Privatisation vs nationalisation vs the RoW

[bramling]

As someone who was not around for the BR era , could someone tell me what BR was really like

The image I have ascertained , is that the trains were old , dirty and run down , with low investment , as well as poor services , such as the Chiltern Line , which BR run down to single line with little/no service , before it's rejuvantation under privatization with CR ( although apparently BR played a role in making it better too )

Hence why I thought privatization was good , because under this , all the new trains , like the SWT Desiros , Southern Electrostar/Turbostars have been brought , whereas under BR it was old slam door 40 year old trains , with no amenities ( based on what I have seen in pictures , not been on one )

Could someone tell me if it was like this , or was it different

Apologies if this is wrong or offensive , am simply unaware of what they were like

I don't get the point about old trains. Using the examples of the three southern networks, the Desiros and Electrostars simply replaced trains that had reached the end of their life. At the end of BR the CIGs and VEPs were only 20-30 years old and therefore nominally had some years to run, even the CEPs were only at the point when replacement should have been at the planning stage. All these fleets had been refurbished in the 1980s.

I can't see these trains would have lasted longer under BR, indeed they may have gone sooner if more Networkers had been ordered.

 

[fgwrich]

My biggest concern is of a financial one. With a nationalised railway, what is there to say the Tresury won't decide to start pulling the strings if and when things get a little tight? Or that the DfT starts to decide to cut branchline services again to meet the needs of other areas? The FGW franchise to my mind provides a good example of what can work well - remember all the service cuts the DfT proposed at the start of the franchise, and the units it told FGW it didn't need? Compare the Devon and Cornwall branches riderships of 2006/2007 to today and you'll see why I've been a big fan of FGWs work down there all along. What I find concerning is that in a nationalised scenario, what would happen if we had the civil service run this, and not allow the investment or innovation put in by FGW to promote ridership or increase service frequencies down there?

And given Corbyns team frequently bring up Ireland, France and some of the European countries as having great examples of nationalised railways - Ireland may have done well out of the Celtic Tiger for new stock and network expansions, but here we are several years later and both Iarnrod Eireann and Bus Eirann are suffering huge financial losses, network cutbacks and some lines being mothballed. I.E. are just short of £2M before going insolvent. And has its share of high fares too. France has had to cut its network and services back too. If cash strapped councils under the government have had to cut back bus services or divest them to privately run company's, can and will they be able to sustain and to afford to re-run them publically again?

 

[LNW-GW Joint]

As someone who was not around for the BR era , could someone tell me what BR was really like

BR was very good at some things and very bad at others.
Seeing as all the current HSTs and IC225s are still running around, they were newer then and at their peak. Also the sprinters and Mk3 EMUs.
BR did technical things very well (when it had the money), but had no real concept of customer service.
Things were run more for the convenience of the operator (eg poor services on Sundays).
We were descending almost to a 5-day railway in many places.
The real problem they had was the annual public sector budget round which meant there were few long-term projects.
BR also took some spectacularly bad decisions (eg modernisation plan diesels) and was generally seen as an organisation that could not be trusted with money, being kept on a very short rein by the DfT/Treasury.

Some lines eventually got very good upgrades (eg ECML, Chiltern), but to pay for it most of the network slid backwards with declining timetables and ageing rolling stock.
It was "managed decline", with a policy of 2 new vehicles for 3 existing ones.
On top of that BR was bad at modernising its organisation, and the Regions (legacy of the Big 4) were still around until the 1990s.
It was also union-dominated and there were repeated industrial problems over things like single manning (everything over 110mph had to have 2 drivers on the footplate, for instance).

So curate's egg really.
"Delay repay" was unknown, and you were made to feel lucky there were any trains at all.
BR invented market pricing, off-peak restrictions and the basics of the current fare structure. The private TOCs have just made it more extreme.
"Pricing people off the train" was BR and government policy, because it couldn't afford more rolling stock to meet higher demand.
It had its good points, but I wouldn't want it back.
But remember in some ways Network Rail still exhibits some of the characteristics of BR (the permafrost, as Nigel Harris calls it).

