With such a tiny majority, MacGregor was forced to toss out all manner of bones. And one by one the headlines had to be rebutted by concessions. Franchisees would be forced to honour the various cheap-travel railcards introduced by BR. Season tickets and saver fares would be price-controlled, with rises limited to one per cent below inflation. Tickets had to be ‘inter-available’ between operators. Closures would be almost impossible. And so on. Eventually, he also had to concede that railways were not airports and that franchisees would have a virtual monopoly of their routes. It was becoming increasingly hard to see the object of the exercise, since train operators would have very little commercial freedom. But the bill had to get through: the government’s credibility depended on it.
In May 1993 Robert Adley died suddenly, aged only fifty-eight. The potential rebels were left leaderless, and the bill was safe. Intellectually, the government had failed to make any argument in favour of its plans. I happened to be in the House of Lords the day the legislation was forced through. No one had a good word to say for it. Lords Marsh and Peyton, both former transport ministers, joined forces to amend it; the government rejected their amendments. The only debate was whether the unelected Lords had the right to persist in their objections against the elected Commons. Another former transport minister, Lord Boyd-Carpenter, by then eighty-five, thought that could have ‘serious consequences’.
The Lords were supposed to be able to make the Commons rethink. But, protested Lord Simon of Glaisdale, eighty-two and sagacious with it, the Commons had not rethought. ‘It is the government, with its whipped majority, that does the thinking.’ Britain did not look a well-governed country that night. At 244 pages, the bill was at least quite chunky by now, but the detail of the new institutions was still sketchy. It would be simpler, said the Liberal Democrat Nick Harvey, if the bill had just one clause: ‘The Secretary of State can do what he likes, how he likes, when he likes, and where he likes.’
Now, however, the game changed. The question was no longer whether privatization would happen, but how. But the need for speed was still overwhelming. The government had a maximum of three and a half years before facing an election it looked almost certain to lose. The aim now was to get the new railway not merely completed but so entrenched that the Labour Party could not dig it out.
To ensure this, the issue of open access was set aside, for fear that it would terminally jeopardize the award of franchises, which was already looking a particularly fraught aspect of a terrifying process. Unified British Rail was broken into dozens of different entities: twenty-five train operating companies (TOCs), six track renewal companies, six track maintenance companies, six rolling stock maintenance companies, three freight operators, three rolling stock leasing companies. And they all had to be flogged off before the closure date of the next election. Hurry! Hurry! Hurry! Everything must go. And, with the trivial exception of Railfreight Distribution, everything did go, although in the initial stages the fabric of the railways – the track and stations – was to remain public property. It was an awesome achievement, in its way: the nearest thing to a scorched-earth policy one is ever likely to see in British politics. Whether there was a cost in blood is a matter for genuine debate. The cost in treasure was staggering.
Hereabouts, the railway industry began to acquire the mass of acronyms that would govern it henceforth. The final volume of Terry Gourvish’s three-part history of the railways since nationalization, covering 1997 to 2005, lists – by my reckoning – 148, the majority of these specific railway creations. Welcome to the world of ORR, OPRAF, ORCAT, ROSCOs, RIDDOR, TOCs and dozens more.
OPRAF was the Office of Passenger Rail Franchising, presided over by Roger Salmon, a merchant banker. ORR, the Office of the Rail Regulator, was run by John Swift, a QC. Their chief qualifications were that they had no knowledge of the railways. Indeed, this became the major qualification for any involvement. This was partly because of a visceral Conservative belief that anyone brought up in the sloppy and slap-happy nationalized sector was completely unfitted for the thrusting, competitive, customer-friendly industry that was about to be born. This feeling was strongly reinforced by what the government saw as British Rail management’s sulky obstructiveness to the excellent idea of their company being eviscerated. The second Sir Bob Reid, Reid II, was always careful not to oppose privatization as such, merely to argue that his own sectors provided a more obvious basis for it. Not all his underlings were as self-contained, and they paid a price.
Railwaymen were out; anyone else was in. This notion reached a peak in 1997 when the British Airports Authority, itself a railway novice, announced plans for the new Heathrow Express link including the recruitment of ‘120 special staff, skilled in customer care … a third of whom will be trained as drivers’. It was considered easier for a well-mannered person to learn to drive a train than to teach a British Rail employee manners.
Two groups of people were highly fashionable: consultants and lawyers. According to a parliamentary answer, quoted by Wolmar, £450m were handed to consultancy firms during the privatization process by the government. ‘Many of these consultants had no prior knowledge of the industry,’ he noted. This addiction has never gone away. The saddest story I heard on my travels was the attempt by a local group of activists to brighten up Homerton station in East London by planting a garden. Frustrated by the sloping site, too urban to have the expertise themselves, they paid consultants to advise them what to plant. Time was when half the signalmen and crossing-keepers in Britain would have known.
