Privatisation of British Rail
The privatisation of British Rail was the process by which ownership and operation of the railways of Great Britain passed from government control into private hands.
Under the Railways Act 1993, the operations of the BRB were broken up and sold off to various parties while various regulatory functions transferred to the newly created office of the Rail Regulator.
Ownership and operation of rail freight in Great Britain passed to two companies – English Welsh & Scottish (EWS) and Freightliner, less than the originally intended six, although numerous new entrants in the sector have since appeared.
Despite opposition from the Labour Party, who gained power in 1997 under Tony Blair, the process has never been reversed wholesale by any later government, and the system has remained largely unaltered.
Historically, the pre-nationalisation railway companies were almost entirely self-sufficient, including, for example, the production of the steel used in the manufacturing of rolling stock and rails.
[4][5] The preferred organisational structure in the 1970s was for the BRB to form wholly owned subsidiaries which were run at an arm's-length relationship, e.g. the railway engineering works became British Rail Engineering Limited (BREL) in 1970; the ferry operations to Ireland, France, Belgium and the Netherlands were run by Sealink, part of the Sealink consortium, which also used ferries owned by the French national railway SNCF, the Belgian Maritime Transport Authority Regie voor maritiem transport/Regie des transports maritimes (RMT/RTM), and the Dutch Zeeland Steamship Company.
There was some duplication of resources in this structure, and in the early 1980s, the divisional layer of management was abolished with its work being redistributed either upwards to the regions or downwards to the areas.
[12][13] In 1992, ABB Transportation took full ownership before the unit was merging with Daimler-Benz's train manufacturing interests to form Adtranz in January 1996.
[15][16][17] For reasons of efficiency and to reduce the amount of subsidy required from the government, British Rail undertook a comprehensive organisational restructuring in the late 1980s.
The new management structure was based on business sectors rather than geographical regions, and first manifested itself in 1982 with the creation of Railfreight, the BRB's freight operation, and InterCity, though the Inter-City branding had been carried on coaching stock since the early 1970s.
During 1985, what may in retrospect be viewed as the harbinger of private rail operation occurred when the quarry company Foster Yeoman bought a small number of extremely powerful 3600 hp locomotives from General Motors' Electro-Motive Diesel division (GM-EMD), designated Class 59, to operate mineral trains from their quarry in Wiltshire.
Later that year, it was announced the line had been purchased by the owners of Brecon Mountain Railway, becoming the first part of British Rail to be privatised.
[28] During 1991, following the partly-successful Swedish example and wishing to create an environment where new rail operators could enter the market, the European Union issued EU Directive 91/440.
Although the previous Transport Secretary Cecil Parkinson had advocated some form of privately or semi-privately operated rail network, this was deemed "a privatisation too far" by Thatcher herself.
[31] The manifesto claimed that "The best way to produce profound and lasting improvements on the railways is to end BR's state monopoly," although according to The Independent, "many – including within the Tory party – believed that privatisation was merely a mechanism to manage the industry's gradual decline without too heavy a burden on the taxpayer.
"[32] Contrary to opinion polls, the Conservatives won the election in April 1992 and consequently had to develop a plan to carry out the privatisation before the Railways Bill was published the next year.
The management of British Rail strongly advocated privatisation as one entity, a British Rail plc in effect; Cabinet Minister John Redwood "argued for regional companies in charge of track and trains" but Prime Minister John Major did not back his view;[33] the Treasury, under the influence of the Adam Smith Institute think tank advocated the creation of seven, later 25, passenger railway franchises as a way of maximising revenue.
[37][43] Railtrack proceeded to let out most of the 2,509 stations to the franchised passenger train operators, managing only a handful (twelve, later seventeen) of the largest city termini itself.
Since maintenance and renewal of the infrastructure was to be sub-contracted (to the private purchasers of the IMUs and TRUs), Railtrack's directly employed staff consisted mostly of signallers.
[44] Railtrack sourced its revenue from track access charges levied on train operators as well as leases of stations and depots; additional funding would come from the British government.
The Regulator did this through powers to supervise and control the consumption of capacity of railway facilities (his approval was needed before an access contract for the use of track, stations or certain maintenance facilities could be valid), to enforce domestic competition law, to issue, modify and enforce operating licences and to supervise the development of certain industry-wide codes, the most important of which is the network code.
[55] Post-privatisation, the structure of the railways has remained largely the same, and the system is still based on competition between private operators who pay for access to the infrastructure provider and lease rolling stock from the ROSCOs.
Since 2005, the Department for Transport has been using the community railway designation to loosen the regulations and lower the costs and increase usage of certain socially necessary routes and services, although these remain within the TOC structure.
[77][78][79] In terms of train ownership, the three ROSCOs continue to exist as originally established, although some now lease freight locomotives and wagons to the FOCs.
Whether to renationalise or otherwise make major changes to the post-privatisation model is an ever-present detail in the election manifestos of British political parties.
The major topics of debate concern whether the process has achieved its central aims of increasing levels of investment, performance, and customer satisfaction while reducing the cost to the taxpayer through rail subsidies.
