The plans for privatisation in the early 90s

[NorthKent1989]

I once read years ago that the one of many plans for privatisation was that each line and not route would be privately ran (or words to that effect) so basically if the North Kent line was its own separate company, was this the case or is this misremembering something? If it’s true how would this have even worked?

 

[Dr Hoo]

I’m not sure that regarding every politician’s, newspaper/railway magazine columnist’s, enthusiast’s (or trade union’s) musings as a “Plan” in any meaningful sense is helpful.

 

[pdeaves]

Somewhat tangential to the question I know, but...
When the privatisation structure was essentially set and government, etc., were starting to push plans, invite expressions of interest, etc., I remember an interesting statement from First Group. At the time, they declared that they were interested in running the Bath-Bristol route. Context suggested that there was no more to it than that. They literally wanted to run all trains from Bath to Bristol and back again. Clearly, over the years they've achieved that, albeit with a whole load of more sensible adjuncts! May that desire have spawned from a similar concept in the original post?

 

[Dr Hoo]

Right at the very beginning I think that there was a naive hope among some bus operators that they would be allowed to just shut lines down, sack the staff, send the trains for scrap and flog off the station sites for property development before enjoying a public transport monopoly.
When I was with ScotRail I was amazed to get a call direct from an extremely senior bus company owner seriously wanting to take over the Aberdeen-Dyce line for conversion to a private busway! (This wasn’t a spoof or hoax.)

 

[JonathanH]

Right at the very beginning I think that there was a naive hope among some bus operators that they would be allowed to just shut lines down, sack the staff, send the trains for scrap and flog off the station sites for property development before enjoying a public transport monopoly.

I recall there was a proposal for the Essex Thameside (LTS) network (which had become something of a 'misery line') to be turned into a busway with frequent services from the suburbs converging on Fenchurch Street each morning. Quite what the practicality of that could have been is unimaginable.

Famously, in a different proposal, Roger Freeman (then rail minister) talked of having different services for different types of passenger (eg bosses and their secretaries) and had to publicly apologise for doing so. At that time it did sound an idea for individual services to be run by different operators.

 

[Joe Paxton]

I once read years ago that the one of many plans for privatisation was that each line and not route would be privately ran (or words to that effect) so basically if the North Kent line was its own separate company, was this the case or is this misremembering something? If it’s true how would this have even worked?

There were all manner of ideas and proposals. However the Major government of 1992-97 did it all in a bit of a rush. There was no government green paper to promote debate as to how it should be done, instead they jumped straight to a rather thin white paper published in July 1992 which didn't do much to flesh out the details - you can read it here:
New Opportunities for the Railways: The Privatisation of British Rail

The resultant bill was passed as the Railways Act 1993 in November of that year. Selling off of almost all parts of BR was then done before the May 1997 general election, which the Tory government was widely (and correctly) expected to lose to Labour.

 

[thenorthern]

As others have pointed out with any government proposals there was a lot of debate and plans before the current system came in.

I know the old system of having track and trains operated by one company like in the big 4 days was looked at but it would not have worked. Partially because of the rationalisation in the 1960s meant that cities with multiple stations each run by separate operators no longer existed. Take the former Southampton to Newcastle services for example they would run Southern from Southampton to Reading, then GWR from Reading to Birmingham but then go into the Birmingham LMS station then run LMS from Birmingham to York then York to Newcastle on LNER.

It's important to remember as well that although the privatisation of the railways was a John Major / Conservatives idea it was largely influenced by the Single European Railway Directive which requires open access operation to the railways.

 

[LNW-GW Joint]

John Major (then PM) was known to want a return to something like the Big 4 TOCs established at grouping in 1923 (but without the infrastructure).
Eventually the Treasury and its consultants won the debate and delivered something more like the pre-grouping set of private companies, or about 20 TOCs.

After the ICWC refranchise fiasco (where First Group won but then had the contract cancelled because of mistakes made by DfT in the bid process), a review of franchising by Richard Brown was held which recommended smaller franchises. This was to encourage more bidders and more competition, with a higher frequency of franchise letting. It was not implemented, and the writing was on the wall for franchising soon after that.