But this was nothing. Virtually every top legal firm in Britain had its snout in the gold-plated champagne-filled trough that the government kept refilling through the mid-1990s. There was an endless supply of billable hours working for a client, the British government, which had no interest in the cost but just needed the job done fast. The job involved transforming the wisdom of the years handed down within a unified, hierarchical organization into myriad contractual relationships. A solicitor involved in the process (who must remain anonymous) explained:
While the contracts were being drawn up for the first franchises in the mid-1990s, a whole new language grew up. There were ‘figleaf contracts’, which I’d never heard of before or since; ‘overarching agreements’ (I’m not sure what that means but it means something) and ‘retrofitting’ documents.
Basically, these were the contracts between OPRAF and the TOCs. No one had finished due diligence or worked out the contractual matrix, but we just had to push on. All sorts of things hadn’t been thought through, like who would make the announcement to say that the train was about to arrive at a short station. You had to work out the contractual arrangement for something even as trivial as that. Or who puts up the announcement that a train is delayed?
The ToCs were buying a pig in a poke. They knew they were buying a pig in a poke. Everyone knew it. The lawyers were sitting around saying ‘What the fuck are we going to do?’ ‘Do it,’ was the answer.
We joked that we knew the election timetable before anyone else. Even very experienced professionals on privatization said this knocked spots off everything else they had worked on, because of all the interlocking complexities. Other privatizations were based on two-dimensional models. This was three- or four-dimensional. And it had to be done to an ever-changing political timetable. It’s impossible to work out what it all cost.
‘A billion,’ I suggested.
‘Not an unreasonable guess.’
‘Did anyone say the whole thing was completely mad?’
‘All the time.’
Some learned the complexities quicker than others. Roger Salmon announced that he wanted to axe the little-used sleeper service between London and Fort William, which newspapers promptly christened the ‘Deerstalker Express’. There was a huge outcry, and a substantial immediate upturn in business from the free publicity. Salmon had to back down. It was clear now that every route had to be sacrosanct because any closure would be seen as a sign of the perfidy
that lay behind privatization.
But the process itself also seemed immutable unless the Conservatives were faced with enough by-elections to destroy their majority: but only eight of their MPs died in the five-year parliament; their lively sex lives must have kept them fit.
For some strange reason, the British government likes to use April Fool’s Day as the date for major administrative changes. And so on 1 April 1994 British Rail handed over its core infrastructure functions to the new operation known as Railtrack. They temporarily retained the trains but with the Reids’ precious sectors split into twenty-five franchise-ready geographical areas.
Railtrack was still a government-owned company but its chairman, another oilman called Bob – this time Bob Horton, an abrasive ex-BP manager – was already agitating for it to be privatized. The first change was the introduction of new grey-and-green staff uniforms at the major stations which had passed to Railtrack, suggesting that the new company had already acquired the taste for pointless corporate self-assertion that would be characteristic of the new railway. Contrast that with the mouselike entry of British Railways in 1948.
Horton was kicking at an open door. What rail privatization had so far lacked was the kind of concession to popular capitalism that could give ordinary shareholders a stake in the railways’ success. Here too was the prospect of a large inflow of funds to the Treasury. And it added yet another padlock on to the new set-up to make it harder for Labour to unpick. Why on earth didn’t they think of it before?
Meantime, the less visible parts of BR were already being sold off including the ROSCOs (Rolling Stock Leasing Companies) and the BRISCOs (the British Rail Infrastructure Companies). The nation’s 11,260 locomotives and coaches were sold off for a song to three groups of chancers including Porterbrook, a consortium set up by an obscure BR manager, Sandy Anderson, who was himself involved in arranging the privatization process. Without a whiff of illegality, Porterbrook bought one set of rolling stock for £526m, and sold it on seven months later to Stagecoach for £300m profit, more than £30m of which went straight to Anderson, whose initial investment had been £120,000.
On the one hand, the vendors were desperate. But potential bidders were also kept out by vague threats from the Labour Party to keep clear. Anderson gambled that Labour were just indulging in windbaggery and won. The newly established National Lottery could not compete with this. Anderson personally thanked the Labour Party whose opposition to the sale – and the fear that they were serious in threatening retribution – helped depress the price. The National Audit Office blamed the government’s haste and said it had cost the country something like a billion pounds. That’s another billion pounds.
The infrastructure companies were sold off in 1996 to major engineering firms who were then given guaranteed contracts with Railtrack. The hidden agenda seems to have been the need to break the unions. The clash of cultures between the old rule-bound, come-day-go-day union-dominated British Rail ways and the can-do-and-do-it-now attitude of private managers was brilliantly portrayed in Ken Loach’s 2001 film The Navigators. Loach is hardly unbiased, but what he illustrated was the manner in which both sides, in their different ways, cut corners. And the 1990s was the heyday of corner-cutting on the railways.
