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LIST OF TABLES
LIST OF DIAGRAMS
1. UK Capital Investment In The Railways, By Sector, 1999
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The privatisation of the UK railway industry was fully completed in February 1997. The privatisation was facilitated by the Railways Act 1993, which enabled the existing British Rail businesses to be transferred to the private sector in order to increase investment and competition in the UK rail network.
Following the privatisation of the UK railway industry, the former British Rail services businesses were divided into 25 train operating companies. In 1994 British Rail's infrastructure services became the responsibility of Railtrack and the remaining British Rail businesses were transferred to individual private sector companies.
The privatisation of the UK railway industry, as intended, has led to a significant increase in the level of capital investment in the UK railways. MSI estimate that total capital investment has increased by some 36 percent, since the privatisation was fully completed in 1997, despite a 4 percent decline in 1999. Capital investment in the UK railways was estimated to have amounted to £3.64 billion (euro5.64 billion) in 1999.
As a consequence of privatisation, franchise agreements were created by The Office of Passengers Rail Franchise, which has since changed to the shadow Strategic Rail Authority. The shadow Strategic Rail Authority is responsible for maintaining high levels of investment in the UK railway industry and has done so by creating franchise agreements for the train operating companies and Railtrack. Under the franchise agreements, the train operating companies are committed to carry out work to enhance and improve the overall standard of the UK rail network. Trade sources report that the franchise agreements have been a significant factor in stimulating capital investment in the UK railways.
The content of the franchise agreements has a direct impact on the level of investment in the UK railways. MSI have identified a number of additional factors, which affect investment in the rail network. These include:
Total capital expenditure by the UK railway industry is expected to decrease significantly in 2000, before investment is stimulated by the re-negotiated franchise agreements. Indeed, the process for re-negotiation will be on-going. However, once the first franchise agreements are re-awarded there will be a significant increase in investment. This will be due to the higher demands and commitments that are expected to be met by the franchises as part of the franchise agreements in order to meet the rail industry's objective of increasing investment in the UK railways.
MSI believe that the UK market for rail maintenance and service increased during the review period. Indeed, it is estimated that the total value of the UK rail maintenance and service market rose by 11 percent between 1995 and 1999. MSI believe that rolling stock maintenance accounted for some 46 percent of the total UK maintenance and service market during 1999. The remaining 54 percent was accounted for by infrastructure maintenance work.
MSI forecast that the UK market for maintenance and service will marginally increase during the forecast period. The marginal increase in the value of the market will be largely attributable to the increasing emphasis that the industry is placing on critical asset management and the use of higher quality parts and equipment.
As a result of an increase in the level of capital investment in the UK railway industry, UK production of railway and tramway vehicles and equipment has been stimulated. Trade sources report that the increase in UK production of railway and tramway vehicles and equipment reflects the high levels of domestic demand in the UK railway sector, since the privatisation of the industry.
MSI believe that there has been a significant increase in the level of imports of UK railway and tramway vehicles and equipment since 1997. As a reflection of the increase in the level of capital investment by the UK railway industry, MSI estimate that the level of UK imports of railway and tramway and equipment increased by some 96 percent during 1999.
Text © 2000 MSI
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Last updated by Paul Tucker 6th September 2000