Key Note estimates that the income generated by domestic rail transport increased by 1.4 percent to reach nearly £4.6bn in 2000/2001, despite the drop in demand following the restrictions put on the networks following the Hatfield train disaster in October 2000. The two main sectors of the UK rail travel market are the national rail network, and the light rail and underground networks. This report also discusses the international rail network (Eurotunnel Shuttle/Eurostar). Overall, the market demand for rail travel in the UK was in long-term decline until the middle of the 1990s. Since then, market demand has increased and rail travel has increased its share of the passenger transport industry. The national rail network and the London Underground account for almost all the expenditure on rail travel in the UK. In the past 5 years, revenues generated by the national rail network have grown at a faster rate than those of the London Underground, while the importance of light rail and underground systems are growing in importance.

The national system was completely privatised by 1997, with 25
train-operating companies (TOCs) providing passenger services, on an infrastructure owned and maintained by Railtrack PLC. Since the privatisation of the national rail network, the demand for rail travel has increased, although the demand was severely affected by the conditions imposed following the Hatfield train accident in October 2000. Nevertheless, passenger demand still increased for the 2000/2001 year as a whole, while the performance of the national rail network deteriorated severely. In 1999/2000, the Strategic Rail Authority (SRA) was a net contributor to TOCs with incentives for reaching performance criteria. In 2000/2001, the SRA was a net benefactor with penalties from TOCs that had failed to reach performance targets. Only two of the 25 TOCs improved against the SRA's new Public Performance Measure (PPM) in 2000/2001.

When the national rail network was privatised, 11 companies owned the 25 franchises. The National Express Group was the most successful franchise bidder and was awarded five franchises. Since then, National Express has acquired Prism Rail, which was awarded four franchises, making it the largest train operator in the UK.

In 2000, the Government launched its 10-year plan for transport, which was underpinned by the Transport Act 2000. One of the main aims of the plan is to increase the use of public transport. The Government's targets are to increase the number of light rail journeys by 100 percent in the UK, between 2000 and 2010, and the national rail target is to increase the number of passengers' kilometres by 50 percent in the UK by 2010.