 

[Railsigns]

My biggest concern is of a financial one. With a nationalised railway, what is there to say the Tresury [Treasury] won't decide to start pulling the strings if and when things get a little tight?

What's to say it won't do the same with the current privatised railway?

The privatised railway is even more dependent on public subsidies than the nationalised railway ever was.

BR took an annual subsidy of around £1 billion (about £1.8 billion at today's prices).
The privatised railway needs subsidies of around £5 billion (and charges higher fares and has borrowed more than £40 billion).

 

[Clip]

What's to say it won't do the same with the current privatised railway?

The privatised railway is even more dependent on public subsidies than the nationalised railway ever was.

BR took an annual subsidy of around £1 billion (about £1.8 billion at today's prices).
The privatised railway needs subsidies of around £5 billion (and charges higher fares and has borrowed more than £40 billion).

However there are more trains running around on the infrastructure now than there was so its possibly an unfair comparison.

 

[BanburyBlue]

Thanks for all the replies.

I'm not sure what the answer is. As has been said on this post, good and bad in both nationalisation and privatisation.

I don't like how involved the government is involved for a so called privatised network, or the amount that is being paid for franchises. But I can also remember some of the bad things of BR.

One of the points of my original post is the fact that we are constantly being told how bad our railways are and how amazing things are on the continent. So France is often quoted but I guess that's the TGV effect. I'm sure I've read on this forum that once you get away from the mainline in France things aren't as rosy.

Is franchising a UK only thing, or do other countries do similar things? I could cope with franchising a bit more if I thought the government was looking for the best deal for the customer, as opposed to wringing as much money as possible out of the transport providers (naïve statement I know).

 

[Moonshot]

What's to say it won't do the same with the current privatised railway?

The privatised railway is even more dependent on public subsidies than the nationalised railway ever was.

BR took an annual subsidy of around £1 billion (about £1.8 billion at today's prices).
The privatised railway needs subsidies of around £5 billion (and charges higher fares and has borrowed more than £40 billion).

Substitute subsidies for investment capital. The day to day operational cost of the railways are easily covered byticket revenue. Its the choice of government to actually pump money into infrastructure - a choice which wouldnt be made by the private sector due to low BCRs.

 

[Moonshot]

Thanks for all the replies.

I'm not sure what the answer is. As has been said on this post, good and bad in both nationalisation and privatisation.

I don't like how involved the government is involved for a so called privatised network, or the amount that is being paid for franchises. But I can also remember some of the bad things of BR.

One of the points of my original post is the fact that we are constantly being told how bad our railways are and how amazing things are on the continent. So France is often quoted but I guess that's the TGV effect. I'm sure I've read on this forum that once you get away from the mainline in France things aren't as rosy.

Is franchising a UK only thing, or do other countries do similar things? I could cope with franchising a bit more if I thought the government was looking for the best deal for the customer, as opposed to wringing as much money as possible out of the transport providers (naïve statement I know).

An alternative viewpoint may well be to draw up a scenario where the whole industry was privatised and train paths bid for in a similar fashion to the airline industry. I guess several different answers would appear however !!

 

[LNW-GW Joint]

What's to say it won't do the same with the current privatised railway?
The privatised railway is even more dependent on public subsidies than the nationalised railway ever was.
BR took an annual subsidy of around £1 billion (about £1.8 billion at today's prices).
The privatised railway needs subsidies of around £5 billion (and charges higher fares and has borrowed more than £40 billion).

Today's railway is actually a public-private mix and most of the excessive cost lies in the public bit (NR).
The railway is currently protected by the 5-year NR funding cycles, and 7-10 year franchises contracts. All recently being very generous.
As a result it sailed through the financial crisis without facing the "austerity" imposed on the public sector.
Imagine what BR would have had to do faced with a 30% budget cut over 5 years. It would not have been ring-fenced like the NHS/Education.
Nationalisation is not going to open the Treasury's wallet in difficult times.
Labour is completely silent about all this, as it's all going to be "free".

 

[physics34]

Basically, would the government have the money to buy all the rolling stock back???

I can imagine everything being back into public hands except the rolling stock which would continue to be leased.

