Privatisation of British Rail

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Historically, the railways had been in state ownership since 1948, with the operating arm BR controlled by the British Railways Board (BRB). Under the Conservative government of Margaret Thatcher elected in 1979, various state owned businesses were sold off, including various functions related to the railways - Sealink ferries and British Transport Hotels by 1984, Travellers Fare catering by 1988 and British Rail Engineering (train building) by 1989.

It was under Thatcher's successor John Major that the railways themselves were privatised, using the Railways Act 1993. The operations of the BRB were broken up and sold off, with various regulatory functions transferred to the newly created office of the Rail Regulator. Ownership of the infrastructure including the larger stations passed to Railtrack, while track maintenance and renewal assets were sold to 13 companies across the network. Ownership of passenger trains passed to three rolling stock operating companies (ROSCOs) - the stock being leased out to passenger train operating companies (TOCs) awarded contracts through a new system of rail franchising overseen by the Office of Passenger Rail Franchising (OPRAF). Ownership and operation of freight trains passed to two companies - English, Welsh and Scottish Railway (EWS) and Freightliner, less than the originally intended six.

The process was very controversial at the time, and its success is hotly debated - with the claimed benefits ranging from a reduced cost to the taxpayer, lower fares, improved customer service, and more investment. 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 remains largely unaltered. A significant change came in 2001 with the collapse of Railtrack, which saw its assets passed to the state owned Network Rail (NR), with track maintenance also brought in house under NR in 2004. The regulatory structures have also subsequently changed. Often reigniting the re-nationalisation debate is the fact many of the private companies are now part of the state owned businesses of foreign governments, while on two occasions TOCs have had to be indirectly owned by the UK government - South Eastern Trains (2003-2006) and East Coast (2009-2015). However, companies such as National Express have gained contracts to operate in other European countries.[1]


To 1979[edit]








British Rail Class 59 (59001 in revised Foster Yeoman livery)









Main article: Railways Act 1993








Infrastructure owner[edit]






Passenger train operators[edit]


Train owners[edit]

Three rolling stock leasing companies (ROSCOs):


Freight train operators[edit]

Six freight operating companies (FOCs):

Infrastructure maintenance and renewal[edit]


Infrastructure maintenance units[edit]


Track renewal units[edit]


Specialist companies[edit]


Subsequent changes[edit]

Infrastructure owner[edit]







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 route and services, although these remain within the TOC structure.

Passenger train operators[edit]


Freight train operators[edit]


Train owners[edit]


Infrastructure maintenance and renewal[edit]



Specialist companies[edit]



Rail Passengers in Great Britain from 1829-2014


Customer service[edit]


The key index used to assess passenger train performance is the Public Performance Measure, which combines figures for punctuality and reliability. From a base of 90% of trains arriving on time in 1998 (the first year this index was used), the measure dipped to 75% in mid-2001 due to stringent safety restrictions put in place after the Hatfield crash in 2000. However, in June 2015 the PPM stood at 91.2% after a period of steady increases in the annual moving average since 2003 until around 2012 when the improvements levelled off.[8]

Level of traffic[edit]

Since privatisation, the number of national rail journeys had increased by 117% by 2014 (see graph)[9] and the number of passenger-km had more than doubled.[10][11] There is controversy as to how much of this is due to privatisation, and how much is due to other factors such as rising fuel prices, road congestion and low unemployment. Critics of privatisation have pointed out that passenger numbers started rising 18 months before the privatisation process began, as the economy started recovering from the recession of the early 1990s.[12] However this increase has kept going during the entire duration of privatisation, with passenger numbers growing much faster than comparable European countries such as France or Germany.[13]

Fares and timetable[edit]


20 years after the privatisation the increase in fares hasn't been uniform: standard single fares increase up to 208% whereas season ticket price rises hover just below or slightly above the rate of inflation, with an increase of between 55% and 80%,[15] while the price of Advance tickets has dramatically decreased in real terms: the average Advance ticket in 1995 cost £9.14 (in 2014 prices) compared to £5.17 in 2014.[16] This is to try and reduce the huge number of people travelling at peak times as opposed to other times which causes overcrowding. For example, over half of National Rail journeys into London occur in the three hours from 7am to 10am, with half of these journeys (a quarter of the days total) occurring between 8 and 9.[17] Overall, train fares cost 2.7% more in real terms than under British Rail.[15][18]

New trains[edit]

The promoters of privatisation expected that the ROSCOs would compete against each other to provide the TOCs with the rolling stock they required. In practice, in most cases the individual TOCs required specific classes of trains to run their services, and often only one of the ROSCOs would have that class of train, resulting in their having to pay whatever the ROSCO concerned cared to charge for leasing the trains. Old rolling stock was extremely profitable to the ROSCOs, as they were able to charge substantial amounts for their hire even though British Rail had already written off their construction costs. As trains grow older, the cost of their lease does not decrease. This was due to the adoption of 'indifference pricing' as the method of determining lease costs by the government, which was intended to make purchasing new trains more attractive when compared to running life-expired trains. In practice, the average age of trains in the UK is only slightly different from that under the last years of BR, as average rolling-stock age fell slightly from the third quarter of 2001–2 to the fourth quarter of 2013–4, from 20.7 years old to 19.4 years old.[19]

Rolling stock manufacture[edit]


Punctuality and reliability[edit]


First Great Western Class 166 No. 166218 at London Paddington.


