Great British Railways: Is this an admission that rail privatisation was a failure?

[Gwenllian2001]

Well fancy that. 'Privatisation' has been a failure. Who would have thought it? Countless millions wasted to satisfy Tory backwoodsmen, the problem being that those who hailed the break up of British Rail will now be shouting how GBR is the way forward. It would be nice to hear some of the Tories who have wasted all this money admit that they were wrong. The whole saga has seen fortunes made by contractors sucking up sums of money BR could only dream about. The guilty politicians will, of course, blame the Pandemic and claim that they are riding to the rescue, conveniently ignoring that the rest of the world is facing the same problems. Forward the railway with a silly name. Surely something like British Railways or British Rail would be more appropriate. Still, I suppose that Northern Ireland Railways will carry on being state owned as before as a prize for not being privatised in the first place. What goes round comes round.

 

[DynamicSpirit]

Well fancy that. 'Privatisation' has been a failure. Who would have thought it? Countless millions wasted to satisfy Tory backwoodsmen, the problem being that those who hailed the break up of British Rail will now be shouting how GBR is the way forward. It would be nice to hear some of the Tories who have wasted all this money admit that they were wrong.

Well privatisation happened 25 years ago and on the whole the politicians involved with that decision are no longer around. But maybe this excerpt from the Williams-Shapps report would satisfy you?

Breaking British Rail into dozens of pieces was meant to foster competition between them and, together with the involvement of the private sector, was supposed to bring greater effciency and innovation. Little of this has happened. Instead, the fragmentation of the network has made it more confusing for passengers, and more diffcult and expensive to perform the essentially collaborative task of running trains on time.

The whole saga has seen fortunes made by contractors sucking up sums of money BR could only dream about. The guilty politicians will, of course, blame the Pandemic and claim that they are riding to the rescue, conveniently ignoring that the rest of the world is facing the same problems.

Maybe a bit more looking forward and a bit less cynicism and trying to throw blame around would be good? I'm struggling to understand how you can think that any of today's politicians are to blame for privatisation? Many of them would have been at school or running around in nappies at the time that privatisation was being planned.

 

[WesternLancer]

Maybe a bit more looking forward and a bit less cynicism and trying to throw blame around would be good? I'm struggling to understand how you can think that any of today's politicians are to blame for privatisation? Many of them would have been at school or running around in nappies at the time that privatisation was being planned.

I think your last para is over harsh actually - many of today's politicians were trotting out the same defenses of privatization that we have heard for the best part of 25 years until very recently, in the great scheme of things! I didn't, for example, hear Grant Shapps questioning the fundamentals of rail privatization in the run up to him becoming a minister (albeit with a different brief) in 2010 election. And I'm selecting him as a prominent example. Tory rail ministers have been trotting out codswallop in press releases each time franchises were offered (even ones that then collapsed quite quickly - eg East Coast)

Yet, this is despite a complete absence of many (if any?) serious commentators with any rail knowledge every defending the UKs' privatized rail model for most of that quarter century.

However, equally, if not more to blame for inaction - since they would not have come from the same starting point - in my view, were Labour DfT Ministers post 1997 who might have been expected to subject Major's model to proper scrutiny and criticism and done something about it as a pro active matter of action - even if that did not mean renationalisation. IMHO they only tackled the Railtrack issue when it became impossible to avoid doing so, and almost got away with saddling more expensive daftness on London Underground.

 

[neilmc]

So basically today's Tories are saying that the ideas that yesterday's Tories had regrading Toryesque ideas such as breaking up monopolies and fostering competition haven't worked? Well, how amazing! Anybody who knows anything about a rail network could (and did) predict such a thing. Probably 90% of intended journeys can only be sensibly made with one operator, so basically one large monopoly has been replaced by multiple small monopolies which don't integrate well (see all the threads on blame-shifting for late running and who exactly to claim delay repay from).

 

[WesternLancer]

So basically today's Tories are saying that the ideas that yesterday's Tories had regrading Toryesque ideas such as breaking up monopolies and fostering competition haven't worked? Well, how amazing! Anybody who knows anything about a rail network could (and did) predict such a thing. Probably 90% of intended journeys can only be sensibly made with one operator, so basically one large monopoly has been replaced by multiple small monopolies which don't integrate well (see all the threads on blame-shifting for late running and who exactly to claim delay repay from).

well, they argued that the 'competition' was at the franchise bidding stage (or started to argue that when it became obvious that on line competition was almost non existent - or that allowing on line competition to happen - true open access, which of course would have always sought to cream off the most profitable routes / services like happened/s with buses outside London - would actually cost the taxpayer more via extraction of revenue from franchises)

But I agree with the general point you make in your post.

