Why the UK’s railways were privatised


I came across this interesting piece from the FT some time ago, that looks into the decision to privatise British Rail back in the 1990’s. Given the recent debate about re-nationalisation, it is perhaps worth watching.

During the video, ex-Tory minister Michael Portillo tries to argue that people’s desire for re-nationalisation is based on a miss-placed nostalgia. That they forget just how bad British Rail service was. Well, as this vlog post discusses, that’s not entirely true. I know people who remember travelling on British Rail and while they’ll agree the service wasn’t exactly 1st class, it worked, you got where you wanted to go, eventually.

Indeed if anything by saying such things Portillo simply demonstrates how out of touch he is with the realities of British rail travel. How bad are British trains right now? Let me put it this way, if you are not from the UK, here’s my advice as regards travelling on British trains DON’T. Find another alternative way to get around the country (buses, lift share, car sharing, etc.), yes that’s not easy (or in some cases impossible), but its going to be cheaper and a lot less hassle than using the train.

If you do use the train, book tickets well in advance (ideally using ticketing services such as split ticket websites, avoid the UK rail company websites) and make sure you get a seat reservation (don’t ever rely on an open return, chances are they’ll find some excuse to stop you boarding or try to get you to buy another ticket). Allow plenty of time (a hour at least) for any change of trains or change of stations (services are frequently late). If you are flying into the country you’d be well advised to fly as close to your destination as possible (and again buy train tickets well in advance). For example, let’s suppose you want to get to Birmingham, you might be tempted to get a cheaper flight to Gatwick or Stansted. However keep in mind that a rail journey from those airports to Birmingham will take about 3 hrs and cost between £300 to £70 and, as it will involve a change in London, there’s a risk of missing a connection (in which case you are screwed!), so you’re probably better off just getting the more expensive flight to Birmingham.

The staff on UK railways will be of no help whatsoever. Its their job is to basically screw the customers over and look out for the company’s interests. They will lie to you or try to deceive you (or they’re just so incompetent that they’re making it up as they go along), or just fob you off (so they can get back to playing minecraft), so take anything they say with a pinch of salt. Finally, when booking a seat avoid window seats (many trains have no window blinds and no air-con so if its a hot day you’ll be roasted), avoid table seats (less leg room) and avoid seats near their ends of coaches (you’ll be near the loo and be smelling urine the whole journey, a smell that will steadily stronger the longer the journey lasts).


Much to the annoyance of many, pacers are still in use on some routes

And if anything services seem to be getting worse (which I didn’t realise was actually possible). There’s been chaos in the north due to timetable changes and in the south due to repeated strikes and staff shortages. Several UK rail companies are planning to re-introduce British Rail era Mark 3 trains (rolling stock forty years old!). And Pacers, another obsolete train type (actually just a bus on top of a freight car) introduced as a stop gap by BR in the 80’s, are still in use, despite repeated promises to phase them out. The other week, there was a row because a UK train company compared themselves to Poundland…..and Poundland objected!


People pay several thousand pounds a year for this!

So given these day to day realities, is anyone really going to tell me that BR was that bad? What did they do? make you get out an push! Was there a guy at the back with a big drum and you had to row? And crucially what I do hear from those who used to use BR, is that its saving grace was that it was cheap. Since privatisation, ticket prices have risen an average of over 100%, but by up to 200% on some routes. And as I discussed in a prior post the UK’s railway’s are now some of the most expensive in the world, which is not reflected in the dreadful quality of service.


UK rail fares have, on average, risen twice as fast as inflation

Those outside the UK need to understand that for some people rail travel is kind of essential. Its the only practical way for them to get to work. Travelling by car would take too long (as many UK cities just aren’t designed for cars in the way North American towns are) and there’s a distinct lack of parking spaces. So they end up having to pay these ridiculous travel costs, leaving them with a yearly bill in the order of thousands of pounds a year (ten times the cost of similar season tickets in other parts of Europe), just to get into work. This is leading to “transport poverty” in some cases.


