It is sometimes suggested in libertarian circles that without the state, free enterprise would cut costs, improve services, raise revenue and the entire network would be able to operate without subsidy. Now, while I am quite happy to believe that free enterprise would do most of these things, I don’t think it would be able to do the last one. Large parts of the UK network could not exist without subsidy.

I believe this because:

• when the issue of cutbacks was last seriously gone into in the early 1980s (in the Serpell Report) the authors came to the view that the only lines that could be self-financing were the main inter-city lines and the London and South East commuter routes
• when British Rail was privatised and rail services were franchised out the lion’s share of the subsidy went to the regional franchises eg. ScotRail, Northern etc
• none of the regional railway franchises ever came close to being able to operate subsidy free. Indeed, if memory serves none of them even managed to keep within their original subsidy profiles. Almost all of them had to be bailed out
• even in those parts of the world eg Japan where private companies dominate, lines from time to time have to be closed down. Incidentally, Japan’s equivalent of regional railways (the Third Sector, as it is known) is heavily subsidised.

That railways should be loss makers away from the main cities is no great surprise. Railways need density. They need lots of people whose journeys start from near point A and end near point B. Why, this is I am not quite sure, but it seems to be an almost universal rule.

So, you’re in favour of subsidy then?

Not quite.

Nothing yet but you never know...