 

[pdeaves]

sucking up sums of money BR could only dream about

Whilst in general I agree with your thought, do keep in mind the benefits. Under BR, budgets came and went according to the prevailing whims and fancies. At least with today's system (well, up to a couple of years ago, at least), the budget for TOCs is laid down in the contracts so there is (was) some stability. Clearly that's not the be-all-and-end-all, but I fear short-term stop/go-ism may rear its ugly head again.

 

[Mcr Warrior]

In retrospect, following the privatisation of the railways, its financing / subsidisation by the general taxpayer was perhaps not too dissimilar to the famous quote attributed to Lord Leverhulme about advertising.

To paraphrase...

"Half the money spent was wasted, and the trouble is I don't know which half!"​

 

[takno]

In retrospect, following the privatisation of the railways, its financing / subsidisation by the general taxpayer was perhaps not too dissimilar to the famous quote attributed to Lord Leverhulme about advertising.

To paraphrase...

"Half the money spent was wasted, and the trouble is I don't know which half!"​

There's a fairly strong argument in this case that it was both halves

 

[ac6000cw]

Whilst in general I agree with your thought, do keep in mind the benefits. Under BR, budgets came and went according to the prevailing whims and fancies. At least with today's system (well, up to a couple of years ago, at least), the budget for TOCs is laid down in the contracts so there is (was) some stability. Clearly that's not the be-all-and-end-all, but I fear short-term stop/go-ism may rear its ugly head again.

Oh, I'm sure it will.

I fully expect control periods and long-term plans to go out-the-window (slowly), to be replaced with per-investment-project Treasury control like BR had. It seems to be the traditional way that nationalised industries in the UK interface with their funding source.

I also expect the use of selective fare increases to dampen demand, instead of spending money to expand capacity, to become a feature again (like BR was forced to do sometimes).

Put it this way - my rose-tinted spectacles are staying firmly in the draw...

 

[LNW-GW Joint]

Privatisation wasn't a failure, and will continue with freight, rolling stock, open access and concessions.
But the franchising system has failed, as well as the extreme fragmentation of infrastructure maintenance under Railtrack.
The latter were brought back in-house by Network Rail.
The former will become simpler concessions in support of a common delivery policy from GBR, delivered by the private sector on periodic contracts.

There was no chance of BR being allowed to continue as a centralised monopoly bureaucracy into the 21st century, any more than gas, telecoms or airlines were.
Railway costs are still far too high and the changes are designed to drive unproductive costs out of the system.
I don't give the "400 staff engaged in delay attribution" much in the way of future career prospects (if there ever were that many!).
The White Paper doesn't go into other "working practices" that need changing but I think we can guess what some of them are.
One of the telling phrases in the White Paper is the railways' "can't do attitude", which has become rife.

 

[WesternLancer]

There was no chance of BR being allowed to continue as a centralised monopoly bureaucracy into the 21st century, any more than gas, telecoms or airlines were.

You've missed out water there....oh, isn't that still a centralised monopoly in the 21st C.

 

[Ken H]

The Thatcher era privatisations were to take the industries out of the public sector and so their borrowing became private so outside the (then) important Public Sector Borrowing Requirement. Many state industries were starved of investment by the treasury. Look at the problems BR had getting investment in HST's and CWR past the treasury.
bringing it back to government and subject to treasury control will mean the railway could be starved of funds again, and 'schools and hospitals' will always soak up any spare cash.
Maybe this is a cynical move by the treasury to bring rail spending under its control, so it can cut it. And cut it they will as the costs of COVID and the drop in tax revenues start to bite. PSBR may become a buzz word once again.
(The theory was that high government borrowing is inflationary. Whether that turns out to be true post COVID we will see)

 

[ac6000cw]

Maybe this is a cynical move by the treasury to bring rail spending under its control, so it can cut it.

