New Labour, Network Rail and
the third way
Kent Business School, University of Kent, Canterbury, UK
Purpose – The paper aims to examine the role, funding and status of Network Rail, a very signiﬁcant
example of New Labour’s attempt to operationalise the “third way”. The analysis of Network Rail is
used to critique the “third way” approach to policy-making in Britain.
Design/methodology/approach – The paper examines Network Rail, and the signiﬁcant changes
that have occurred since its creation, in the context of the claims originally made for the company by
Transport Secretary Byers. It employs critical ﬁnancial analysis and non-ﬁnancial performance
indicators to examine the “third way” approach to rail privatisation, drawing on the work of its leading
supporter in the UK, Giddens, and its leading critic, Callinicos.
Findings – The paper demonstrates that Network Rail is an expensive mechanism for channelling
public money to private companies. It argues that the “third way” is really a smoke screen for the
neo-liberal ideology, behind which there is a continuing transfer of wealth from taxpayers to the
Research limitations/implications – The paper focuses on one signiﬁcant example of the “third
way” approach to policy making. It demonstrates the strength of the neo-liberal ideology, particularly
the belief in the value of privatisation, in the UK.
Practical implications – The ﬁndings of the paper have implications for public policy and for those
affected by rail privatisation, including employees, passengers and taxpayers.
Originality/value – Researchers and practitioners working in the area of public sector management
and reforms should ﬁnd the paper of value.
Keywords Railways, Privatization, United Kingdom, Political philosophy, Public policy
Paper type Research paper
The Conservative governments in the UK in the 1980s introduced on an incremental
basis an extensive privatisation programme. Assets of public utilities such as gas,
water and electricity were sold through share ﬂotations. Early debate on privatisation
was dominated by economic arguments about the superior efﬁciency of the private
sector and the importance of market disciplines (Flemming and Mayer, 1997, p. 4;
Goodman and Loveman, 1991, p. 460; Letza and Smallman, 2001, p. 66; Ogden, 1997,
pp. 529-530; Shaoul, 1997, p. 480). Later justiﬁcations focused on the importance of
privatisation in reducing the role of government and, in particular, in limiting public
sector borrowing (Letza and Smallman, 2001, p. 66; Ogden, 1997, pp. 529-530; Shaoul,
1997, p. 480). While economic models and efﬁciency arguments were used to legitimise
privatisations, the underlying purpose in each case was to beneﬁt British capitalism by
transferring “wealth from the public at large to a relatively few individuals and
The current issue and full text archive of this journal is available at
The author would like to thank the anonymous reviewers for their helpful comments, and Lee
Parker for his editorial guidance.
Network Rail and
the third way
Received 7 January 2008
Revised 16 May 2008
Accepted 8 October 2008
Accounting, Auditing &
Vol. 22 No. 5, 2009
q Emerald Group Publishing Limited