Season ticket prices are much higher in the UK than in many other European countries

However Portillo (and a number of his ministerial colleagues in the aforementioned video), do let slip the real reason why BR was privatised. Money. The UK’s train network is still basically the same network the Victorians build in the late industrial revolution era. There’s been only a handful of major additions to the network since then and of course the Beeching’s axe eliminated large parts of the network. So arguably the Victorians had a better service than the present one. This is perhaps best highlighted by a visit to the Railway museum in York. Here you’ll find a Japanese bullet train from the 1970’s. Which despite being a museum piece is still faster than many of the “express” trains passing the museum! That’s how far behind the UK railway network has fallen in terms of investment.

So the Tory government under John Major was faced with a Victorian era network, which needed significant upgrading, which would cost tens of billions of pounds that they didn’t have, nor wanted to spend. So instead they decided to simply sell the whole thing off, cross their fingers and hope for the best. Some of the cabinet may well have deluded themselves with a lot of neo-liberal BS about how the magic of the markets would wave a magic wand and fix everything. But in reality, given how the system was privatised, it was highly unlikely that was ever going to happen. For the seeds of the failure of privatisation were sown in how it was undertaken.

Firstly they allocated the rail franchises on the basis of a bidding system. Inevitably many of those who won the bids did so by simply writing a blank cheque for whatever sum they thought would ensure they won. Then on the first day of the new railway company’s formation, this sum of money became part of the company’s debt. This meant that all of the UK rail companies started off with basically the same creaky infrastructure that had existed the day before, but with a debt of several million to the banks. So inevitably the new owners chose to invest as little as possible and push up ticket prices as quickly as they could.

Another factor is that the railways were split up into different elements. The track and track maintenance was handled by a separate company (with various construction firms subcontracted to do the actual maintenance work). Another company actually owned the trains and so on. This was probably undertaken by the Tories fearful that labour would immediately re-nationalise the network after the next election, so they needed to make that as difficult as possible to unpick. However, it created a system where capitalist competition became impossible and inefficiency grew exponentially.

My own personal view is that the Tories just didn’t care. They weren’t thinking that far ahead. Few of them used the train anyway, who cares if a few plebs can’t get to work anymore. They no doubt assumed that it would decline and be replaced by something else, much as how cars had largely superseded rail in North America. Of course that had only happened because it was directly encouraged by the US government. And, with long daily commutes stuck in bumper to bumper traffic, American are now paying the price for those decisions.

However, despite it all, railways in the UK didn’t die, in fact passenger numbers increased (likely because the roads just hit peak capacity). And rather than saving money, its now costing the UK more money. The last year before privatisation it was costing the UK about £1 billion to subsidise the railways (closer to £1.6 billion in today’s money). Now its roughly £4 – 5 billion, on top of those massively inflated rail fares. In short, its difficult to avoid the conclusion that the UK rail network is now less efficient than it was in the last days of BR.


While the cost of government subsidy to the railway’s fluctuates, its clearly a lot higher than during the day’s prior to British rail

This of course raises the question of how to fix it. The knee jerk reaction of Corbynites would be to say, renationalise it. But hold on. Firstly, how are you going to re-nationalise it? The assets are owned by private companies, they’ll have to be bought out, which isn’t going to be cheap. You could wait for their contracts to expire and then simply not tender them again, but that would take a long time. And obviously in the meantime, knowing they’re going to get run out of town, they’ll have even less of an incentive to invest in the network. Things will in short get a lot worse before they get any better.

Support for nationalisation

Support for re-nationalisation is strong, although not quite as strong as for RM and the energy industry being re-nationalised

Secondly, we need to return to the 1990’s. Again, the whole reason why the Tories privatised the network was because they baulked at the likely costs of upgrading the network to 20th century standards. Unless Corbyn (or whoever is in power after Theresa May’s reign of error runs its course) is prepared to put the necessary funds into such a project (and we are talking about tens of billions of pounds, probably at least £100 billion or more I’d estimate), there’s not a lot to be gained.

