What if...British Rail had never been privatised?

Prospect’s counter-factual column
December 12, 2013

Margaret Thatcher counselled one of her most faithful acolytes, Nicholas Ridley, against selling off the railways on the grounds that they were too deeply engraved on the nation’s hearts. Although British Rail was not as fondly viewed as the trains themselves, she thought the upheaval involved would be too risky.

Not so John Major, who allowed rail privatisation to be included in the Conservative Party’s 1992 election manifesto. But once the Tories had won that election, with a majority of 21 seats, they realised that the commitment to sell off the railways hadn’t been thought through. By July 1992, the government had cobbled together a rather sparse, 21-page plan, entitled “New Opportunities for the Railways,” setting out how they would restructure a nationwide industry, breaking it into more than a hundred parts.

Privatisation was eventually enacted in the Railways Act 1993. But breaking up British Rail went against the grain of a century and a half of railway history. Railways are a natural monopoly thanks to their capacity limitations and the requirement for heavy investment.

The timing of British Rail’s demise was unfortunate. It had recently got its act together and benefited from excellent board chairmen over the previous 15 years, notably Peter Parker and Bob Reid “1” (he was succeeded by a namesake). It had created popular brands such as InterCity and Scotrail, and developed a business-oriented structure that meant subsidy was on a downward trend, except in hard economic times. As Tanya Jackson puts it in British Rail: The Nation’s Railway: “By the late 1980s, it seemed BR had dispelled the doldrums… it seemed to have new energy and purpose, a new spring in its step—or its wheel.”

There are numerous stubborn myths about British Rail, most of them relating to sandwiches and strikes. Criticism of the quality of its catering stretched back to a 1954 episode of the Goon Show, but by the time of privatisation, the sandwich with curly edges and dry cheese was a thing of the past. Indeed British Rail pioneered the idea of packaged sandwiches and employed Delia Smith, among others, to devise their contents. As for strikes, there were regular threats, but the industrial record was mostly good, with relatively few strikes. In its 50-year history, BR shed half a million staff. An irony of privatisation is that the unions have been strengthened and drivers’ wages have gone up more than they would otherwise. BR’s ability to bear down on costs would have resulted in considerably less subsidy than taxpayers pay today.

There is no doubt that the railways have been successful since privatisation. But even the most fervent advocate of privatisation would accept that most, if not all, of the growth has come from what Gordon Brown called “exogenous” factors: road congestion, high fuel prices, high levels of employment in London, reduced tax allowances on company cars and so on. Had it survived, British Rail would have benefited from those too.

With government backing, it might even have become an international success. To get an idea of what a 70-year-old British Rail might have looked like, look across the Channel at the SNCF in France, created in 1938, or Germany’s Deutsche Bahn, founded in 1949. These organisations have expanded by buying overseas companies and establishing themselves on the world stage. SNCF is strong on consulting, while Deutsche Bahn is the biggest rail freight operator in Europe. Both are involved in rail franchising—British Rail was banned from bidding for franchises, despite a late amendment forced on the government by the House of Lords.

Major does not mention rail privatisation anywhere in his 816-page autobiography, even though it was a source of controversy throughout the 1992-97 parliament. I recently bumped into him and asked about this omission. He said that he had wanted to include it, but that he “ran out of time.” It’s a pity the same couldn’t be said for his rail privatisation plans.