To borrow from House of Cards: "You might very well think that; I couldn't possibly comment"

(along with 'Yes Minister', 'Yes, Prime Minister' and the original 'Spitting Image' series, House of Cards is one of my all-time favourite politically-inspired TV series)

 

[WesternLancer]

The Thatcher era privatisations were to take the industries out of the public sector and so their borrowing became private so outside the (then) important Public Sector Borrowing Requirement. Many state industries were starved of investment by the treasury. Look at the problems BR had getting investment in HST's and CWR past the treasury.
bringing it back to government and subject to treasury control will mean the railway could be starved of funds again, and 'schools and hospitals' will always soak up any spare cash.
Maybe this is a cynical move by the treasury to bring rail spending under its control, so it can cut it. And cut it they will as the costs of COVID and the drop in tax revenues start to bite. PSBR may become a buzz word once again.
(The theory was that high government borrowing is inflationary. Whether that turns out to be true post COVID we will see)

Yes, spot on ref PSBR - and this never worked for rail because it still needed support of vast levels of govt spend and borrowing, esp after Railtrack collapse and the route back to spend being on PSBR. So you have to ask why Treasury boffins thought it would do? If they genuinely did they were wrong big time.

Other commentators have speculated that Treasury just thought the railways would wither and die / close and it would no longer be there problem.

I suspect post covid the PSBR issue will rise again, but it will be considered in context of how UK borrowing compares with other similar economies as well as the considered underlying strength or weakness of the economies the countries concerned.

But I am 100% confident the railway will not be immune from all this!

How long before guaranteed control period budgets become a thing of the past?

 

[ac6000cw]

How long before guaranteed control period budgets become a thing of the past?

My guess - not beyond the already committed (i.e. contracts let for the work) expenditure for the current CP6, which runs to 2024.

 

[NSEFAN]

So you have to ask why Treasury boffins thought it would do? If they genuinely did they were wrong big time.

The cynic in me believes that the sort of people who work in the treasury (or at least at the time) are the sort of people who think that trains were old hat and any civilised person with any self respect would buy himself a motorcar! As a result, no need to invest in railways, as only poor people need to use those.

 

[Iskra]

Did we even have full privatisation?

Perhaps things weren’t privatised enough to deliver the efficiencies desired? We had a typical half measures approach incorporating loads of duplication and then are surprised when it didn’t perform as intended.

I’m not necessarily in support of the above view, just putting it out there and challenging the narrative.

 

[WesternLancer]

My guess - not beyond the already committed (i.e. contracts let for the work) expenditure for the current CP6, which runs to 2024.

probably a very good call

The cynic in me believes that the sort of people who work in the treasury (or at least at the time) are the sort of people who think that trains were old hat and any civilised person with any self respect would buy himself a motorcar! As a result, no need to invest in railways, as only poor people need to use those.

Quite possibly - tho if they did think that they clearly were not aware of the fares - didn't even seem cheap in BR days....

 

[pdeaves]

One reason (among many) that 'the railway' costs so much is because of all the non-railway things the money is spent on. Good, worthwhile things, most likely, but coming from the wrong pot. One example: transport interchange. Maybe, just maybe, a greater contribution could come from the non-railway beneficiaries.

 

[ainsworth74]

Yes, spot on ref PSBR - and this never worked for rail because it still needed support of vast levels of govt spend and borrowing, esp after Railtrack collapse and the route back to spend being on PSBR. So you have to ask why Treasury boffins thought it would do? If they genuinely did they were wrong big time.

Other commentators have speculated that Treasury just thought the railways would wither and die / close and it would no longer be there problem.

I suspect post covid the PSBR issue will rise again, but it will be considered in context of how UK borrowing compares with other similar economies as well as the considered underlying strength or weakness of the economies the countries concerned.

But I am 100% confident the railway will not be immune from all this!

How long before guaranteed control period budgets become a thing of the past?

My guess - not beyond the already committed (i.e. contracts let for the work) expenditure for the current CP6, which runs to 2024.

Whilst I certainly share your concerns I thought it was interesting that the report mentions that: "GBR will - Develop a 30-year strategy and 5-year business plans". Now a 5-year business plan could also be called a Control Period...

Of course there's no gurantee that such plan would actually come with any funding let alone with the guaranteed funding that a Control Period has historically come with so I maintain my somewhat cynical position that the Treasury will take the opportunity to knock on the head the idea of funding being allocated in five yearly chunks to ensure that they have greater control. But still, perhaps we shouldn't pull our tin foil hats on too tightly just yet?

Did we even have full privatisation?

