HONOR, LIBERTAD DE EXPRESIÓN E INTIMIDAD:

The railways were ‘born’ on the 21st February 1804 when Richard Trevithick’s pioneering engine pulled 10 tons of iron over a 30 mile track – although it was the first run of George Stephenson’s Locomotion that pulled the train on the Stockton to Darlington line in 1825 that is best remembered as the start of the railway age. By 1845 there were approximately 2,400 miles of track across the UK and the railways quickly became the preferred method of

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transport for moving first freight and then passengers as the industrial revolution was by now in full swing (Héritier, 2002). Canal transportation was slow and unpredictable and routes were sporadic and constrained to lowlands near rivers, whilst coach travel was dangerous, slow and could only transport small items at a time. The train, on the other hand could pull large loads, and as long as the track didn’t run out, could be used to transport goods for miles over differing terrain. The first half of the nineteenth century saw the transformation of the lives and livelihoods of Britain’s people as the rail network stretched from Plymouth to Aberdeen enabling fast and effective movement of first goods, then people (Wolmar 2005). Built by the wealthy industrialists of the time, the rail network was not strategically planned as a passenger network but rather to link factories and ports and large urban market centres. With the realisation that passengers could be moved from one location to another at a profit, tracks began to be laid side by side in direct competition with each other, and whilst each new line needed parliamentary approval, the government of the time had a limited interest in the emerging network that was being created and very few applications were turned down (Glaister et al., 2006). The oligopolistic competition of the early years gave way to a more consolidated industry as the more profitable rail companies took over the weaker ones, thereby reducing the number of privately owned rail companies and creating a monopoly situation for passengers and freight users in many areas. Many of the newly forming rail companies also maintained a monopoly within the industry sector as they owned both the infrastructure and locomotives they used.

In terms of transport share, the rail industries ‘Golden Age’ was short lived, if it ever existed, as the railways had an ever falling percentage of overall transport share and went from an almost total monopolisation of all passenger and freight movement in the 1850’s to no more than 6% of the total share at the point of privatisation. Government intervention as early as the 1840 Railway Regulation Act entailed regulating the monopolies in each area and insisting on specific health and safety issues to be addressed. These early interventions by the

Government also heralded a concern for the consumer, specifically the less economically advantaged consumer, by enabling rail travel to be accessed by all. These ‘parliamentary trains’ (Harris and Godward 1997) became a provision of service and provided at least one return trip per line each day at around 1d a mile, although many of these carriages had no seats or windows and led to the outcry that animals were treated better than people. The 1844 Railway Act also gave the government the option to revise prices and the right to

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compulsory purchase after 21 years; although these provisions were never taken up they show an early indication towards nationalisation options.

Modern rail, from the early twentieth century onwards, was dominated by several significant events before culminating in the privatisation of the industry in 1995/6. The amalgamation of the rail companies into the ‘big four’ in 1921 set the standard of government intervention following the brief period of nationalisation during the First World War. Nationalised again during the Second World War the railways were over worked and under maintained to the point where significant investment was needed to bring the network up to operational standards (Shaoul, 2004). In the wake of the war the government was not in a financial position to inject large sums of money into private enterprises, and the owners of the industry were unable to finance such large investment. Thus to prevent the railways from falling into disrepair the 1947 Railway Act created the British Transport Commission (BTC), and the railways were brought under the umbrella of nationalised industries.

The aim of the government in regard to nationalisation was always to ‘produce an entity that could combine public service operations with commercial viability’, although this appeared as time went on to be an impossible task (Gourvish, 2002a). The BTC was abolished in 1962 and the British Railways Board (BRB) set up in 1963 to deal specifically with the railways with a view to improving operational service. The Beeching Report, in 1962, had a dramatic effect on the rail network as it suggested mass closure of many branch lines in order to cut the deficit and bring the industry into the twentieth century. The Government carried out many of the recommendations it suggested, reducing the infrastructure by almost a third (Figure 2-1). The impact was not as successful as originally hoped; neither service quality or value for money improved; and many of the lines that were lost would, today, be strategic links (Wolmar, 2005).

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Figure 2-1 Before and After the Beeching Recommendations were Instigated

Source: (Price, 1999)

In 1968 the Transport Act provided a public service obligation to distinguish between commercial and social railways and ensured grants were made payable for those lines that remained necessary for social reasons but un-commercial in economic terms. By 1974, after the restructuring and reshaping of the industry, the passengers were being better valued (Harris and Godward, 1997). The railways were now characterised by five main groups (not including Users):

1. the passenger and freight companies now served by lobby groups in response to the powerful road lobbyists;

2. the essentially hard working and dedicated rail managers and engineers; 3. the heavily unionised but low paid general railway workers;

4. the Department for Transport;

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These were difficult times for the railway industry, and even though the railways have always endeared a sense of nostalgic affection this has rarely been coupled with respect. British Rail has historically been held in low esteem, been the keen butt of many jokes, and dismissed as an inferior method of transport to road, whether deserved or not. As road building and car ownership increased, rail patronage decreased with even the former transport minister, Dr John Gilbert, admitting to preferring the car to the train. Yet unlike many other industries, the railways have always generated passionate debate from every sector and as Richard Marsh commented in his communications lecture in 1974:

‘Together with labour relations and singing in the bath, knowledge of how the railways should be run is provided by the Almighty at the moment of birth. It is a well-known fact that the nation is divided between 27 million railway experts and 190,000 of us who earn our living on the railways’ (Marsh 1974 cited in Gourvish 2002a p8).

