Gerald Corbett speaks!

[quantinghome]

The latest in unsolicited advice from everyone's favourite Railtrack CEO...

’I think a reintegrated railway is a good thing, but I think eventually the old problems of reporting to a minister and being subject to the Treasury’s annual cash controls and running it as a public service will slowly re-emerge, and I think that parts of it will be reprivatised, but in a different way, and I look towards the creation of a privatised, integrated railway, maybe along the lines of the Big Four before 1948.’

https://www.railnews.co.uk/news/2026/02/27-former-railtrack-chief-predicts-eventual.html

Unfortunately he fundamentally misunderstands railway economics. There is likely no profitable core to UK railways (or if there is it's extremely small) which would enable a private company to run on a truly commercial basis. It is permanently reliant on government cash so the sort of interference he fears is inevitable, and has been a feature of the railways throughout the 'privatised' era.

 

[Tetchytyke]

The history of the railways is that, ultimately, they aren't profitable.

I know the two wars distorted things, but the Big Four were formed because the smaller companies couldn't afford to maintain what they had. The Big Four were privatised because they, in turn, couldn't afford to maintain what they had.

There isn't any privatised TOC which has ever generated a net profit to the Treasury, once you factor in the subsidies towards the cost of the infrastructure.

 

[The exile]

The history of the railways is that, ultimately, they aren't profitable.

Or possibly that they don’t fall into the “simple” pattern of profit and loss (any more than health or social care does). A simple railway from A to B might “make a loss” of £10million per annum on a basic “fare box income less costs” basis - dealing with the consequences of it not being there might well cost way more per year than that £10 million.

 

[35B]

The latest in unsolicited advice from everyone's favourite Railtrack CEO...



https://www.railnews.co.uk/news/2026/02/27-former-railtrack-chief-predicts-eventual.html

Unfortunately he fundamentally misunderstands railway economics. There is likely no profitable core to UK railways (or if there is it's extremely small) which would enable a private company to run on a truly commercial basis. It is permanently reliant on government cash so the sort of interference he fears is inevitable, and has been a feature of the railways throughout the 'privatised' era.

And was before nationalisation.

The interesting point is that he's actually right - the conflation between "nationalised" and "politically controlled" undermines the railways consistently

 

[quantinghome]

Or possibly that they don’t fall into the “simple” pattern of profit and loss (any more than health or social care does). A simple railway from A to B might “make a loss” of £10million per annum on a basic “fare box income less costs” basis - dealing with the consequences of it not being there might well cost way more per year than that £10 million.

I agree. But 100 years ago the railways WERE commercially profitable purely from the fare-box (or more specifically freight). US freight railways still are. Basically passenger railways are unprofitable pretty much everywhere, but are necessary for the reason you give. British Railways stopped being net profitable sometime in the late 50s / early 60s as they lost their freight business to road haulage. But some people are still convinced that this was due to BR being nationalised and that there is a profitable core if it was run with commercial 'savvy'.

 

[CMS1]

Also, there's an argument that fully privatised railways (own/manage track and trains) but with some statutory service requirements and a subsidy to keep them in business due to their essentiality to the country (not subsidising losses regardless, but a sensible fixed subsidy) would work well. After all political interference & turmoil is a major hinderence (and sometimes worse) to the railways.

 

[3141]

Also, there's an argument that fully privatised railways (own/manage track and trains) but with some statutory service requirements and a subsidy to keep them in business due to their essentiality to the country (not subsidising losses regardless, but a sensible fixed subsidy) would work well. After all political interference & turmoil is a major hinderence (and sometimes worse) to the railways.

It's necessary not just to "own/manage track and trains" but to carry out renewals and replacements at intervals. In addition, travel patterns change (e.g.as a result of new industrial or housing developments), and as a result new railway lines, or substantial improvements to existing ones, may be required. Means have to be found to pay for those, and a "subsidy" is unlikely to be the answer.

 

[Pegpilot]

And there's the rub, 3141.

I was part of ORR's consultancy support team WAY back in 2000 working on the RP2 regulatory cost review. I remember that Railtrack's management had essentially concluded that signalling renewals were not financially justifiable, and we were underwhelmed at Railtrack's proposed volume of track renewals (combined with their scant knowledge of asset condition, and we know how that turned out), Project Destiny, IIRC.

So I'll take Mr Corbett's observations with a pinch of salt. His team was spectacularly apathetic towards long term asset condition and performance. And we, the taxpayers, ended up playing catchup for years. Incidentally, the in joke was that with Gerald Corbett as regulatee (if that's a word) and Tom Winsor as Regulator, we had the Tom and Gerry show...

 

[styles]

Presumably someone, somewhere, attempts to calculate the indirect costs and returns of having a modern railway system though.

I mean sure you're never going to recover all your costs from fares and advertising revenue. But society benefits from lower GhG emissions, air quality, faster journeys, connected communities, tourism, productivity, etc. I would expect most rail, even egregious over spends such as on HS2, to deliver long term net benefits for the economy.

 

[Harpo]

the conflation between "nationalised" and "politically controlled" undermines the railways consistently

If only that interference was consistent!

DfT has swung between holistic industry funding (of sorts) to emasculation of highly competent industry leaders through micro-management.

The IET saga provides a sobering review of how DfT’s egregious self-confidence impacts the industry and Covid gave DfT the keys to everything down to the pencil cupboard.

With a re-aligning Labour government (supposedly) setting the GBR framework, I can’t see them giving much scope to privateers. That will doubtless delight the 300 financial control freaks being parachuted from the civil service to GBR as it will still be ‘taxpayers money’.

 

[Magdalia]

I remember that Railtrack's management had essentially concluded that signalling renewals were not financially justifiable, and we were underwhelmed at Railtrack's proposed volume of track renewals (combined with their scant knowledge of asset condition, and we know how that turned out), Project Destiny, IIRC.

So I'll take Mr Corbett's observations with a pinch of salt. His team was spectacularly apathetic towards long term asset condition and performance. And we, the taxpayers, ended up playing catchup for years.

To see how this might have played out long term, exhibit A is the water industry.