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Britain’s rail experiment is set finally to roll into the buffers
If privatisation had been a roaring success, Labour would have had no difficulty in continuing with it
Labour’s plan to bring the remaining private train franchises into public ownership puts the final nail in Britain’s experiment with rail privatisation. If the party’s spin doctors had wanted to be cute with the timing, the announcement could have been brought forward a few weeks to a significant anniversary: the founding act of privatisation, the transfer of British Rail’s track, signalling and big stations to Railtrack, took place on April 1, 1994.
Three decades is long enough to judge privatisation a success or failure and is not much shorter a period than the railways were in public ownership the first time round. The four big rail companies, struggling to compete with the rapid growth of road transport and hampered by the damage done to the network during the Second World War, were nationalised in 1948 by the Attlee government. Reprivatisation was mooted several times by the Conservatives in the 1990s as a way — they believed — of reviving a flagging industry, but even Margaret Thatcher considered it a sale too far. John Major finally did it by setting up Railtrack, which was listed on the stock market in 1996, with the first train company franchises having been let a few months earlier. All that is going to be consigned to the scrapheap.
Did it work? “No,” is the short answer, if only for the reason that it is now being abandoned. If privatisation had been a roaring success, Labour under Sir Keir Starmer would have had no difficulty in continuing with it. There were some positive things about the private railway, but the whole exercise was undermined by one flaw. The architects of the sell-off chose a system that was much too complicated, with British Rail’s assets being split between myriad companies. The biggest break was between track and train; Railtrack got the former and the passenger franchise companies the latter.
Ministers and officials at that time believed it the right thing to do. The network would go into a single, tightly regulated monopoly, while train operating companies would compete for passengers. It also was in line with the prevailing mood within the European Commission, which wanted to separate track and train to help to break up protectionist national rail monopolies.
The brave new world of competition never arrived (except for some small operators) and bigger problems were created in an antagonistic relationship between train companies and Railtrack, which hampered the smooth running of the network, and the forest of contracts to try and control it. There was duplication of management and a frittering of effort on meaningless activity, such as the squabble over who was to blame — and had to pay for — delays.
It brought higher cost, confusion and hold-ups when dealing with problems. Andrew Haines, the chief executive of Network Rail, summed it up last year when he was caught up in the chaos outside Paddington after overhead lines came down. The incident took a long time to deal with, he noted at the time, because “too many individual actors [saw] risk from their own perspective, [which] meant it was harder than it should have been to get things done while maintaining safety”.
Labour’s plan to bring all the franchises into public ownership and to have them and the tracks directed by a single “guiding mind”, in the shape of Great British Railways, should help to mend the splits (it should be said the correct structure for the industry is a perennial subject of debate among industry executives and transport experts, in the way that philosophers continually argue about the relationship between the mind and the body; many still believe the track-train split is correct. However, Roger Ford, technical editor of Modern Railways and the most astute analyst of UK railways, thinks unification is the right way to go, and that’s good enough for me).
There is also debate about the positive aspects of privatisation. There was a surge in passenger numbers. Journeys grew from about 800 million a year to 1.8 billion a year before the pandemic struck. Some commentators think this would have happened with or without privatisation and was the result of growing road congestion and economic growth. That does explain part of the revival, but there is no doubt that companies did all they could to boost passenger numbers by running more services. The more people they carried, the more money they made, and the deciding factor in most franchise competitions was revenue and service growth.
The extra services were often made possible by another upside from privatisation, the ability to buy trains financed by the private sector. British Rail had been constrained by the limitations of government finances, but the newly created rolling stock companies were able to borrow upfront to build new trains, with lease payments spread out over many years. The railway was still paying, but investment in new rolling stock was brought forward. That freedom from the tyranny of annual budgets was a boon in other ways, too. Railtrack and then Network Rail, for example, had funding set in five-year cycles, so could take a longer-term view of projects and maintenance spending.
Another aspect of privatisation — perhaps positive — was that it lured colourful and interesting characters into what had been a grey industry. Sir Richard Branson, the flamboyant airline tycoon, struck up an unlikely alliance with Sir Brian Souter, the wily Scottish bus entrepreneur, to create Virgin Rail. Souter was one of the “bus bandits” who spotted the opportunity to make money from trains, along with his fellow Scot Sir Moir Lockhead, the cattle-rearing boss of FirstGroup. Another to see the opportunity was the late James Sherwood of Sea Containers, who ran the Venice-Simplon luxury rail service and tried to bring a touch of that to Great North Eastern Railways, which won the contract for the London-Edinburgh route. He hated Branson with a passion and vied several times with Virgin to keep the contract. GNER’s financial demands eventually helped to drag Sea Containers into Chapter 11 bankruptcy in the United States.
Labour’s new plan doesn’t leave much room for a Sherwood, which might be no bad thing. It is, in reality, a final confirmation of what had begun to happen even before the pandemic shattered the industry’s finances; private operators had little room to manoeuvre and were delivering services to a Department for Transport blueprint.
What those in the industry want now is quick action to fix the railways’ obvious problems, with punctuality poor and industrial relations fractious. Richard Bowker, the former boss of the Strategic Rail Authority, thinks Labour’s scheme a step in the right direction and notes it includes an immediate action plan to tackle the inertia. In the end, that is what the next government will be judged on when it comes to the railways — not whether the right structure is adopted, but whether services improve.
Dominic O’Connell is business presenter for Times Radio
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