The railway can point to continued improvements in safety under privatisation; in fact the rate of improvement has increased compared to that experienced in the last years of BR.[20] In 2013, according to a European Railway Agency's report, Britain has the safest railways in Europe based on the number of train safety incidents.[21]



However, since privatisation, the amount of investment has gone up nine-fold, from £698m in 1994-95 to £6.84bn in 2013-14.[23] There is investment across the network in speed improvements, electrification, in-cab signalling, the Northern Hub, Thameslink and HS2.



Nevertheless, privatisation has brought some private sector investment into the railway. However, government subsidy spiralled after the Hatfield rail crash in 2000 after initially decreasing by over half. Some believe this increase was due to what they consider a largely inefficient structure. In 1994, the total government support received by BR was £1,627m,[24] (£2,168m in 2005 terms, adjusted by RPI[25]), while in 2005, government support from all sources totalled £4,593m,[24] despite a lack of any particular increase in government investment in improving infrastructure. Once the extra safety investment after the Hatfield crash had finished, subsidies have since been brought under control. Subsidies to the rail industry have slightly decreased from £4bn in 1992-93 before privatisation to £3.8bn in 2013-14 (in 2014 prices) but have fallen by over fifty percent in terms of subsidy per journey from £5.40 to £2.40.[26][27]

Profitability and efficiency[edit]

One of the principal expectations from privatisation was that the railway service could be delivered more efficiently in the private sector because of the profit motive. The expectation that there were considerable costs that could be slashed from the system was not fulfilled; new operators found that BR had already done much of what could be done to improve efficiency.[28] Staff wages under British Rail were low compared to the market rates, and have risen considerably since privatisation. In addition, the profit motive was diluted when some of the passenger franchises ran into financial trouble and entered into management contracts with the franchising authority, which reduced the incentive to innovate. With individual train operating companies unable to procure equipment to the volumes previously procured by British Rail, the unit costs to the privatised rail industry is significantly higher. In addition, new health and safety requirements and the complexity of the privatised structure has thrown up additional costs in the industry. In all, the subsidy to the railway from the Government is considerably larger now than it was for BR. However, journalist Aditya Chakrabortty published calculations by the Centre for Research on Socio-Cultural Change indicating that "In the financial year ending in March 2012, the train companies gained an average return of 147% on every pound they put into their business."[29] However, found that in reality the amount of return made after subsidy and paying money back to the government was 3.4% for the financial year ending March 2012 (i.e. the same period).[30]

Political control[edit]

One of the benefits promoted for privatisation is that it would remove railways from short-term political control which damaged an industry like the railways, which had long-term investment requirements. This has not happened and, with the latest changes that have been made to the railway structure, the industry is more under government control than ever before. This was consolidated in September 2013 when the borrowing needs of Network Rail were once more taken under HM Treasury control and added to the Public Sector Borrowing Requirement PSBR effectively re-nationalising the Government-owned Not For Profit company which had been created by Labour Party Transport Minister Stephen Byers. The railways also suffer from the effects of short term control because the franchises given to TOCs typically last for a short time.


London Midland, a rail franchise operator part-owned by SNCF


Although one of the original aims of the 1990s privatisation was to break up the British Rail state monopoly, a number of rail franchises in Britain today are run by companies which are part-owned by the state-owned railways of other European countries;[31] for example Keolis, which has a stake in Gatwick Express, London Midland, Southeastern and Southern through Govia, is majority-owned by SNCF, the French railways operator; Abellio, the owner of Greater Anglia trains, is the commercial arm of the Dutch government rail operator Nederlandse Spoorwegen;[32] and the German government-owned Deutsche Bahn owns Arriva (Arriva Trains Wales, Chiltern Railways, CrossCountry) and a 50% stake in London Overground Rail Operations Limited (a joint venture with MTR Corporation of Hong Kong).[33][34]

