Rail Policy in the European Community.

Abstract

This paper begins by considering the reasons why the rail sector has long been considered a problem in European transport policy. These concern both the degree of government intervention and subsidy, which conflicts with the aim of a free international market, and the loss of market share even in those sectors- especially international traffic - in which rail should in principle be able to compete. It explains how the economic structure of rail transport leads to a case for public monopoly provision, with regulation and subsidy, but poses the problem of reconciling this with the need for efficient operation. The history of regulation and control of the rail sector, and of past Community attempts to reform it is then briefly considered before attention is turned to latest Commission proposals on rail policy. These consist essentially of four measures. Two concern the specific need to provide a framework to encourage the development of an international network of high speed passenger and combined freight trains, and the only doubt about these rests on whether they go far enough to exploit the potential of these important and rapidly growing sectors of the rail market. A third comprises a further attempt to clarify the relationship between government and railway, with increased financial autonomy, realistic balance sheets and clearer contractual arrangements regarding subsidies and can be generally welcomed. But the greatest doubts must rest on the proposals concerning separation of the infrastructure from the operations. Whilst the rationale is superficially attractive, many reasons are cited to doubt whether it would be an efficient way of organising railway services in practice. As a way of promoting new entry in specific areas of operation, such as international freight, whilst leaving the bulk of operations in the hands of integrated companies, it has more to commend it, but even here there is reason to doubt whether the results would be better than a vigorous pursuit of joint venture operations