Britain’s railways were always mooted as a potential candidate for privatisation in the early Thatcher Government, and it is argued that privatisation was inevitable, it was just the when and how that needed to be decided (Godward, 1998). The complexity of the industry meant that although privatisation was considered on what appears to be a regular basis, it was always shelved as something to consider during the next term of office. As early as 1981 the British Railway Board looked enthusiastically into how to integrate private partnership into the railways. This was a particularly bleak time in rail finances and also the start of industrial unrest. Most of the proposals were aimed at specific projects; such as electrification in conjunction with private companies such as Balfour Beatty; but floundered when the Government insisted that any projects should be ‘self-standing’ and not ‘overtly controlled’ (Gourvish, 2002a).

In 1982 the Secretary of State for Transport David Howell, appointed a four-man committee, headed by Sir David Serpell, to analyse the financial situation of the railways and their associated companies with the aim of producing a 20 year plan with the objective of securing efficiency and financial growth in the rail industry. The report engendered a hostile reaction due to the suggestion that the railways should be further reduced in track length and

disagreements amongst the committee members themselves meant that practical discussion on the actual contents of the report were overshadowed by public interest in the conduct of the committee (Committee, 1983). One of the findings of the Serpell Committee regarding private investment was taken on board though, and as it concluded that private investment was currently unmanageable, the proposals by the BRB were shelved.

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Although the railway objectives set in 1983 by Ridley and 1986 by John Moore made no account for private investment, the option was not ruled out completely and opened the way for procurement, contracting, and other sales elements. The 1985 Omega report from the Adam Smith Institute challenged the concept that the railways needed political control and government subsidy, and with Kenneth Irvine’s The Right Lines in 1987 and Track to the Future in 1988 (Irvine, 1987, Irvine, 1988) further underpinning the arguments for segregation in the operating and infrastructure areas, the privatisation debate could hardly be considered buried. In September 1988 the Board debated the future organisational development of the industry and in the uncertain climate for the long term future of the railways it was decided to radically decentralise the industry regardless of who ended up running it. After careful

consideration, in June 1989 the options were taken even further and focused on profit centres and inter sector trading. The decision was made, and government support sought, for what was to become the radical initiative that became known as ‘Organising for Quality’ (OfQ) (Gourvish, 2002a).

With privatisation supposedly shelved in 1990 it seemed that the OfQ programme of changes could be embraced with enthusiasm, but less than a year later the privatisation debate was rekindled. The idea of franchising and competition was once again looked at by a variety of consultants and although the OfQ initiative was by now well under way, the Government were looking seriously at various proposals for the ultimate privatisation of the Railways. In the meantime, OfQ was instigated and, British Rail began to look like a streamlined

commercial enterprise. Figure 2-2 shows the organisational structure that was operational post OfQ in 1992.

38 Figure 2-2 British Rail’s post OfQ organisation, April 1992

Source (Gourvish 2002a p 381)

OfQ was the end of the matrix management structure and embraced Bob Reid I’s vision of a business-led railway (Harris and Godward, 1997). As the organisational chart shows, sectors guided railway policy but had contracts with different operating and contracting units who operated and maintained the railway. All employees were now under one director who had a separate budget and made his own business decisions. The emphasis of OfQ was on customer service and each business unit contained a group of profit centres working closer to the work

Chairman Chief Exec NSE Regional Railways Intercity Trainload Freight RfD Finance Group Finance & Audit Operational Standards & Safety Operational Standards Safety Engineering Technical Standards Technical Strategy Quality BRML Level5 Group Services BT Police BR Property Central Services HQ Design Business Services Engineeri ng R&D Finance Services Legal Services Personnel Services Procurem ent Production Project managem ent Quality & Safety Transmark Directly Resoponsible to the Chairman Secretary Advisor Public Affairs Solicitor Mega Projects Parcels

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face and customer. Passenger functions were split into five units and freight and parcels became separate units. OfQ was not without opposition and this came from both internal and external sources. One of the main complaints internally seemed to be that rather than

abolishing the matrix system, OfQ just lowered it to the customer level. Engineering also had doubts about the new management structure and this became one of the last sectors to integrate into the new system (Gourvish, 2002a). Rail safety was paramount to the new structure and responsibility was given to two sections within the main headquarters: Group Technical Standards and Group Operational Standards.

By 1992 the regions had been abolished and replaced with the OfQ management structure. Staffing levels remained fairly static in the beginning but British Rail Headquarters had shrunk in size. The overall cost of implementation was estimated at around £50 - £70 million

(Gourvish, 2002a) compared to estimates of the privatisation process at £5 billion (Harris and Godward, 1997). However, the new organisation was unable to prove itself to its fullest extent as the privatisation debate moved from planning to instigation.

Throughout the last two centuries the railways have struggled to turn a profit, and more often than not, have continually been running at a loss and, since 1968, heavily subsidised. Financial responsibility for the railways has very often lain heavily at the door of the government and even though each change to the industry has been received with great expectations these have ultimately resulted in disappointment. Private ownership of the railways was hardly a new idea considering they were privately owned for so much of their existence but the

method and speed taken to return them to private ownership was considered radical. In order to begin to understand the complexities of the privatisation process it is important to

understand the concepts of privatisation and nationalisation and the social, economic and political reasons why industries are run under such conditions. The following section looks at the two concepts and discusses the variables that seem to need to be in place for either model to be of any success.