Part 6: Sectorisation
This year sees the fiftieth anniversary of Richard Beeching’s ‘The Re-Shaping of British Railways’. Colin Garratt reports
2013 also sees the thirtieth anniversary of the Serpell Report. These two events mirrored the tempestuous undertones of railway policy in the years following World War Two.
In this eight part series, Colin Garratt of Milepost 921⁄2 outlines the turbulent events which led up to the privatisation of British Rail in 1993, concluding with an analysis of the current situation and where it might be heading.
Under sectorisation British Rail changed from its inherited regional structure to a series of business units.
At least that was the idea. Up until the 1980s BR had operated five regions – largely based on the old railway companies inherited by the British Transport Commission after the Second World War.
These were London Midland, the Southern, Western, Scottish and Eastern – which spliced together North Eastern and Anglia in an arranged marriage put through in 1967 – the summer of love for some.
The Board believed the best way of answering the remorseless pressure from government to cut costs was to refashion itself into a series of businesses – some of which could turn a profit.
The sub text was that the new businesses would be able to fill trains using up to the minute marketing and analysis. Friction was inevitable but the combined talents of John Welsby – chief executive of BR and Sir Robert Reid – arguably the best of the BR chairmen – joined engineers and marketeers in a new sense of identity.
BR was subdivided into six organisations, accountable for cost and performance. During the 1980s assets such as stations and rolling stock transferred to the new businesses. However the board at Euston was still firmly in control.
The new businesses included:
- Rail Express Systems
- Provincial Services (Regional Railways)
- London & South East (Network Southeast from 1986)
- Trainload Freight
- Railfreight Distribution.
Sectorisation ensured clear accountability, decentralised management and a vigorous marketing strategy which was customer orientated. The emphasis on businesses and profit centres played out well with the Thatcher administration, busily privatising nationalised utilities.
The procedural-led railway was being reborn anew as a series of dynamic focused businesses, proponents argued. BR, with its high dependence on subsidy, looked business-like and so remained immune to the Thatcherite privatisations.
The Organising For Quality campaign reinforced the message of running the railway better, giving passengers – now termed customers – what they wanted – Clean smart trains that ran on time. Old railway personnel argued that was what they had been doing all along. Public perception lagged behind reality.
However BR determined even before OFQ to address this. Advertising agency Allen, Brady and Marsh won the account after a pitch which has passed into legend.
In 1977 Peter Parker, legendary BR chairman, led a sizeable delegation and went down to ABM’s offices. At ABM they were greeted by a surly receptionist filing her nails and smoking a cigarette. No one else appeared.
‘How long do we have to wait,’ Parker enquired. The receptionist shrugged. ‘Dunno,’ she said. Increasingly irate Parker looked around at the room full of cups of cold coffee, overflowing ash trays and cheap magazines lying on the floor. The place was filthy. Eventually the ever genial Peter Marsh bounced into the room.
‘What is going on?’ Parker roared. ‘That is how the public sees BR,’ Marsh said. ‘Let’s see what we can do to put it right.’ ABM won the account and the advertising slogan the Age of the Train was born.
Under sectorisation the new businesses took the limelight allowing the British Railways Board to oversee crucial issues of safety, investment, strategy and planning.
This sector became the first long distance passenger railway in the UK to go into profit. InterCity became one of Britain’s top 150 companies with civilised city centre to city centre travel across the nation from Aberdeen and Inverness in the north to Poole and Penzance in the south.
‘All trains have catering ranging from a trolley or buffet to a full meal service with a choice of market researched menus. Buffets stock ten brands of beer and cider thirteen brands of spirits sixty varieties of sandwiches…’ InterCity said.
Determined to roll back the curly edged sandwich joke BR engaged Clement Freud to fill the gap. Wine was chosen by experts with the enthusiastic assistance of senior staff. InterCity concentrated on business people. ‘Few companies can afford to have their executives wasting time behind the wheel of a motor car,’ InterCity argued.
The aim of Provincial Services (later Regional Railways) was threefold:
- To provide urban railway services in cities outside London and the south east.
- Run inter-urban services linking towns and cities.
- Maintain connections with rural communities.
Regional Railways operated over half of British Rail’s route mileage and served 1,500 stations. One third of its turnover came from fares; a third from government public service grants and the remainder from local government- controlled Passenger Transport Executives. PTEs paid Regional Railways to operate their services.
When this sector was formed in 1982, as Provincial Railways, it inherited old rolling stock and run down lines but ten years later the average age of its diesel trains was only seven years and the livery was modern and eye catching.
Regional Railways emphasised the benefits of rail travel, introducing through services which would have been unimaginable in steam days along with greatly improved journey times.
‘Combined with PTE and light rail services locally and InterCity services nationally, Regional Railways is helping to fulfil the increasing need for rail travel across Britain. Strathclyde PTE aims to have 95% of Glasgow’s population within walking distance of a railway station,’ BR said.
From 1986 under its new director, Chris Green (pictured above), it became Network South East with its distinctive red, white and blue livery. It was Europe’s most intensive peak period rail operation and also one of the largest retail operators in the south east.