I think we still have 19 "franchises"/TOCs (ignoring open access, Eurostar, Heathrow Express), despite 10 of these being under some form of government ownership.
There is no hint of how these will be whittled down under GBR, although GA and C2C seem destined to combine.
There are likely to be 4 or more "government" owners/operators (DfT/GBR, Scotrail, TfW, TfL), with metro mayors lobbying in the wings for more local control.
Network Rail (also to become part of GBR) has its 5 Regions covering 14 Routes, with an uncertain relationship to most of the 19 TOCs.

 

[yorksrob]

As others have pointed out with any government proposals there was a lot of debate and plans before the current system came in.

I know the old system of having track and trains operated by one company like in the big 4 days was looked at but it would not have worked. Partially because of the rationalisation in the 1960s meant that cities with multiple stations each run by separate operators no longer existed. Take the former Southampton to Newcastle services for example they would run Southern from Southampton to Reading, then GWR from Reading to Birmingham but then go into the Birmingham LMS station then run LMS from Birmingham to York then York to Newcastle on LNER.

This is not true. Even in pre-nationalisation days, companies trains would sometimes run over other companies routes.

 

[Djgr]

I'm sure many beer mats and cigarette packets were used.

 

[OVS Flatbottom]

I believe "BR plc" (a single privatised company, possibly with competition via tendering or open access as appropriate) and a sell-off of the individual sectors (it was pointed out at the time that this would be a real nightmare if it included infrastructure) were both considered too.

 

[adc82140]

I seem to remember a pilot project whereby a "Stagecoach Rail" carriage (a repainted Mk3 I think) was marshalled onto the end of an InterCity service. Was there really a plan to have individual carriages run by different companies, or was this just a publicity stunt?

 

[JonathanH]

I seem to remember a pilot project whereby a "Stagecoach Rail" carriage (a repainted Mk3 I think) was marshalled onto the end of an InterCity service. Was there really a plan to have individual carriages run by different companies, or was this just a publicity stunt?

That was an instance of Stagecoach providing seated accommodation on one of the Scottish sleeper services that BR had decided to remove. It was short lived. See https://kentrail.uk/stagecoach_sleeper_1992.htm

Stagecoach’s foray into the privatised railway had, however, begun some years earlier. On 6th May 1992 the government, through the Queen’s Speech, announced the privatisation of BR. Perth-based Stagecoach had been quick off the mark to test the waters of running a private passenger service on BR metals, to parallel its existing road coach operation. Having learnt of BR’s announcement in March 1992 that normal seating accommodation would be discontinued on the Euston to Aberdeen combined sleeper/Motorail/Royal Mail trains (meaning passengers could now only travel on the services if they booked sleeping berths), Stagecoach decided to step into the breach. The company leased six carriages from BR, and the proposal was to attach two of these to each sleeper train run by the latter between Euston and Aberdeen, to provide seated non-sleeping accommodation on the service.

The carriages selected by Stagecoach were BR Mk 2D vehicles from the pool of the InterCity business sector: Nos. 6201, 6202, 6210, 6224, 6228, and 6232. These were repainted into Stagecoach’s colours - a white background with large orange, red, and blue stripes - emblazoned with “Stagecoach Rail” in capital letters across their sides. The work was undertaken at Derby by BREL Ltd, which included laying new flooring and abolishing a W/C in each carriage. The new vehicles were officially launched at Derby on 7th May 1992.

The original contract drawn up was for a period of three years, BR receiving an annual payment of £860,000 (£1,748,000 at 2018 prices) for the pleasure of accommodating Stagecoach on the sleeper trains. This was soon found not to be viable and, after the start of the new sleeper timetable on 27th September 1992, revisions to the contract were made. This culminated in a reduced number of tickets being offered by Stagecoach for the service and an early termination of the company’s lease of the six Mk 2 carriages at the end of October 1992. Seating accommodation remained on the sleeper service in spite of the lease coming to an end, but the scenario changed to Stagecoach reserving seats in BR-operated carriages (not necessarily those six which had originally been leased).

In early 1993, the six “Stagecoach Rail” Mk 2 vehicles were repainted into InterCity "Swallow" livery. Although Stagecoach branding had disappeared from the train, the company continued to promote the service under their name until the venture was discontinued on 3rd October 1993.

 

[thenorthern]

This is not true. Even in pre-nationalisation days, companies trains would sometimes run over other companies routes.

Running rights did exist but they were the exception rather than the rule as in most the time rail companies would have their own seprate lines, sometimes in duplicate with other lines to avoid having to use another operator's line.

