HomeRail NewsThe fall and rise of Britain's railways

The fall and rise of Britain’s railways

Listen to this article

Long serving rail chief, Richard Brown, now at the DfT, tells a story which typifies all that was best about the controversial privatisation of Britain’s railways. Writes Colin Garrett

The erstwhile managing director of Midland Mainline was ushered into a top level meeting with the new owners of the franchise, the National Express Group. Brown, who had organised an MBO, had bravely put all that behind him.

In the new franchise agreement was a clause dealing with new rolling stock. Tentatively Brown pointed this out. Get on with it then he was told. You mean do a feasibility study? Form a steering group? With some asperity he was told, no, just buy the trains.

It is tempting to report that Brown closed the door and leapt a yard in the air clicking his feet together. But Richard is far too professional for any such immature display of raw emotion. Midland Mainline went on to acquire a fleet of gleaming new Class 170 Turbostars.

Railway privatisation caught the industry largely unawares. Few believed the Conservative Party’s 1992 election pledge to privatise the railways. Margaret Thatcher was known to be against it but this unlikely defender of BR had been replaced by John Major.

Even fewer people expected Major to win the general election. When he did Sir John then took the entirely laudable step of attempting to implement his election manifesto. The Railways Act, when it became law in April 1994, would go on to break up British Rail into 400 parts.

Still rail barons and staff alike believed they could spin out the process until a Labour government won and called a halt. In this they were sadly adrift. As the Railways Bill went through committee stage it was largely unopposed by the Labour Party opposition.Desiro London Midland (2) [online]

BR had few friends politically and was regarded by many as the last bastion of cold war corporate socialism. Getting rid of it was attractive in Westminster. Privatising BR meant breaking the power base of the rail unions – heavily involved in supporting the miners’ strike. More attractive still treasury wonks came to believe that this heavy drain on the public purse could effectively be sidelined and left to seep away. Managed decline was the buzz phrase in Whitehall. Once vanquished the railways would gurgle into the weed-grown four foot of history.

Rail regulator

The unlikely saviours of the railways sprung from the commuter belt around London. The term commuter means one who has part of his fare commuted or waived – that is replaced by public subsidy. As the privatisation process unfolded commuters and their MPs made it clear the trains that brought people into work must be protected.

Prices would have to be controlled, a rail regulator, who was responsible for the interests of the passengers rather than the government, appointed. Fare rises were pegged at 2% above RPI. Of course it followed that train tickets would have to be transferable.

Sir Bob Reid, congenial chairman of British Rail, returned from a trip to the American West Coast and told reporters he had had to buy seven rail tickets to complete a modest journey around northern California.

Appalled by the glimpsed vision of BR’s chairman hanging on to a San Francisco street car clutching a wodge of tickets the clamour to keep some sense of a unified railway grew. Reid, an oilman, pressed on and pointed out that BR was the best value railway in Europe in terms of per capita subsidy. The industry was already being run commercially.

Apart from Reid, most BR managers were cagey about defending the industry. However clandestine mavericks and those outside mounted an effective campaign. Colin Garratt took a road show around Britain celebrating the achievements of the world’s first railway industry.

The stunning visual display fired the imaginations of almost all who saw it. After one performance in a theatre on the Euston Road opinion was divided. Some, admittedly incomers, thought the show unhelpful. Such an emotional display of support for the railway could rock the boat, make privatisation worse than it was.

This argument was ridiculous. If the BR Board made a proposal the Major administration seemed to do the exact opposite. Sell BR as a unified plc? Split it up!. OK, divide it into its core businesses – InterCity, Trainload Freight? 25 different train companies were created. Freight was divided up into four and then all sold to the same buyer. The rails and signals themselves were to be owned by Railtrack.

EU directive

M997-00005Major took as his starting point the EU directive to demonstrate a separate set of accounts for track as opposed to train operation. This was to enable foreign railway administrations to run trains over neighbouring railways.

Initially Railtrack was supposed to stay in the public sector. However emboldened by the lack of opposition Railtrack was to be sold off in no little haste and took over the network in 1994. BR went on running trains – trying desperately not to crow when a signalling strike paralysed Railtrack throughout that summer.

If BR management did little to oppose privatisation, their argument being that it was government policy and not be questioned, this cut little ice with the unions who opposed it for logical as well as moral reasons. Separating wheel from rail – introducing two entirely different management structures stretched credulity. Moreover why subsidise a private company to make a profit from what is effectively a monopoly?

Further afield the idea of protecting subsidy took root. Local railways clamoured to be kept safe. Eventually the resulting community rail partnerships, local rail organisations, tram projects and heritage railways became one the most successful phenomena of the new industry.

If the Major administration thought it would break the power of the railway it was badly mistaken. Early on it became apparent that wage demands could be fought on a regional basis. Faced with a driver shortage – for instance a number of SWT drivers took redundancy – wages went up. The old capitalist theory of supply and demand was seized on with much hand-rubbing glee in many a mess room.

