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Rail sector contributes billions to UK economy

The size and value of the rail industry to the UK economy are detailed for the first time in a report published today by the Rail Delivery Group (RDG).

The report highlights the importance of the rail industry to UK plc, showing how:

  • The railway and its supply chain have an economic footprint of £9.3bn, employ 212,000 people and pay £3.9bn a year in tax, offsetting nearly all of the £4bn the industry receives from government
  •  Rail services increase the output of the rest of the economy by as much as £10.2bn a year—equivalent to £386 for every household in Britain—mainly by reducing road congestion and increasing productivity
  • Travel by rail reduces carbon emissions by up to 7.4m tonnes annually and prevents as many as 950 serious and fatal accidents per year

The report also finds that passenger rail services performed with markedly more resilience during the most recent economic downturn than in previous recessions; passenger numbers increased by 5% while the economy shrunk by approximately 6%, while in previous recessions rail journeys dipped further than GDP or effectively stopped growing.

Between 2006 and 2010, rail journeys in the UK increased faster than in France, Italy, Germany and Switzerland even though the decline in GDP here was greater than all of those countries except Italy.

Oxera estimates further that the way rail services are operated in the UK, a partnership between the public and private sectors, could have benefited the economy by as much as £7.2bn in 2013. As well as encouraging more growth in volumes of rail freight, it may have generated additional growth in passenger journeys of between 0.5% and 1.5% per year since the mid 1990s.

Commenting on the report, Michael Roberts, director general of the RDG, which brings together Network Rail and passenger and freight operators, said:

“We have the best railway in Europe. Now we know how important the railway and its supply chain are to every household in the country, creating employment, paying taxes and increasing economic output.

Like the UK, other European countries have invested heavily in their railways but none has come close to matching our industry’s success because they do not benefit from the winning combination of private sector innovation and government investment.

Even though our economy shrunk more than many on the continent, our railway defied previous recessions and grew, maintaining a key public service during the worst downturn in decades. Our railway has been transformed in the last 15 years into the best in Europe, and our aim is to make it even better for passengers and businesses.”

The report includes the following infographic, which summarises the contribution of rail to the UK economy.

The full report is available to download here.