Despite the importance of the rail sector to the UK economy, its economic impact has not been analysed at a national level, although some studies have considered parts of the sector or parts of Great Britain.⁴ To fill this gap, the Rail Delivery Group (RDG)⁵ commissioned Oxera to provide an independent assessment of the contribution of the GB rail industry to the UK economy.

The economic contribution of the industry is split into three perspectives:

• the contribution of the industry and its supply chain, which is the employment of approximately 212,000 people, the generation of £9.3bn in GVA each year, and the provision of £3.9bn of tax revenue to the Exchequer. Importantly, the tax contribution almost exactly offsets funding provided by government to the industry;
• up to £13bn in benefits to passengers and freight users a year;
• up to £10bn worth of additional productivity in the economy, which arises through the impact of the rail industry on other sectors of the economy.

In addition to assessing the economic contribution the RDG also asked Oxera to review the performance of the sector in the recent recession relative to previous recessions and the rail sectors in other European countries, and to examine how the change in the industry model in the mid-1990s has affected its economic contribution.

The sector has performed better during the most recent recession than in previous recessions. While it is difficult to infer from the statistics that this is purely due to the change in the industry model, it seems likely that this change contributed to the improved performance.

In addition, using a set of plausible assumptions, the change in the industry model is thought to have delivered up to 345m additional passenger journeys of a total of approximately 1.6bn (or one in five journeys), and economic benefits of between £2.2bn and £7.2bn in 2013, through higher passenger and freight volumes. This increase in passenger and freight volumes can reasonably be attributed to a combination of greater stability of government funding and greater access to private capital over an extended period of time, together with incentives on passenger and freight operators to grow the market.