The sinking of early privatisation
In the 1980s, British Rail considered a number of initiatives that could have led to greater private sector involvement in the railways. DAVID CLOUGH examines three beached proposals
The British economy of the late 1970s was in such a dire state that the Labour Government had been forced to seek financial support from the International Monetary Fund. In 1979, the Treasury was casting around for assets within the government estate that might be sold to raise money and British ports were seen as suitable candidates.
Enabling legislation in the form of the Transport Act 1981 was passed but this attracted no interest in contemporary railway periodicals. As will be explained, it could have brought the first use of private capital to the railways and operation beyond the existing fleets of privately-owned freight rolling stock.
The Act had several parts, one of which introduced the compulsory wearing of seat belts for a trial period. Most of the Act, however, dealt with preparation for the
privatisation of British ports that were owned by State undertakings, notably the British Transport Docks Board. Part 1 comprised provisions under the heading ‘Subsidiary Activities of British Railways Board’.
Part 1 Section 1 gave BR the power to divest itself of any part of its undertaking, subject to approval by the Secretary of State for Transport. The method was to be by the hiving-off of the relevant part into a subsidiary company, which would then be disposed of.
The thrust of the Sections in Part 1 was the transfer of port facilities within Sealink, BR’s maritime arm, into a newly-formed subsidiary company and then its disposal. The Board, however, interpreted Part 1 as a general provision that was not confined to Sealink’s harbours and gave consideration to how the provision might be applied in other contexts.
A tripartite working group comprising the Department of Transport (DTp), the Treasury and BR was set up in 1979 to consider ways of getting private-sector involvement into Britain’s railways. The group reported in September 1982 that scope existed for such involvement and referred to the provision of a dedicated rail/air link between London Victoria and Gatwick Airport as potentially a good first step. There were two parts to this – property development in the shape of a terminal at Victoria that private capital might fund, and train operation.
Privatisation of the routes between Fenchurch Street to Southend and between Settle and Carlisle were also under consideration. Other schemes proposed were East Coast Main Line electrification, a private company to build, maintain and derive fees from BR for level crossings and Tiger Rail for the supply of merry-go-round coal wagons.
Two objectives emerge from these schemes – the removal of the need for public funding of asset enhancement and the elimination of activities that were a drain on the Exchequer. A range of criteria was compiled against which such schemes should be judged. Included were protection for BR revenue, better service to the public and reduced call on the public purse. BR was also keen to establish the principle of private sector involvement.
Let’s consider three schemes in detail.
Slough to Windsor
At the start of 1983, BR had received a number of private sector expressions of interest in taking over specific services or some peripheral lines, including the two-and-threequarter-mile single track Slough to Windsor railway. On February 3, 1983 the Board called for a specification for operational standards for such lines to be prepared to serve as a discussion document with interested parties.
The main criteria for a private operation were: Long-term provision of services. Need for maintenance of infrastructure. Safeguard contributory revenue from the line to the rest of the network.
Does the proposal provide for reduction in Government subsidy without net increase to the rest of the railway?
Does the proposal provide for satisfactory interface with BR, including safety, rolling
Two objectives emerge from these schemes - the removal of the need for public funding of asset enhancement and the elimination of activities that were a drain on the Exchequer.
stock moves and passenger interchange? Does the proposal cover BR transition costs, including redundancy?
In January, Rail Ltd, which adopted the trading name Windsor Rail, opened a dialogue with a view to taking over the Slough to Windsor Central branch. Windsor Central had been constructed on arches that could be expensive to maintain and a mile of the route was carried on a viaduct.
For BR, the situation was complicated because, while the railway was part of the Western region, the train operation was by the London & South East Sector, later rebranded as Network SouthEast.
In February, the Sector Director said the route gave a notional annual loss of £ 325,000, which included various allocated costs, such as work on the Thames bridge. The avoidable loss was £43,000 on earnings of £165,000, to which should be added contributory revenue from through tickets to destinations beyond Slough of £ 250,000.
Not referred to by the Sector Director was the significant income derived from the Windsor Central site. This included rent from Madam Tussauds for its Royalty and Empire exhibition at Windsor and Eton Central and from catering. BR approached Tussauds but the latter declined to bid to run the branch.
Government subsidies across the Sector’s services meant the line would not be considered for closure. Financial benefits accruing to BR were judged small’ and the risks relating to through ticket income more than offset this benefit. Other issues that meant the Sector Director was not in favour included absorption of BR management time and industrial relations risk. He recommended Rail Ltd be offered an alternative route than Windsor.
The following month, the Board’s Chief Solicitor drew attention to some of the provisions of the Great Western Railway (Slough and Windsor) Act 1948 (sic). This date was repeated in subsequent correspondence but no one picked up that this was 100 years late. The 1848 Act included provisions relating to Royal trains to Windsor Castle, Eton College (which had vigorously opposed the line) and the towing path on the River Thames under the railway bridge.
