Bringing the benefits of rail to the wider economy

Passenger rail in Britain has boomed since privatisation as train companies have worked with the rest of the industry to improve services for passengers and attract ever greater numbers of people to the network.

People have returned to the railways in numbers not seen since the Second World War, with journeys increasing by 60% since 1996. Customer satisfaction, as measured by the independent watchdog Passenger Focus, is at record levels, with four out of five people happy with the service that they receive. Punctuality also continues to rise to historically high levels – more than nine out of ten trains arrive at their destination on time.

After seeing passenger numbers dip briefly during the recession, rail travel has bounced back strongly in the last six months, with passenger numbers growing strongly as demand has returned to pre recession levels.

The railways remain integral to Britain’s future as a modern, green economy. These are tough times however, not just in the UK, but throughout Europe. I would like to consider a little more closely the role that the railways will have in the coming years as Britain seeks to emerge from recession.

A recent report by a British think tank, published by the Centre for Cities and supported by ATOC, shed some light on the issue. It examined the role that the railways will play in the coming years in linking people to jobs and strengthening local economies and many of its findings will be equally as relevant to the rest of Europe as they are to Britain.

The report highlights that it is not just rail passengers that benefit from an effectively functioning rail network. As a general rule, the better a city or town is connected both externally and internally, the more able it is to take advantage of economic opportunities. This is because a healthy transport infrastructure connects people to jobs, drives competition and productivity and supports interaction between businesses.

The wider economic benefits of rail investment break down into a number of areas:

For businesses, properly functioning transport connections give access to a wider pool of possible suppliers and customers and to a wider labour market. By exposing companies to greater economic activity and more competition, better transport encourages them to become more-and-more productive.

For people, better transport widens the access they have to economic opportunities, such as shops, theatres or restaurants. A wider choice of jobs also means that people have a greater chance of finding the best job for them, which can often mean better wages. Added to this, more productive businesses can often offer higher wages.

Cities and towns become better connected to each other and their wider outlying economies, helping them to play to their strengths while drawing upon complementary industries in surrounding cities.

However, as the British and European economies continue to deal with tough economic times, the importance of rail will continue to become even more significant. Transport and, in particular, the rail network, can play a significant part in helping to facilitate more economic activity.

Britain faces the prospect of economic rebalancing. The Government has made it clear that the economy needs to be more reliant on the private and less on the public sectors for its growth. As Britain returns to a sustainable growth path, comparative advantage will increasingly be focused on knowledge intensive production and services – such as business and professional services, digital industries, media, and advanced manufacturing.

The reality is that that cities and towns across the country differ in their ability to generate more private sector jobs. With the prospect that the public sector in the UK will shrink in the coming years and the jobs market evolve significantly, effective rail links between cities and towns will form an important part of the new Government’s plans to rebalance the economy – by linking people to jobs.

As we enter into a period of austerity, we need to focus limited funding on improvements which will bring the biggest benefits to passengers, taxpayers and the wider economy.