ABSTRACT
This chapter discusses the reasons why it may be desirable to subsidise loss-making passenger services. We then review the cost-benefit studies that have been made of rail services, and revise their results to make them comparable with each other. This exercise enables people to estimate the social benefits per passenger mile, for the services considered, which are then used as a broad guide to the likely benefits which will result from the subsidisation of other grant-aided services. The benefits per passenger mile are compared with figures of cost per passenger mile, service by service, in order to identify those services which seem unlikely to be able to generate social benefits sufficient to cover the avoidable costs of operating them. Finally, the chapter suggests desirable changes in methods of pricing the use of roads, and outlines the effects of these changes on the pricing and subsidisation of rail services.