The Chief Solicitor put forward three options and the main drawbacks to each:
Lease the line, but this would leave BR with residual and contractual liabilities.
New operator to obtain a Light Railway Order whereby statutory and contractual liabilities would be capable of transfer but this procedure could take a long time.
Formation and disposal of a subsidiary company as permitted under the Transport Act 1981; Windsor Council could object.
He also flagged up the question of the protection of BR’s revenue in the event of the new operator’s failure.
On March 29, a memo said the proposal from Rail Ltd failed all the criteria set out above. The view was Slough to Windsor was not an ideal candidate for the first privatisation because of its integral nature in the network and Royal train requirements. It suggested an alternative loss-making service be identified and the Isle of Wight was suggested.
Despite this conclusion, and that of the Sector Director, senior BR officers met Rail Ltd on June 2 and it was explained that BR would need to go through a tendering process as part of any disposal. A second interested party in the form of the Slough and Windsor Railway Society also expressed interest.
Rail Ltd presented a detailed business plan, including staffing. It proposed to use Leyland LEV ( bus on wheels) vehicles for the basic timetable but had discussed the use of steam on selected weekends with the Great Western Society at Didcot. Rail Ltd had also researched the possibility of conversion to third rail electrification. In August, it provided evidence of its financial standing.
Over the following 12 months to August 1984, BR and Rail Ltd held six working party meetings and the upshot was that Rail Ltd’s proposal met all BR’s criteria for service operation.
Meanwhile, discussions between BR and the DTp during 1983 came to a view concerning the disposal of lines to the private sector that were still in operation. In generality, leasing or agency arrangements involving a private operator left BR with too many residual liabilities and outright sale was the only acceptable route.
Under the prevailing legislation, such a sale would have to involve BR making a closure application to facilitate a sale. A private operator would then need to apply for a Light Railway Order. These legalities would be open to opposition and so delay, which would cause a break in service of many months. For a service such as Slough to Windsor, this would be unacceptable.
With this 1983 conclusion in mind, it is perplexing that the dialogue between BR and Rail Ltd continued until Autumn 1984. The involvement of the private sector in running non-heritage railways went away for several years.
Main line steam
Undoubtedly the most unusual private sector approach came from a town planner with transport experience, who will be identified here as Mr T. He wrote to the BR Chairman in July 1983 with an initial proposal for the private operation on the Marylebone-High Wycombe-Birmingham Moor Street and Stratford-upon-Avon route, using 130mph sophisticated steam traction.
At this time, BR was considering closure of Marylebone station and conversion of the railway to Northolt Junction into a busway.
The underlying motive set out was to showcase the potential of a modern steam locomotive to the world and BR was sympathetic to this goal.
Although closure proposals were published, these were abandoned.
Mr T wanted to use his Marylebone to Moor Street service to showcase state-ofthe-art steam engines that would be singlemanned, computer controlled and cheaper to operate than diesel power. Trains would be “distinctive” but would not compete with BR’s London to West Midlands electrified route. A two-hour schedule was proposed, with a stop at Leamington. About 15 miles of track were to be upgraded for 130mph running, haulage would be by a 2,500hp locomotive and the trains would weigh 350 tons.
Mr T put forward several alternatives for the operation of the railway north of Aynho Junction, south of Banbury, including BR and his venture each having one track. Understandably BR said this would be impractical. He also offered to take over the running of the Birmingham Moor Street to Stratford on Avon services.
The underlying motive set out by Mr T was to showcase the potential of a modern steam locomotive to the world and BR was sympathetic to this goal.
He made the point that China was still building this form of traction, and it was in regular service elsewhere in the world, notably South Africa. His contention was that the operating cost per mile was superior to diesel and that a modern design was less polluting than previous examples.
As the dialogue continued, Mr T advanced a second proposal to build a Garratt-type prime mover to haul heavy coal workings to Didcot Power Station. He had support from the Assistant Chief Mechanical Engineer, South African Railways, who explained that modern steam was to be used on the 145-mile Kimberley to De Aar line, instead of electrification on cost grounds.
Mr T continued that experts gave a 20% cost advantage to a modern steam locomotive over a diesel, the former was cheaper to build and would have double the operating life. BR doubted Mr T’s figures but he said BR had no expertise in modern steam and they should consult the work of acknowledged experts.
One overseas development offered by Mr T was in the USA, where American Coal Enterprises (ACE) had established a consortium that included railroads to develop a high-tech traction unit.
Several points arose during the dialogue. While facilities to trial and demonstrate a modern steam traction unit could be made available on BR, these could not be on an existing main line. BR said a steam locomotive would not be allowed inside Didcot’s discharge house and anyway doubted that one could operate at a controlled 0.5mph during the discharge process. This brought the suggestion of a change to diesel traction inside the power station.