British Rail Franchise Foreign Owners
InterCity Cross Country CrossCountry Deutsche Bahn
Network SouthEast Chiltern Chiltern Railways Deutsche Bahn
Merseyrail part of Regional Railways Merseyrail 50% owned by Nederlandse Spoorwegen
Regional Railways Arriva Trains Wales Deutsche Bahn
Regional Railways Northern Rail 50% owned by Nederlandse Spoorwegen
InterCity East Coast Grand Central Deutsche Bahn
InterCity Anglia Abellio Greater Anglia Nederlandse Spoorwegen
Network SouthEast and Regional Railways London Midland 35% owned by SNCF
Network SouthEast Southern Trains 35% owned by SNCF
Network SouthEast Southeastern Railway 35% owned by SNCF
Regional Railways First TransPennine Express 45% owned by SNCF

Positive media coverage[edit]

The Adam Smith Institute has written that while it would prefer more competition within the system, privatisation has introduced competition into the system which has meant an explosion in passenger numbers.[35]

In 2013 the Guardian wrote that "on balance, rail privatisation has been a huge success" in terms of passenger numbers, fares and public subsidy, as well as Britain having both the safest railways in Europe and "most frequent services among eight European nations tested by a consumer group".[36] In 2015, it released an editorial saying that again, despite some problems, privatisation has delivered many improvements. The editorial said that although privatisation 20 years ago was an ideological move, to renationalise the railways at a time when they are quickly growing would also be motivated by ideology.[37]

In 2015, the Daily Telegraph wrote that "a state-owned railway would be a costly mistake" for three reasons. Firstly, it would be prohibitively expensive, secondly the trains are not owned by the operators but by third-party leasing companies and thirdly that EU law enshrines the right of open access operators such as Grand Central to operate free from government control.[38]

The Independent explained that the reason for high fares was to fund the programme of investment and upgrades that is currently going on and while private companies do make large profits, they are small compared to the total cost and the private expertise means the companies are run more efficiently than if they were state-run. It also said that the reason fares are higher than in European countries is that there is less public subsidy and lowering fares would mean increasing taxes.[39]


Negative media coverage[edit]

The rail franchising system has in the past been a subject of criticism from companies, passengers, union leaders and some MPs. It has been said that the system is too complex and involves too many companies, some of which were merely sub-contractors. This has led to confusion about responsibilities, led to several safety-critical incidents and incurred high costs for companies and passengers.[42] This is one of the reasons which led Network Rail to take back into its direct control all responsibility for infrastructure maintenance, whereas previously the company had used subcontractors.[43] Multiple examples of problems with the DfT's original franchising model were highlighted by the East Coast franchise, when first GNER (owned by Sea Containers) and then National Express resigned the franchise when staged franchise payments to DfT became greater than the revenues that could be extracted.[42]

Some observers—such as the rail journalist and author Christian Wolmar—argue that the whole idea of separating track from train operations in this way is fundamentally misconceived[44] being based on the model of air transport, where the infrastructure, engineering and operational considerations are entirely different. The current subsidy of some £4 billion is at least twice as big as at the time of privatisation in the 1990s.[45]

The clearance between train and tunnel is often small. London Underground train at Hendon.

"Tellingly," wrote two British academics, "of all the European countries that came to investigate Britain's great railway privatisation experiment, not a single one has chosen to adopt the same approach."[45] They note that "the domestic railway network has, compared to mainland Europe, been "starved of investment for decades, has been considerably reduced in scope, is significantly overcrowded and in many cases is not a particularly comfortable way to travel. … [T]he system costs a fortune."[45] The pair note that "while other [European] countries have … developed wide-ranging electrified and increasingly significant high speed railways … the UK has achieved comparatively little … What is more, at least some in the government seem to regard this approach to investment as having been a success."[46] An estimated 30% efficiency gap in railway operations compared to the continent contributes to an overall efficiency gap in transport "equivalent to a lost Terminal 5, or HS1, or two Jubilee Line Extensions every year."[47] However this is at least partly due to the fact that Britain has the most restrictive loading gauge (maximum width and height of trains that can fit through tunnels, bridges etc) in the world which means that any trains must be significantly thinner and shorter than those used elsewhere. This means that British trains cannot be bought "off-the-shelf" and must be specially built to fit British standards.

Academics have criticised the privatisation arguing that BR was not actually privatised in the conventional sense, but operates under governmental control with private companies subcontracted to manage franchises, resulting in high costs to the taxpayer.[48] However, open access operators can now compete directly for long-distance travel.

Proposals for reform and renationalisation[edit]

Bring Back British Rail logo

Before losing power, the Labour Party planned to reform the existing system, and was reviewing options including a trial re-integration in Scotland. There has been discussion about the extremely high profits some believe the ROSCOs make (see impact of privatisation on profitability above for a full discussion) and proposals that would allow TOCs to own more rolling stock, or even to allow Network Rail to lease some stock. There have also been some market led changes in this area already with TOCs hiring in rolling stock and even locomotives from heritage railway organisations.