Network South East was British Rail’s largest passenger business and Britain’s fifteenth largest company, running 7,500 trains a day over 2,500 route miles of track with 943 stations.
Whether building new stations or restoring the railway’s Victorian heritage, architects hired by Network SouthEast created a cheerful and welcoming style. The sector’s colourful branding helped attract an ever increasing volume of passengers. Eight hundred new coaches were put into service between 1986 and 1993.
Parcels – Rail Express Services
The Parcels Sector was set up in the 1980s and rebranded Rail Express Systems in 1991. Royal Mail letters and parcels were conveyed by Rail Express Systems (RES) with specially liveried locomotives and rolling stock. Thirty Travelling Post Offices ran nightly, sorting the mail as they went. 100 mph running gave rail the competitive edge.
Analysts at the time believed the principle of running freight trains profitably was to run bulk trains as long and as full as possible for as far as you could for one customer. Trainload Freight achieved just that and became one of British Rail’s most profitable businesses.
Trainload Freight had four profit centres: Coal, Construction, Metals and Petroleum. Coal trains operated the Merry-go-Round system loading and discharging on the move from colliery to power station. Coal trains also served cement, steel, paper and chemical plants.
Trainload Construction carried aggregates, domestic waste, soil and cement. Trainload Metals carried 17 million tonnes a year; 70% in raw materials – iron ore and limestone and 30% in semi- finished commodities. Imported iron ore was conveyed from Immingham Docks to Scunthorpe and from Port Talbot to Llanwern.
‘Rationalisation in the steel industry has left some rolling mills and coating plants remote from the steel works and Trainload Freight acts as a moving conveyor between them,’ TLF said.
Trainload Petroleum worked for the oil industry, competing favourably with road haulage, pipelines and coastal shipping. Altogether Trainload Freight employed 13,000 people, ran 400 main line locomotives and 25 depots. TLF also controlled eleven wagon repair centres, 50 train crew booking on points and served over 700 private sidings and terminals.
Once the four profitable parts of railway freight had been teased out and transferred to Trainload Freight the board took everything else and put it into Railfreight Distribution.
This included car transporters, China clay trains, wine wagons, the Speedlink network and Freightliner – already handling substantial numbers of ISO shipping containers.
RfD was also BR’s international freighting arm charged with readying the UK for the opening of the Channel Tunnel to rail freight. RfD ran trains to France using the Nord pas de Calais – the Trainferry ship and operated a container ship between Harwich and Zeebrugge.
RfD employed a colourful mix of Flemish and French staff at its Paddington HQ. Senior managers could be observed slipping across Bayswater at lunch times for French lessons. When it opened the tunnel would plug Britain’s rail freight network into a pan- European railway – suddenly creating the longed-for long distance, high volume, economic matrix.
Around Britain RfD opened and re-designated a number of depots as Euro-terminals. Against this rather optimistic backdrop RfD closed the Speedlink network and several terminals.
Was Sectorisation a success?
No sooner had BR’s sectorisation and OFQ programme taken root than the John Major administration announced the privatisation of Britain’s railways. Few quite believed the implications of the 1993 Railways Act.
However John Welsby told senior staff railway privatisation was going to happen and to start preparing for it. The shape of the new railway took little account of the achievements of BR’s new businesses.
InterCity was broken up. Trainload Freight was broken up. Network SouthEast was broken up. In all BR was fractured into 400 different companies. The whole operation of Britain’s railways ended up costing a lot more money.
However. the basic dynamism that would herald the return of the successful railway had been sewn in to the industry’s DNA by the Board’s Trojan-like reforms. The government of the day might have concluded that railways were slated for terminal decline.
Railway staff, local leaders and supporters thought otherwise. Amidst a welter of evidence two examples best typify what Welsby’s herculean reorganisation accomplished.
Faced with the closure of Marylebone – little used and under resourced – the Board took a decision to fight back. The Marylebone – Aylesbury line went through a process of Total Route Modernisation. Semaphore signalling was replaced, stations done up and new rolling stock introduced.
Chiltern Railways, born of a management buy out went onto become one of the most successful railways of the new era. The company expanded with regular services to Birmingham.
Over at RfD a group of managers staged an ambitious management buy out of the Freightliner network. Freightliner went on to become immensely successful – fuelled by the huge upsurge in the importation of Chinese consumer goods.
Sectorisation proved to be a great success. The railway was fully accountable as never before. However the opportunity to shine even brighter under BR would be denied.
Splintered into 400 parts the Humpty Dumpty railway looked set for a final and fatal fall. Managed decline was the phrase bandied about Marsham Street and Whitehall.
As it turned out it would be the private sector – and in fact railway staff who stayed the course – that went on to build on the foundations achieved.
As the lamplighters of Marsham Street worked out the Kafkaesque detail of the Railways Act, few imagined the railway would emerge triumphant 20 years on. The industry never lost its sense of identity, purpose or self worth.
Ask railway staff where they work and the reply will usually be – on the railway. Despite a fractured industry and a botched privatisation the railway stuck together, survived and prospered. Perhaps that remains BR’s greatest legacy.
Part 7: Privatisation
Photographs supplied by Milepost 92 1/2