God no. Railtrack probably got quite close in terms of infrastructure but folded within, I think, ten years of formation and we got Network Rail afterwards who are absolutely not a private company. The TOCs have always been fundamentally 'owned' by the DfT (for instance if one implodes the trains don't stop running, the staff don't get made redundant and all the assets don't get sold off instead the Government takes over and runs it instead) with private companies just running them for the Government (and of course many of them are in fact state owned companies, just not the British state) on varying types of agreements. I suppose we've gotten close in some areas. Rolling stock is mostly owned by private companies who purchase their stock from other private companies. The Open Access Operators are also private entities that stand or fall on their own two feet (see what happened to GC's Blackpool services and WSMR before them) and freight is similarly a private enterprise (when coal collapsed there was no bailout and DBS had to make drivers redundant and find new business).

I think that all that can be said for 'privatisation' in the 90s was that that it allowed private companies more access (and I say more on purpose as the private sector had been involved with BR) to what had previously been akin to a closed shop.

 

[ainsworth74]

Hmm then again maybe we are all being too cynical:

A key weakness of the nationalised railways – and another reason why we should not simply replicate the model – was its stop-start funding. British Rail was dependent on public funding, for which there were many competing claims. It was often denied medium and long-term financial certainty, meaning that it had to operate year-to-year and could not plan properly or deliver efficiently.

Short-term pressures to save relatively small sums forced British Rail into damaging decisions that were not in its or the country's long-term interest, and that later had to be reversed at far greater cost. In some ways this has continued, with fragmentation inhibiting the ability to set out long-term priorities and invest in affordable, necessary schemes without gold-plating or missing simpler, more efficient solutions.

Privatisation has given the railways much more certain and stable medium-term public funding, with successive fve-year ‘control period’ settlements from the government for Network Rail. The government will at least maintain the current infrastructure settlement, which runs until 2024, and will provide subsequent fve-year infrastructure funding deals from 2024 onwards — including for Great British Railways, once it is established. As set out in Chapter Two, the government will require Great British Railways to set out business plans over a fve-year planning horizon in the future too, covering services and infrastructure, to inform its funding decisions. This will ensure that infrastructure and operational funding decisions are taken in a joined-up way and help to provide a stable planning framework. These business plans will develop 'in-life' to reflect multi-year operational budgets set through the government's Spending Reviews, whilst preserving the five-year infrastructure settlement.

(page 32)

That sounds quite positive!

 

[LNW-GW Joint]

How long before guaranteed control period budgets become a thing of the past?

There's some reference to this, I think there will be a CP7 from 2024 on something like the usual planning round (HLOS/SoFA).
The aim beyond that is to key the cycle into the periodic government Spending Reviews.
These usually go by parliamentary terms, but just now are annual with the Covid crisis.
So the Chancellor of the day will get to decide railway spend during every parliament.
The 5-year CPs for NR are acknowledged as a success of the current regime.
(Not so much the franchise periods as they got in the way of cost control, meaning TOCs were protected during downturns pre-Covid).

 

[Djgr]

You've missed out water there....oh, isn't that still a centralised monopoly in the 21st C.

Arguably all the above privatisations have been failures. The illusion of customer choice coupled with fat cat money grabs.

 

[muddythefish]

According to the FT, the big rail "shake-up" will involve even more involvement from the private sector

Intro

Ministers have promised to open up Britain’s railways to increased competition from the private sector as part of the biggest reforms to the industry since the 1990s.

UK rail looks to private sector in biggest shake-up since 1990s

Reforms mark the end of problematic franchise system brought in under privatisation

www.ft.com

Grant Shapps said on radio this morning that it would bring an end to the "outrageous situation where hundreds of people are employed just to work out whose fault a particular train service delay was"

He didn't quite grasp the irony that it was government policy that created this.

 

[Irascible]

Isn't this process going to make the system *more* detached from the civil service? renationalising Railtrack was the acknowledgement of failure.

Far more than the privatisation of the train operations, I think the breakup & knowledge fragmentation of all the other services ( and also the near death of native stock builders ) was the tragedy - as somewhat demonstrated in a concrete way a few years after.

 

[WesternLancer]

Hmm then again maybe we are all being too cynical:



(page 32)

That sounds quite positive!

Thanks for flagging that bit up - interesting to read.

Arguably all the above privatisations have been failures. The illusion of customer choice coupled with fat cat money grabs.