Based on the information from Mr T, they felt that the method for dealing with
smokebox ash was impractical within the BR loading gauge. One-off steam runs from Marylebone to Moor Street would be feasible but regular ones would not.
It was, however, clear BR had a closed mind to the proposals. It argued that there was no possibility of an electric train supply, which today (and elsewhere in the world at that time) comes from a generator van.
BR cited the 1948 Interchange Trials having provided performance data for steam and being conducted under very carefully controlled conditions. The performance of an ‘A4’ Pacific had shown the economy of steam. Mr T countered that pre-war designs bore no relation to what could be produced in 1983 and (correctly) that the 1948 trials were not carefully controlled.
Consideration was being given to increasing the loading of the Didcot coal services and this came about eventually by the double-heading of Class 58s. Mr T pointed out prophetically that there was no chance of winning export orders for Class 58 because these were too expensive, whereas British Rail Engineering Ltd would stand a much better chance by offering a modern steam locomotive.
BR contended that, if high tractive effort was needed, then the railway would be electrified, which was clearly a nonsense, as the advent of Class 59 proved soon afterwards. BR argued training for steam would be too great but Mr T replied it was no greater than for diesel to electric.
BR cited pollution issues with steam. Mr T countered that modern steam could be less polluting and no more carcinogenic than diesel. They argued steam breached the Health & Safety At Work Act 1974, so Mr T asked how compliance with this squared with steam on BR’s Vale of Rheidol Railway. Unfortunately, trying to fend off Mr T does not portray BR management in a good light.
The correspondence continued until July 1984 when BR said “safety issues” were too great for Mr T’s proposals. Just why it had failed until then to obtain the answer to the utterly crucial matter of Mr T’s financial wherewithal to move from a proposal to a practical proposition is unclear. If BR had insisted over a year previously for this to be established before any meaningful dialogue could take place, then a considerable amount of very senior management time would have been saved.
For the record, the ACE-led consortium in the USA failed and the use of steam in South Africa was phased out.
Settle-Carlisle Line
Finally, BR’s plans in the mid-1980s to rid itself of the Settle & Carlisle line (S&C) are illuminating.
The line had the major disadvantage of having many viaducts and several tunnels that were expensive to maintain, yet minimal levels of traffic. Outsiders considered the route offered significant tourism income
BR was insisting that the private operator for S&C should pay BR £150,000 annually for five drivers and guards, who would work just 20 hours per week!
potential but BR appeared unwilling to devote management time to realise this and instead proposed closure.
It appears the Government was prepared to give away the route between Settle Junction and Petteril Bridge Junction and engaged Lazard Bros to advise on the disposal through a bid process.
In July 1988, BR advised Lazards that private trains would be permitted to operate over its tracks into Hellifield and Carlisle, provided the footplate crews were long-term company employees, were passed out on BR’s rules and regulations, and medically fit. No BR pilotman would be required. Sand traps would have to be installed at the junctions with BR’s tracks.
Understandably, interested parties said a service that started or finished at Hellifield would not be viable and there should be running powers to Leeds and Preston. This is where discord within BR surfaced, even though there was an existing precedent of a private operator running trains on BR in the shape of the Dart Valley Railway into Totnes.
The London Midland Region’s General Manager was prepared to accede to the proposal to include Hellifield to Blackburn but was opposed to through running to Preston, an additional 17 miles, which compared to 25 miles to Leeds and which was agreeable to the Eastern. He also put forward Skipton as the southern extent of private operation, which was close to the boundary between his Region and the Eastern.
Three of the four bids to take over the S&C stipulated that no BR pilotman should have to be paid for. The reason for this came into the public domain when Alan Whitehouse, the Yorkshire Post transport correspondent at the time, revealed that BR was insisting that the private operator should pay BR £150,000 annually for five drivers and guards, who would work just 20 hours per week!
While it was quite reasonable that a charge would be made for running over BR’s metals, a further charge was to be levied for access to Leeds station and there would be only two offpeak paths guaranteed. The Eastern Region doubted that a private operator’s train crews would be able to learn the complex track layout at Leeds. Just why BR drivers could manage this, but others not, was not explained.
The Director of Operations at the BR Board eventually made it clear to colleagues that private operators were envisaged under Channel Tunnel Phase 3 provisions and some other privatisations currently being considered. He said there was no rational operating reason to prohibit such operation.
In November 1988, the Director laid down parameters for private operation. BR pilots would not be required over its routes, except that a traction inspector would be mandatory for steam. Through running to Leeds, Blackburn and beyond Carlisle to Kingmoor depot would be acceptable. There would be a need to determine available capacity over routes and stations with the BR Sectors.
As always with BR, the elephant in the room was trade union reaction to these proposals. On December 9, the Director of Employee Relations envisaged problems with the unions over private-owner crews operating on BR. He was, though, positive about the concept of private operation, provided there was a practical policy in place covering training and safety.
The following year the Government decided that the S&C should not be closed and the idea for a full private sector takeover went away.