RDG claims rail adds £10bn to UK economy

Britain’s railways contribute £10.1bn to the UK economy every year says a new Railway Delivery Group (RDG) commissioned report. Its findings are based on research undertaken by the economists Oxera.

The rail industry (basically Network Rail plus the train and freight operating companies) generates £6.3bn in gva (greater added value) with the rail supply chain providing an additional £3.8bn (at 2014 prices).

RDG says the rail sector (the industry and the supply chain) provides employment for 216,000 people; it generates £4bn in tax receipts – £2.7bn from the industry plus £1.4bn from the supply chain.

Rail also boosts annual economic production by £11.3bn through reducing road congestion and by encouraging companies to ‘cluster together’. Rail ‘leads to a reduced number’  of serious and fatal road accidents – estimated at between  86 and 865 per year – and produces  savings of between £31m and £308m in economic, medical and social costs.

Rail also saves between 0.7 million and 7.7 million tonnes on CO2 emissions annually valued at around £40m and £460m.

GB rail fared better than its European counterparts since the 2008 recession, and this despite the UK economy suffering a greater fall in GDP than other countries; rail has also coped better – in both the passenger and freight markets – than in previous recessions.

RDG says rail’s contribution to the economy has increased by a third since the mid 1990s (when the industry was privatised and restructured). Since then, passenger journey numbers have increased by 115%; train distances by 36%; and freight tonnes per kilometre by 70%.

RDG suggests there are five main reasons for this growth:

  • Access to larger volumes of private sector capital (especially for rolling stock);
  • Establishment of five year funding periods for Network Rail (unlike the one year annual expenditure caps on state-owned BR);
  • Incentives to the train operating companies to grow the market and cut costs;
  • Greater government funding to offset costs plus revenue growth; and,
  • Availability of heavily discounted advance passenger fares.

Report author Andrew Meaney said:

“Our analysis makes use of a range of techniques to demonstrate the substantial and ongoing economic contribution made by the rail sector.

“Users of rail services are key beneficiaries but our analysis demonstrates that the sector also generates benefits to everyone else such as reduced congestion, increasing business productivity and reducing both accidents and carbon emissions.”

RDG report: What is the contribution of rail to the UK economy

682/Oct 15

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