 

[Wombat]

I agree that today competition is via the franchise process (which delivers precious little for us mere passengers imo) however I disagree that was the intention at the time. The Tory plan might have been unworkable but their plan was for on rail competition NOT the competition via franchise race that subsequently emerged. This system has simply created regional rail monopolies.

That's an interesting point. The rationale for privatisation is typically that the free market forces efficiencies and service improvements as the most effective companies rise to the top. If instead the government merely hands over a bunch of local monopolies, what is the remaining argument for private operation? And if there isn't one, doesn't that make an implicit case for allowing franchises to lapse back into public ownership?

 

[LNW-GW Joint]

That's an interesting point. The rationale for privatisation is typically that the free market forces efficiencies and service improvements as the most effective companies rise to the top. If instead the government merely hands over a bunch of local monopolies, what is the remaining argument for private operation? And if there isn't one, doesn't that make an implicit case for allowing franchises to lapse back into public ownership?

But it doesn't just "hand over" the local monopolies.
There is investment and risk involved, with onerous requirements on revenue, service level and quality, with specific returns to the DfT.
Franchises are competed for, best bid wins (but might lose next time).

.

 

[Moonshot]

But it doesn't just "hand over" the local monopolies.
There is investment and risk involved, with onerous requirements on revenue, service level and quality, with specific returns to the DfT.
Franchises are competed for, best bid wins (but might lose next time).

.

in effect it becomes a competition for either who requires the lowest operating subsidy or highest premia paid to the state.

As a rail employee, my own salary has risen far greater per year under franchising than it would have done if we still had British Rail.

 

[DarloRich]

But it doesn't just "hand over" the local monopolies.
There is investment and risk involved, with onerous requirements on revenue, service level and quality, with specific returns to the DfT.
Franchises are competed for, best bid wins (but might lose next time).

.

Agreed - franchise are won, but they have created rail monopolies. Virgin/Stagecoach have a monopoly on North/South intercity travel for instance (the idea of competition between franchises here is a non starter) with no real, like for like, competition.

(accepting GC/HT on the east coast as an exception)

 

[Gareth Marston]

Thanks for all the replies.

I'm not sure what the answer is. As has been said on this post, good and bad in both nationalisation and privatisation.

I don't like how involved the government is involved for a so called privatised network, or the amount that is being paid for franchises. But I can also remember some of the bad things of BR.

One of the points of my original post is the fact that we are constantly being told how bad our railways are and how amazing things are on the continent. So France is often quoted but I guess that's the TGV effect. I'm sure I've read on this forum that once you get away from the mainline in France things aren't as rosy.

Is franchising a UK only thing, or do other countries do similar things? I could cope with franchising a bit more if I thought the government was looking for the best deal for the customer, as opposed to wringing as much money as possible out of the transport providers (naïve statement I know).

The only country in the world that copied the UK privatization model - New Zealand ended up re nationalizing it after it went bankrupt and nearly closed down- think Railtrack!!!

What we see on the Continent is a modicum of Open Access and some small relativity self contained regional lines being franchised out with the main IC services and infrastructure being in state railway hands. Private operators are minor players on the whole and appear to be used as some sort of benchmarking toy.

 

[TUC]

What also needs to be taken into account is the proportion of increased costs that have arisen from increased safety specifications that would also have been incurred if BR had continued in existence. Comparing present day costs with the 1990s is not a straight like for like.

 

[TUC]

That's an interesting point. The rationale for privatisation is typically that the free market forces efficiencies and service improvements as the most effective companies rise to the top. If instead the government merely hands over a bunch of local monopolies, what is the remaining argument for private operation? And if there isn't one, doesn't that make an implicit case for allowing franchises to lapse back into public ownership?

But the free market and the fixed subsidy/premiums incentivise private operators to maximise income by increasijg the number of passengers, which many of the TOCs have done to good effect and for the benefit of passengers through keenly priced Advance fares.

 

[ChiefPlanner]

There were 2 Monopoly and Mergers Commissions done on London and South east and Regional Railways in 1988 or so , bot were meant to attack the total inefficiency and crap that the Govt belivred BR was , but actually commended the progress made in all areas s and said kind works for the local level management who were described as professional and deeply committed.

