ABSTRACT
This chapter describes the economics of the railways, particularly to explain the nature and origins of this financial situation. It considers the railway cost structure and discusses demand for rail transport and the ways in which railway commercial freedom in meeting this demand has been constrained by government regulations. The chapter discusses the policy responses which British Road has made to their situation and of present policy issues of greatest concern. The railways have a long tradition of price controls in recognition of their role as monopoly providers of many services. The central aim of the 1968 Act was to put the railways on their feet again. The change of government in February 1974 has had little impact on railway policy. The conclusion stems from the observation that many of the railways' costs track and signalling, terminals, administration, and even some operating costs in the short run are fixed.