 

[Bald Rick]

seem to remember a pilot project whereby a "Stagecoach Rail" carriage (a repainted Mk3 I think) was marshalled onto the end of an InterCity service.

Mk2. I remember the Stagecoach MD coming to the office, looking worried, not long after it started.

 

[JonathanH]

Mk2. I remember the Stagecoach MD coming to the office, looking worried, not long after it started.

Did they just get the perceived level of demand completely wrong?

 

[nw1]

John Major (then PM) was known to want a return to something like the Big 4 TOCs established at grouping in 1923 (but without the infrastructure).
Eventually the Treasury and its consultants won the debate and delivered something more like the pre-grouping set of private companies, or about 20 TOCs.

I still wonder why. I never understood the point of the messy and fragmented form privatisation took.

It just seemed to be a bureaucrat's wet dream. Perhaps that was the idea - maximise the number of companies, and thus maximise the number of government buddies to put in well-paid senior management jobs.

The Big 4 (with XC part of London Midland, as they are centred on Birmingham) would at least have maintained some form of network coherence and would have been far preferable to the mess that was actually created. Thus people often blame Major but it appears it wasn't his fault, but the bureaucrats who enforced 20 million TOCs. Not to mention the bizarre concept of ROSCOs - yet more bureaucracy, yet more CEOs and shareholders to be paid..

And as for splitting the ex-SR into three companies. It just begs the question: "why"? They had largely common fleets at the time and much shared track, so why on Earth didn't they just make a single SR?

I believe "BR plc" (a single privatised company, possibly with competition via tendering or open access as appropriate) and a sell-off of the individual sectors (it was pointed out at the time that this would be a real nightmare if it included infrastructure) were both considered too.

I do wonder why, if they had to privatise, BR plc was not done.

 

[Bald Rick]

Did they just get the perceived level of demand completely wrong?

That’s my take on it. Those negotiating with Stagecoach cut a good deal!

I do wonder why, if they had to privatise, BR plc was not done.

Because it would need significant ongoing subsidy, and would have been the only one of the big privatisations where that was the case.

 

[coppercapped]

In the run up to privatisation many models for the future structure of the railways were put forward by various interested groups and observers at various times. There is a good description of the events and discussions leading up to the Railways Act 1993 in the book “All Change. British Railway Privatisation” edited by Freeman and Shaw and published by McGraw-Hill in 2000.

Essentially five models for privatisation were put forward by different groups (the Cabinet Office, the DfT, the Treasury and outside parties) over the five or six years before the Railways Bill. The process was very definitely not rushed. Very briefly these models were:

• Regional - essentially re-creating the ‘Big 4’ (but could have been up to 12, getting back towards the pre-grouping set up prior to 1923)
• Track Authority with separate train operators with two flavours (a) on-rail competition and (b) service groups (franchises).
• BR plc
• Sectorisation
• Hybrid of above.

So several models were available - and the supporters of each produced their own arguments. The was no ‘basic premise’ apart from a general feeling that costs could be reduced and the quality of service improved if the private sector were to be involved.

The first two options were produced by right-wing ‘Think Tanks’, the Centre for Policy Studies and the Adam Smith Institute. They both proposed breaking up BR before privatisation, but for different reasons.

The concept mentioned, of on-rail competition with a separate track authority with the train operators bidding for paths, was proposed by the Adam Smith Institute following a similar line of thought which led to bus privatisation and deregulation in 1985.

Because of the weak financial position of many of the bus operators, although they were still profitable, the results of the bus policy was not as successful as its chief protagonist, Nicholas Ridley, had envisaged. This was even more obvious in the case of BR as it ran at a deficit and required a continuing subsidy. In the final run-up to the Railways Bill the idea of on-rail competition was dropped because the Government didn’t again want to suffer the bad press that it received after the bus de-regulation.

There were all sorts of arguments within the working groups on how to handle the necessary on-going subsidy for the railways and how to square these payments with the EU's rules on state subsidy for private industry. Further analysis showed that bidding for paths supplied by a Track Authority on a monthly or bi-monthly basis was not applicable for railways because of the inter-related nature of their operations. So that idea was dropped. It was decided the best way to handle the subsidy issue was for potential train operators to bid for a group of services - a clear figure was available for each area and any cross-subsidy between profitable and loss-making services was up to the individual operators to manage. This avoided the DfT having to identify costs and revenues on an individual service basis.