A wealth of detail - the biggest problem was - especially in London and South East was the retention and recruiting of staff due to shift working and poor pay levels.

From 1986 - NSE did a huge amount of work in cleaning up ("Operation Sparkle") - brought in heavy cleaning teams , hugely improved train cleaning by setting targets and refurbished trains and stations. Commercial payback was assured and NSE very nearly broke even. Transformed the image and amazingly had strategic planners (of very good quality also) - opened a few modest lines , (one called - I think - Thameslink) - about 20 new stations and planned in some detail - Crossrail with LUL friends.

Clearly not good enough ....

 

[The Ham]

What's to say it won't do the same with the current privatised railway?

The privatised railway is even more dependent on public subsidies than the nationalised railway ever was.

BR took an annual subsidy of around £1 billion (about £1.8 billion at today's prices).
The privatised railway needs subsidies of around £5 billion (and charges higher fares and has borrowed more than £40 billion).

for 2015/16 it was £4.8 billion, of which nearly £1.3 billion was for HS2 and Crossrail, that leaves £3.5 billion.

Compare this with the circa £3.0 billion (in real terms) at the end of BR - see graph on page 2 of the PDF on this link: http://www.orr.gov.uk/__data/assets/pdf_file/0005/22982/rail-finance-statistical-release-2015-16.pdf - and it's not very far adrift.

That said that £3.0 billion was only right at the end and privatisation has been a lot higher.

 

[Gareth Marston]

for 2015/16 it was £4.8 billion, of which nearly £1.3 billion was for HS2 and Crossrail, that leaves £3.5 billion.

Compare this with the circa £3.0 billion (in real terms) at the end of BR - see graph on page 2 of the PDF on this link: http://www.orr.gov.uk/__data/assets/pdf_file/0005/22982/rail-finance-statistical-release-2015-16.pdf - and it's not very far adrift.

That said that £3.0 billion was only right at the end and privatisation has been a lot higher.

Look at the graph from 85/86 to 15/16 the railway has had £105,228 Billion in Govt Subsidy at 15/16 prices. Of this £21,373 was pre 97 at an average of £1,943 per annum since 97 its been £83,855 Billion at an average of £4,192 Billion per annum.

 

[4973]

And given Corbyns team frequently bring up Ireland, France and some of the European countries as having great examples of nationalised railways - Ireland may have done well out of the Celtic Tiger for new stock and network expansions, but here we are several years later and both Iarnrod Eireann and Bus Eirann are suffering huge financial losses, network cutbacks and some lines being mothballed. I.E. are just short of £2M before going insolvent.

To go off topic a bit ... and if any members are from the Irish Republic and can add to/correct this please do so.

I was talking to an IE driver late last year and he told me about the situation there. A major part of the problem is that the Irish Government introduced a scheme similar to our senior citizen card but applied it to the railways as well. What's more they set it up in such a way that IE got no income at all from the use of the card (ours gives 20p - not much but it helps in several ways). Issue of the card doesn't seem to have been well controlled and a very large number of people not hold one.

Because of the lack of revenue IE decided not to record the use of a card - with the consequence now that many rural services are jam-packed but since the majority of passengers are card holders they are recorded as being little used.

Interesting illustration of the law of unintended consequences.

 

[coppercapped]

Not sure about that. John MacGregor's words at the time were quite clear:

OUR objective is to improve the quality of railway services by creating many new opportunities for private sector involvement. This will mean more competition, greater efficiency and a wider choice of services more closely tailored to what customers want.

No mention of franchises there. The Conservatives of the time hoped and planned for the emergence of up to 100 rail companies which would compete for business over one private infrastructure system. The reality which has emerged is that fewer companies bid for franchises to operate rail services over a fixed timescale.

I agree that today competition is via the franchise process (which delivers precious little for us mere passengers imo) however I disagree that was the intention at the time. The Tory plan might have been unworkable but their plan was for on rail competition NOT the competition via franchise race that subsequently emerged. This system has simply created regional rail monopolies.

You also overlook the fact that the cost to the taxpayer has risen during the period of privitisation. It has more than doubled, perhaps even trebled! Lots of that is driven by fragmentation. There are complex tiers of contractors and sub-contractors involved in any rail project, vast costs associated with bidding for a franchises, duplicated layers of executives on decent remuneration and bonuses, man marking, dividends, debt payments etc etc.