No one should underestimate the pain of redundancy and good careers cut short. Many people left the industry disillusioned. But the railway that emerged was, in the main, better paid and better equipped. The Railtrack fiasco – too much outsourcing of skilled maintenance and renewal, poor leadership and a systemic failure to identify with the industry itself – led it into administration.

Its successor, Network Rail, was tasked with making good the railway first and indeed embraced the phrase ‘not-for-profit’ with relish. The railway as a responsible national entity was back.

What no one in the industry had predicted was the extraordinary commercial growth of London and its grid-pump effect on the rest of the UK. Like it or not the Thatcherite financial reforms of the 1980s created a good place to do business and to grow commerce.


Passenger pressure for more trains led to increased calls for investment. It’s an over simplification but commercial discipline and rail staff professionalism forged a new industry that routinely delivers major projects on time and on budget.

The upsurge of imported goods from China revolutionised railway freight. One successful MBO, Freightliner, went on to increase traffic well over the cautious projections of the 1980s. Passenger railway companies ran extra services and recruited more staff.

The skills shortage in engineering remains a real challenge for the railway. Best of all, privatisation encouraged ordinary men and women to take control of the industry. Quite junior staff were given great responsibility. Freed from the suffocating inertia of state control new ideas flourished.

Richard Brown was not the only BR manager that spring to be blinking wide eyed amidst the raw oxygen of the private sector. Over at Gatwick Express the new managing director, Mac Mackintosh, ushered his top managers into the boardroom. Mac looked rather subdued. All four Gatwick Express directors had left by this time.

Mac, an engineer, had been parachuted in by new owners, the National Express Group. Mac had worked on the winning bid and knew the T&RS depot used by Gatwick Express at Battersea Stewarts Lane quite well. ‘We need to increase revenue,’ he said and looked round.

No one spoke. Here it comes. Redundancy. But Mac went on, ‘I believe in railways, all of them, I believe in reopening canals as well.’ Startled, people sat up.

Then Shaz Stevens, the marketing manager, an articulate graduate from Northern Ireland, said she had always wanted to introduce a carnet system – seven tickets for the price of 10. Stevens understood consumer psychology – buy a bargain and yes you spend more – and make 8 or 9 trips whereas before you might have made just five separately.

Wall-to-wall PR

Mac backed the plan straight away. When the meeting broke up the press officer had a message from the local radio station, BBC Southern Counties. ‘Do we give an interview?’ he asked as they strode across Grosvenor Gardens to Victoria.

‘Yes of course, say what ever you think best. I want wall-to-wall PR,’ said Mac, a tall man, throwing wide his arms, almost knocking over a startled Japanese tourist.

Even if people were unenthusiastic about being taken over by a bus company we were free to enthuse about the railway and the new fares and services on offer.

‘Just a minute. I’ll have to adjust the sound levels you sound so enthusiastic,’ a lugubrious BBC producer told Andy Milne later tT001-00332hat afternoon at Southern Counties Radio.

People like Mac Mackintosh and Richard Brown were railwaymen through and through. In the past this had unnerved the department but the private sector warmed to them. Businesses can be built by employing people of vision working in an industry they adore. Passenger numbers soared to pre-1948 levels. Stations and tracks reopened; freight tonnages powered up. It became virtually politically impossible to resist calls for a high speed rail network. Trains in 100 different liveries took to the metals.

The system is far from perfect and mistakes are still made. But the energy and enthusiasm of the people who make up the industry remains undimmed. The railway plays a central part in the economic regeneration of Britain. If privatisation caught BR unawares so has the unfolding future packed with promise and opportunity. Even so the people who make up the industry will be taking it in their stride. The short comings of railway franchising are, even as you read this, being addressed by one, Richard Brown, long term witness of this parish.


  1. This is a bit too enthusiastic. Growth has been spectacular but then so has growth in population, traffic congestion on the roads and, for the first fifteen years of privatisation, the economy too.
    It also glosses over the huge growth in interface costs from the fragmented structure we’ve built.
    There is also no mention of perhaps the worst mistake of privatisation, the disposal of the universally-known and popular Inter City brand, and the brand values of a premium experience. The service is now run largely by a collection of bus companies, with their bums-on-seats mentality. They’ve dutifully provided the seats, at premium cost, but have done away with the premium service, so those seats don’t come with tables, windows or a buffet car for their occupants.

  2. The other problem with privatisation is that there wasn’t a single passenger business; there were four or five. The intercity services were profitable; and Network south-east was at least solvent. The main subsidy drain was the provincial services, like the north – which covered a quarter of their costs – and then the isolated rural services, which covered a tenth of their costs (though no-one said that very loudly).
    Also, the real problem of separating the network from the operator was that you still needed a subsidy for a lot of the network. Rail is unusual as a transport mode in that a very high weight of its costs is tied up in the provision of the infrastructure – far more so than for aviation or shipping. Anyway – Britain didn’t have one railway network, it had (in business terms) four or five – and any re-organisation should have worked along those lines.


Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.