The real story of UK rail privatisation
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The railways in the UK had been nationalised by the Atlee Labour government in 1947 and had gone into a steady decline until privatised by the Conservative government of John Major in 1996.   The effect was dramatic.    Privatisation increased the number of trains.  Figure 1 below shows the number of train kilometres in billions per year from 1969 to 1999.  

The improvement was not just in train numbers.  They carried more passengers.   Figure 2 below shows railway passenger kilometres since 1908, "stretched" to show detailed quarterly data (at the annual running rate) for the four quarters starting spring 2000.  It remained remarkably stable through two World Wars, the Beeching cuts of the 1960's and the advent of the motorcar.  However, quite extraordinary growth was established after privatisation. Quality of service initially also improved for some years after privatisation but started to decline, partly as a consequence of congestion of trains on the network.

The effect on freight was less dramatic.   Apart from one relatively small company the road haulage industry was never nationalised and it thrived.  In contrast under nationalisation rail freight declined steadily until a small upturn after privatisation in 1996.   See figure 3 below. 

 

The effect of privatisation was to increase investment in the railways.   Private investment increased from near zero to about 3 billion per year but the total investment increased less than that because government investment fell by about 1.5 billion per year over the same period.   

This was unfortunate since the additional private investment proved inadequate to correct the infrastructure weakness that had resulted from years of under investment while nationalised.  

The general public were unhappy with the concept of rail privatisation, and their concerns were fanned by BBC commentators and the new Labour government of Tony Blair which had opposed privatization whilst in opposition. People were unreceptive to data that seemed to show that things were improving. 

Two major accidents reinforced their scepticism and government took the opportunity to add to the adverse comment. Then a third accident with the broken rail at Hatfield in autumn 2000 led to an embattled Railtrack taking precautionary action that destroyed the train service performance and the confidence of the general public and investors.   The third quarter of 2000 shows the effect on passenger carriage as a result of the restrictions imposed after Hatfield. 

The message is clear for those who care about the environment and wish to shift passengers and freight from the roads to the railways.  Privatisation is the way to achieve this.   There may be a role for government railway subsidy but there should be no return to railway nationalisation.  That would return the railways to the path of long term decline.    

The figures in this paper are taken from http://www.cts.cv.ic.ac.uk/staff/wp21-glaister.pdf

Jim Thornton Leeds 3 Nov 2001

 

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Last modified: September 10, 2006