In 2009 the Bring Back British Rail campaign for renationalisation was formed in 2009 by Ellie Harrison.[51][52]

As of January 2011, both the Labour Party and the Conservative Party back the current model of privatised railways, as do the Conservatives' coalition partners, the Liberal Democrats. The Green Party and TUSC (Trade Unionist and Socialist Coalition) call for renationalisation of the network.[53] The Scottish Labour Party, the Scottish National Party, The Scottish Anti-cuts Coalition and the Scottish Greens all have advocated for the renationalisation of the First ScotRail contract that was operated by FirstGroup. In 2014, Transport Scotland awarded the franchise to Abellio ScotRail.[54]

A 2012 poll showed that shows a 70% of voters want a re-nationalisation of the railways, while only 23% supported continued privatisation.[55][56] According to a 2013 YouGov poll, 66% of the public support bringing the railways into public ownership.[57]


In 2013 Labour Party members suggested re-nationalising the railways should be one of the policies Labour should explore leading up to the 2015 general election The policy has since been dropped in favor of simply keeping the fragmented rail system in place and creating a government backed Intercity franchise to compete with the other train operators.[60]

The Green Party of England and Wales committed to Renationalisation in their 2015 Manifesto,[61] reconfirming this at their Autumn conference in Birmingham in September 2014. Caroline Lucas' Private Member's Bill calls for the end of franchising altogether. Lucas argues allowing the individual franchises when they expire or when a company fails to meet its franchise conditions to fall back into public ownership will avoid expensive compensation to the rail companies, saving over £1 billion per year for the public.[62][63]

See also[edit]


  1. ^ "Germany and France still want their rail monopolies". 
  5. ^
  6. ^ Her Majesty's Government (1903). "Railways Act 1993". The Railways Archive. (originally published by Her Majesty's Stationery Office). Retrieved 2006-11-26. 
  8. ^
  9. ^
  11. ^ "Browse reports / data". Retrieved 4 November 2014. 
  12. ^ The performance of the privatised train operators - Jean Shaoul.
  13. ^
  14. ^ "Train companies respond to July inflation rate and fare rises". ATOC. August 2011. Retrieved 25 February 2015. 
  15. ^ a b Have train fares gone up or down since British Rail?, BBC News, 22 January 2013
  16. ^
  17. ^
  18. ^ "Train fares cost more than under British Rail". Daily Telegraph. 1 December 2008. Retrieved 7 July 2015. 
  19. ^
  21. ^ How safe are Europe's railways?, The Guardian.
  23. ^ GB rail: dataset on financial and operational performance (PDF) 
  26. ^ "Have train fares gone up or down since British Rail?". 22 January 2013. Retrieved 2 August 2015. 
  27. ^
  30. ^ "Do train operating companies earn 'massive' profits?"
  32. ^ "Parent company". Abellio. Retrieved 10 December 2012. 
  35. ^ What would we consider a successful railway system?, Adam Smith Institute 
  36. ^ Forget the nostalgia for British Rail – our trains are better than ever, The Guardian 
  37. ^ "The Guardian view on rail fare rises: the end of the line". 
  38. ^ "A state-owned railway would be a costly mistake". 
  39. ^ "Could Jeremy Corbyn's plan to renationalise the railways actually work?". 
  40. ^ Curriculum vitae: Lew Adams BBC News - October 19, 1998
  42. ^ a b BBC NEWS | UK | MPs raise rail-franchising fears
  43. ^ BBC NEWS | Business | Network Rail takes track back
  46. ^ Shaw & Docherty (2014), p. 5.
  51. ^ "Campaign History". Bring Back British Rail. 2009-07-29. Retrieved 2014-05-01. 
  52. ^ Harrison, Ellie (2014-01-09). "Power For The People!". The Ecologist (London). Retrieved 2014-05-01. 
  53. ^ "Green Party wants full railway renationalisation". Retrieved 9 January 2011. 
  54. ^ FirstGroup loses ScotRail franchise BBC News 8 October 2014
  55. ^ "bring-back-british-rail-surefire-vote-winner -". 2011. Retrieved 2013-07-31. 
  56. ^ "Want to end rail privatisation". 
  57. ^ "". 
  59. ^ 20 years since rail privatisation, speech on
  60. ^ "". 
  61. ^ ",-urges-caroline-lucas/". 
  62. ^ "Why not... nationalise the railways?". BBC. 11 July 2013. Retrieved 16 June 2015. 
  63. ^ Gary Dunion (26 June 2013). "Caroline Lucas. bill to renationalise the railways published today". Bright Green. Retrieved 16 June 2015. 

External links[edit]