And to be clear, there’s a need for a lot more than HS2 and a few high speed lines, indeed there’s some who argue that HS2 would be counter productive. As noted, many of the UK’s trains are still vintage BR-era trains and need to be replaced. Electrification of the network is incomplete. Signalling is archaic (In some cases we still have guys in boxes pulling levers!). Many stations are in a poor state of repair and need some significant upgrading. The whole point of HS2 is that the mainlines are overcrowded, so additional lines of rail, tunnels or viaducts are needed at key bottlenecks. Most notably there is a lack of direct connections between certain northern cities. So the requirements are multiple.

This is not to say that re-nationalisation is impossible (some good reports on that here). The point I’m making is that the devil is in the detail. A blast and grab populist raid, of the type the hard left prefer, probably won’t work. Instead a longer term national strategy is needed, which should ideally have cross party support (notably with minority parties such as the Greens, lib dems and SNP involved, as if such a plan is in their manifesto it likely to stay the course). This might involve a certain level of horse trading. e.g. keep the rail companies but gradually buy out the private share holders (by the government investing in rail infrastructure). Longer term they could be merged and live on as a not-for profit quango, nominally owned by the government (and in receipt of subsidies) but otherwise independent.

Incidentally, one of that hard left justifications for leaving the EU is so that the UK can re-nationalise the railways. However, there is no reason why the UK can’t do that while in the EU. The EU’s competition rules would merely require that the track network be opened up such that if someone wants to set up their own private rail company (e.g. such as Italo in Italy) on their own dime, they can do so (given the current state of the UK network I consider this highly unlikely). And any kind of trade deal the UK strikes with the EU, will almost certainly include such provisions anyway.

And speaking of the EU, many of the UK’s rail franchises are owned by European rail companies. In theory, if the UK was still in the EU it might be possible to negotiate with these governments a deal, whereby they cede control. So leaving the EU actually makes re-nationalisation harder.

One also has to raise the question as to whether the UK rail network has already declined to a point where its simply not worth saving. While there’s probably a case for renationalising the commuter routes around major cities, one could argue against building new inter-city lines and perhaps even scrapping those that still exist. Previously this would have meant a spike in pollution due to a rise in motorway traffic and air travel. However, progress with electric cars and electric planes means that this isn’t necessarily the case anymore.


Railways could be replaced by a combination of air travel and dedicated bus corridors

That said, you’d need to expand the motorway network (although using the route of old railway lines would certainly make that a lot easier). 138 million long distance rail journey’s were made last year, so assuming a significant number of those transfer to air travel, that’s potentially a 50% jump in passenger numbers across the UK. Not only would projects like expansion of Heathrow and Stansted have to go ahead, but pretty much every airport in the UK would need upgrading. This plan would also mean the demolition of many iconic buildings (e.g. King’s Cross would have to go to make way for replacement road, parking and charging infrastructure).

I would note that I’m not necessarily advocating this option, what I’ll call the Beeching’s II option (like a horror movie, Beeching’s II: mainline blood bath). However, I think its important that we acknowledge just how run down the UK rail network is and just how much trouble and time it would take to fix it. Hence radical options like this do have to stay on the table.

There are in short, no easy solutions. But that’s kind of my point, if there was an easy solution here, someone would have already implemented it. Any successful plan must involve understanding how we go here in the first place and just how difficult it is going to be to fix it. But equally, understanding that the status quo is not an option.

About daryan12

Engineer, expertise: Energy, Sustainablity, Computer Aided Engineering, Renewables technology
This entry was posted in aviation, cars, economics, environment, history, politics, subsidy, sustainability, sustainable, technology, transport and tagged , , , , , , , . Bookmark the permalink.

3 Responses to Why the UK’s railways were privatised

  1. Pingback: Nihilistic rebellion | daryanenergyblog

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