Privatising BR as 'BR plc' would not have changed anything and it ran straight into the EU's subsidy rules. So that was dropped as well.
So, although on-rail competition was considered in the early phases of the privatisation debate it was dropped as it wasn’t compatible with the realities of railway operation. Sectorisation would have kept the track and the trains in the same organisation but again the allocation of subsidy and management of track usage and costs where different sectors used common infrastructure was seen to be very difficult.

So essentially we ended up with BR's passenger service groups becoming the TOCs. This structure is not a million miles away from the 'Landlord and Tenant' structure proposed by the LNER in 1946... There's nothing new under the sun.

 

[JamesT]

I still wonder why. I never understood the point of the messy and fragmented form privatisation took.

It just seemed to be a bureaucrat's wet dream. Perhaps that was the idea - maximise the number of companies, and thus maximise the number of government buddies to put in well-paid senior management jobs.

The Big 4 (with XC part of London Midland, as they are centred on Birmingham) would at least have maintained some form of network coherence and would have been far preferable to the mess that was actually created. Thus people often blame Major but it appears it wasn't his fault, but the bureaucrats who enforced 20 million TOCs. Not to mention the bizarre concept of ROSCOs - yet more bureaucracy, yet more CEOs and shareholders to be paid..

And as for splitting the ex-SR into three companies. It just begs the question: "why"? They had largely common fleets at the time and much shared track, so why on Earth didn't they just make a single SR?

I do wonder why, if they had to privatise, BR plc was not done.

Why is 4 the correct number and 20 not? Smaller franchises allows management to be more focused on their area. E.g. would you bin Scotrail off as that’s not a Big 4 company?

Why are ROSCOs bizarre? Rolling stock generally has a longer lifespan than the franchises. Otherwise you’d have to have the winning bidder buy the rolling stock from the outgoing franchisee.

As for Southern, it was run as three separate geographical regions under BR. There’s not anything intrinsic about the way the pre grouping companies were merged together.

BR was seen as failing and the competitive environment could fix it, which BR plc wouldn’t do.

 

[Recessio]

It's important to remember as well that although the privatisation of the railways was a John Major / Conservatives idea it was largely influenced by the Single European Railway Directive which requires open access operation to the railways.

Common misconception; open access operation and the Single European Railway directive doesn't require privatisation of the state-owned operator, it just requires separation between infrastructure and train operations - look at France and SNCF for an example.

 

[thenorthern]

Common misconception; open access operation and the Single European Railway directive doesn't require privatisation of the state-owned operator, it just requires separation between infrastructure and train operations - look at France and SNCF for an example.

It still had a major effect on the privatisation of British Rail.

 

[Dr Hoo]

Did they just get the perceived level of demand completely wrong?

They did try quite hard to make it work. I was involved in arranging ScotRail ‘add-ons’ for through/combined fares from local stations into their seating carriages on the Aberdeen sleeper.

I can sort of understand where Stagecoaches were coming from. They wanted to position themselves as part of the future and a possible ‘solution’ rather than the long-standing railway ‘problems’ that privatisation was intended to address (in the Major government’s view).

 

[Recessio]

It still had a major effect on the privatisation of British Rail.

How so?

 

[The Pelican]

As others have pointed out with any government proposals there was a lot of debate and plans before the current system came in.

I know the old system of having track and trains operated by one company like in the big 4 days was looked at but it would not have worked. Partially because of the rationalisation in the 1960s meant that cities with multiple stations each run by separate operators no longer existed. Take the former Southampton to Newcastle services for example they would run Southern from Southampton to Reading, then GWR from Reading to Birmingham but then go into the Birmingham LMS station then run LMS from Birmingham to York then York to Newcastle on LNER.

It's important to remember as well that although the privatisation of the railways was a John Major / Conservatives idea it was largely influenced by the Single European Railway Directive which requires open access operation to the railways.

I don't think the 60s rationalisations would have been too big a problem- in America, with even more small railway companies than UK per head of population, companies shared "Union Stations" which were often owned by an independant company- Carlisle was like this in the UK. Fairly big cities like Washington and LA had single stations serving quite a few companies. Chicago is more like London/ Glasgow /Paris in having loads of terminals.

 

[thenorthern]

How so?

As it meant that private operators would now be in the market, particularly with freight which people rarely talk about.