I do agree with this - but always worth seeing this in the context of the overall PSBR issue flagged above. EG would the UK govt have decided it wanted to borrow money in the 1980s to build, say, a modern (or more modern) telephone/telecomms infrastructure to keep pace with tech change. Or decided to borrow money to build new schools or hospitals (which before the PFI wheeze was dreamt up in the latter Major years IIRC) instead? (or knowing the 80s govts, maybe do neither of course....). The telecomms market being obviously profitable / potentially profitable meant that that need for investment could easily be passed over to the pirvate sector, including individual savers and investors, to fund.

This being rather different than the context of the 60s expanding economy when the govts both built new schools / hospitals AND had a GPO which was quite pioneering in terms of phone system tech development as I understand it.

This is different than rail as clearly that has never, during any of those periods up to now, had the potential for profit. And I can't believe anyone ever thought it did, not without substantial ongoing govt subsidy of course.

 

[Helvellyn]

Well fancy that. 'Privatisation' has been a failure. Who would have thought it? Countless millions wasted to satisfy Tory backwoodsmen, the problem being that those who hailed the break up of British Rail will now be shouting how GBR is the way forward. It would be nice to hear some of the Tories who have wasted all this money admit that they were wrong. The whole saga has seen fortunes made by contractors sucking up sums of money BR could only dream about. The guilty politicians will, of course, blame the Pandemic and claim that they are riding to the rescue, conveniently ignoring that the rest of the world is facing the same problems. Forward the railway with a silly name. Surely something like British Railways or British Rail would be more appropriate. Still, I suppose that Northern Ireland Railways will carry on being state owned as before as a prize for not being privatised in the first place. What goes round comes round.

This is rather an over simplification of things. The privatised railway has existed for pretty much equal time under Conservative and Labour administrations. The original franchise model was ripped up by Labour when the Treasury saw an opportunity to use them as cash cows, which unfortunately the Coalition and then Conservatives continued. DfT also used the revised franchise models to embed ever more control with highly prescriptive agreements, mico-managing to a degree that the old DoT was never able to with BR.

John Major's original idea was to create regional operating companies but he was persuaded by the Treasury to break BR up into literally hundreds of companies. There is also an element of scorched earth - the model pushed through was nigh on impossible for Labour to reverse given the fragmentation. Whilst Railtrack was pretty much a disaster, albeit brought down by Stephen Byers, a number of the original TOCs were very innovative. But for every GNER you also had a Connex. Yet also remember that at the time of privatisation it was never expected the growth that has occurred in the last quarter century would have happened - managed decline or status quo was the name of the game. For example, Virgin didn't originally order 8-car Pendolinos thinking they would be massively overcrowded and need lengthened before service entry to 9-cars and within a decade to 11-cars, nor Midland Mainline ordering two-car Turbos for new MML stopping services expecting within a few years they would have to lengthen some to three-cars then replace them with Meridians.

On balance I think privatisation has unleashed more good than bad but the dead hands of the Treasury and DfT have been running the show for over a decade behind the scenes and leaving the private companies to be blamed for everything that goes wrong.

 

[Irascible]

This is different than rail as clearly that has never, during any of those periods up to now, had the potential for profit. And I can't believe anyone ever thought it did, not without substantial ongoing govt subsidy of course.

I remember quotes around the time it was happening, that Thatcher had looked at privatising BR & didn't want to do it - not sure if there's any substance to any of those but I like to think so. Makes Major's decision even more boneheaded.

I think BT going private was the one that really worked ( wasn't that the first one? I wasn't terribly old when it happened ), although there's a lack of real competition even now. The other utilities I'm more dubious about , especially power distribution. Some industries like shipbuilding should never have been publically owned in the first place.

 

[deltic]

The cynic in me believes that the sort of people who work in the treasury (or at least at the time) are the sort of people who think that trains were old hat and any civilised person with any self respect would buy himself a motorcar! As a result, no need to invest in railways, as only poor people need to use those.

As someone who worked at the Treasury around this time and like 99.99% of my colleagues travelled to work by public transport this is very far from the truth.

 

[NSEFAN]

As someone who worked at the Treasury around this time and like 99.99% of my colleagues travelled to work by public transport this is very far from the truth.

Having worked in the treasury, would you say that there is/was an attitude that the railway should pay its way, and not be dependent on state handouts? "The customer should pay the true cost of their travel"? Or was it more the case that the government simply wasn't actually authorising more money to be spent in the first place? Who ultimately had the power to decide if BR would be getting more or less money from one year to the next?