A little background to the privatisation process which dragged on for many years. Five models for privatisation were put forward by different groups (the Cabinet Office, the DfT, the Treasury and outside parties) at different times. Very briefly these were:

• Regional - essentially re-creating the ‘Big 4’ (but could have been up to 12)
• Track Authority - but see below
• 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 the 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 you mention, 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.

The results of the bus policy was not as successful as its chief protagonist, Nicholas Ridley, had envisaged, (partly because of the weak financial position of many of the bus operators - which was even more obvious in the case of BR and its continuing subsidy) and 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 business.

There were all sorts of arguments within the working groups on how to handle the necessary on-going subsidy and it became clear that bidding for paths on a monthly or bi-monthly basis was not applicable for railways because of the inter-related nature of its operations. So that was dropped as well. 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.

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.

 

[sk688]

Thanks to all for the responses received from my query

Learnt a lot more about BR now , and realise they were actually pretty good

 

[coppercapped]

Thanks to all for the responses received from my query

Learnt a lot more about BR now , and realise they were actually pretty good

To which BR are you referring? The early BTC/RE version? The BTC version? The BRB as epitomised by the Beeching era or the BR of the Sectors?

 

[ChiefPlanner]

Thanks to all for the responses received from my query

Learnt a lot more about BR now , and realise they were actually pretty good

They (we) honestly did try , there were some gruesome bits but the business led policies of the mid 1980's onwards (after a very tricky and depressing 1970;s) , did turn the "company" around.

The problem was often the stop-go funding from the Treasury - but BR was pretty good at making do with not much ....

As an operations manager , I never , ever worried about possession overruns at weekend.

 

[LNW-GW Joint]

Well, looks like we can put the renationalisation issue back in its box for another 5 years - but only just.
Very hard to work out what the election result means for rail policy, but for sure it won't be high on the national agenda for a while.
I suppose the first thing is, will Chris Grayling stay as SoS for Transport.
The second thing will probably be a resumption of hostilities on DOO.
The franchise timetable will roll on, and the diggers will start in earnest on HS2.

 

[matt_world2004]

Well, looks like we can put the renationalisation issue back in its box for another 5 years - but only just.
Very hard to work out what the election result means for rail policy, but for sure it won't be high on the national agenda for a while.
I suppose the first thing is, will Chris Grayling stay as SoS for Transport.
The second thing will probably be a resumption of hostilities on DOO.
The franchise timetable will roll on, and the diggers will start in earnest on HS2.

I would guess not even with a dup coalition all it would take is a feq commuter belt tories to rebel against rail privatisation and nationalisation would be very much back on the agenda.

 

[LNW-GW Joint]

I would guess not even with a dup coalition all it would take is a feq commuter belt tories to rebel against rail privatisation and nationalisation would be very much back on the agenda.

Well they haven't for the last 20 years, and the DUP won't be in the least interested in GB rail.
In any case, Brexit will crowd out normal domestic legislation in the next session.
The DfT will concentrate on restructuring NR and ORR.

 

[yorkie]

No I don't & know I wasn't missing the point. Just saying it's how it was.

Yes that is how it was, but as with the NHS, it wouldn't be the same today if privatisation hadn't happened.

....I can't see these trains would have lasted longer under BR, indeed they may have gone sooner if more Networkers had been ordered.

Absolutely. Privatisation actually delayed the procurement of new stock for several years and caused the cancellation or curtailment of various projects. Then we had some catching up to do!

My biggest concern is of a financial one. With a nationalised railway, what is there to say the Tresury won't decide to start pulling the strings if and when things get a little tight?

The DfT already are pulling the strings.

 

[matt_world2004]

Well they haven't for the last 20 years, and the DUP won't be in the least interested in GB rail.
In any case, Brexit will crowd out normal domestic legislation in the next session.
The DfT will concentrate on restructuring NR and ORR.

One tory politican Bob neil called for Chris grayling to resign when he refused to allow London rail devolution to go ahead. So the idea that commuter belt tories wont rebel is false.