Taxpayers likely to shore up cost of new rail investment

Claims that rail investment can be funded through higher
 fare revenues and efficiency gains should be treated with scepticism.

Commenting on today's government announcement of a new £9 billion rail investment, Dr. Richard Wellings, Head of Transport at the Institute of Economic Affairs, said:





“The government's main priority should be phasing out taxpayer subsidies 
to the railways rather than investing in additional loss-making 
projects. Indeed, claims that the schemes can be funded through higher
 fare revenues and efficiency gains should be treated with scepticism. In
 reality taxpayers are likely to end up paying a significant share of the 
costs. This is particularly objectionable given that rail travellers are
 on average wealthier than the general population.


 


“In addition, it would seem that many of the projects are motivated by 
politics rather than economics, representing attempts to gain political 
favour in particular regions. If economic objectives were the priority,
 the government would be investing the money in road schemes, which
 generally produce far greater economic returns.”