Also it would mean that British Rail as we knew it would have be broken up. While SNCF is a near monopoly in France in other European countries there are a large amount of private operators.

I don't think the 60s rationalisations would have been too big a problem- in America, with even more small railway companies than UK per head of population, companies shared "Union Stations" which were often owned by an independant company- Carlisle was like this in the UK. Fairly big cities like Washington and LA had single stations serving quite a few companies. Chicago is more like London/ Glasgow /Paris in having loads of terminals.

Sure it would be possible but not the easiest thing.

 

[nw1]

Why is 4 the correct number and 20 not? Smaller franchises allows management to be more focused on their area. E.g. would you bin Scotrail off as that’s not a Big 4 company?

It lessens the number of companies involved and means more integration. Surely the less companies you have, the easier it is to manage the system. Timetable planning can presumably be simplified if it's all one company in a given area. For example if the vast majority of services coming into Birmingham or Manchester are London Midland, most of the timetable is operated by one company meaning an easier planning process. Granted some locations would have other companies coming in (e.g a London Midland-operated XC would go onto other companies' patches), but they managed it under the Big Four, why could they not manage it under privatisation?

I'm not necessarily saying the Big 4 was not the correct structure - perhaps a five-company set up of GWR, London Midland, LNER, Scotrail and NSE would be. But my main point is you lessen the number of companies to those which make most sense operationally, or even just have one BR plc.

Why are ROSCOs bizarre? Rolling stock generally has a longer lifespan than the franchises. Otherwise you’d have to have the winning bidder buy the rolling stock from the outgoing franchisee.

Again, why have short-lived franchises? Why not let a given company operate the services indefinitely, unless they break the terms and conditions and get "booted off"? And in that case, the replacement franchisee would inherit the stock, with stock costs payable to the government. Essentially you dispense with ROSCOs and have the government oversee stock transfer in the hopefully small number of cases where a franchisee misbehaves.
.
Once again, ROSCOs mean more organisations involved in running the railway, hence more bureaucracy and more shareholders to be paid.

As for Southern, it was run as three separate geographical regions under BR. There’s not anything intrinsic about the way the pre grouping companies were merged together.

The network is a closely integrated one and has much in common e.g third rail electrification, and most services at the time were operated with inter-compatible 41x - 42x EMUs (on the mainline), or 455s (on the suburban - admittedly not the South Eastern). Essentially it was a common network. The big question really is why not operate as one company, with three regional subdivisions? The aim of NSE was to move towards more integration across the SE, not less. Thus, as an alternative to an integrated SR, you could also have had a privatised version of NSE, operating all commuter lines round London.

We now have a situation where each part of the old SR is using incompatible EMUs. Imagine the operational advantages if the current SR used a compatible fleet of EMUs.

BR was seen as failing and the competitive environment could fix it, which BR plc wouldn’t do.

Failing by whom? IMX BR was doing really quite well in the (roughly) 1986-90 period, e.g. electrification, regularisation of timetables, renewal of stock. It was only the 1991 recession that put the kybosh on things, and would that have been any different under a many-company scenario?

Would BR have done badly under the better economic times of 1995 onwards, or would it have recovered?

You could still have competition with open-access operators, no need to carve up things the way they did.

 

[Bald Rick]

Failing by whom?

The Government in power, and many of its passengers.

 

[SuspectUsual]

I still wonder why. I never understood the point of the messy and fragmented form privatisation took.

It just seemed to be a bureaucrat's wet dream. Perhaps that was the idea - maximise the number of companies, and thus maximise the number of government buddies to put in well-paid senior management jobs.

According to my then MP (Labour), the word in Westminster at the time was that it was done this way to make it near impossible for a future Labour government to reverse it

 

[Recessio]

As it meant that private operators would now be in the market, particularly with freight which people rarely talk about.

Also it would mean that British Rail as we knew it would have be broken up. While SNCF is a near monopoly in France in other European countries there are a large amount of private operators.

There's no reason it couldn't have been an SNCF style separation between infrastructure and (passenger) operations though, while still remaining nationalised. Selling off the state-owned operator wasn't enforced by the EU (then EC), all it enforced was simply opening it up so that alternate private providers can also have access alongside the state-owned operator. Privatising BR - and the way it was privatised - was a political decision by the government of the time, nothing to do with Europe, and that government would probably have done it anyway regardless.