Railtrack was sold off in 1996, for just under £2 billion. It was a last hurrah for privatization: over-subscribed, with shares leaping by fifteen per cent on day one, even though the company was already starting to build its reputation for laxness and ineptitude. Once again the National Audit Office said governmental haste had cost the taxpayer money: had the sale been conducted in stages, it could have raised an extra £1.5 billion.
Amidst all this came the sale of the franchises. In just over a year, under the comparatively emollient stewardship of the bicycling baronet Sir George Young,2 all the trains had been sold off. It began, amid farce, in February 1996, when South West Trains began operating into Waterloo and Great Western into Paddington. There should have been three companies operating. But the third sale, involving the lines into Fenchurch Street, had to be scrapped following allegations of ticket fraud. Then there was the question about which train was the first. The secretary of state was anxious to make it clear that the 0150 from Fishguard to Paddington belonged to the old era, especially as – under the familiar Sunday engineering arrangements – it had started out as a bus. Anyway, that was an even less enticing obligation than getting on the first South West train, the 0510 from Twickenham, which is what he did, along with various members of the media, seven fare-paying passengers and one non-fare-paying passenger, who was the first person off at Waterloo and somewhat surprised by the size of the welcoming party at that hour on a Sunday morning. He was fined £10.
The Fenchurch Street ticket fraud, explained Steve Norris, the junior transport minister, was ‘not particularly large’: about £30,000 a month. That was somewhat larger than a single evaded fare from Twickenham, but considerably smaller than the billions that the government was flinging at all-comers to preserve some semblance of respectability for the process. However, most of the other franchises did go without much difficulty. The South West franchise was owned by Stagecoach, undaunted by their pioneering failure on the Aberdeen sleeper. And Stagecoach’s enthusiasm encouraged other bus companies to join in. When the last British Rail train ran, before the start of the ScotRail franchise in February 1997, it hardly registered.
It would be a mistake to imagine that the end of British Rail was universally unpopular. Nostalgia doesn’t come that quickly. When one of the last BR evening trains from Euston before the takeover by Virgin went wrong in familiar fashion, passengers began a chant of ‘Branson! Branson! Branson!’ in honour of their presumed saviour. ‘Surly ticket inspectors were taunted with predictions of their job prospects when the people’s champion took over,’ wrote the Guardian columnist Mark Lawson, having witnessed this outburst of popular delight. ‘Metaphor became reality: these people really believed that Richard Branson would make the trains run on time.’
Virgin’s airline had built a good reputation, which partly rested on the pleasing touch of giving cattle-class passengers a choc-ice during the film show. And Branson evidently believed in his own magic powers too. But arrogance was the defining characteristic of the train operators in the early days. The sensible approach would have been to keep his brand name off the trains until he was sure they would show some improvement on British Rail. In view of the foul-up of the West Coast Main Line upgrade that was to follow, this would have been at least ten years.
Instead, he rapidly had the word Virgin painted everywhere (what would the board of the London & North Western have made of that?) and took the blame for deep-seated problems that were not actually his company’s fault. As I recall, the only immediate change on board was a switch in the buffet from Coca-Cola to Branson’s ersatz Virgin Cola. Though Branson had been free with all sorts of baloney about providing on-board massages and the like, he never even bothered with the choc-ices.
And Virgin was not the only letdown. It soon became clear that improving customer service was not to be the mission of the new train operators. There were exceptions of course. In case you have forgotten, let me remind you of Great Western’s baked beans. The Modern Railways columnist Roger Ford noted that Great Western also had better litter bins, that ScotRail had improved provision for cyclists and that first-class passengers on Anglia Railways got a new free magazine.
In the opening months of 1997, there remained a widespread assumption that this was a brief interlude. After eighteen years, Labour government was imminent. The incoming prime minister, Tony Blair, had promised a ‘publicly owned, publicly accountable railway’. Surely this was going to mean a return to something that looked a bit like British Rail.
For once, railways were an issue in the election in the sense that the whole pointless botch of privatization merged into the general air of decay that surrounded the government. The Labour landslide dwarfed even that of 1945. Surely Blair would use t
his remarkable opportunity to fulfil that promise and restore some sense to the railways. He would, wouldn’t he? Wouldn’t he? Wouldn’t he?
Oh, no, he wouldn’t
There wasn’t even a pretence about it, not in the end. In opposition, Labour had been content to make whatever promises they thought the audience wanted to hear. ‘It mattered what we said but not what we did,’ explained Clare Short, recalling her stint as shadow transport secretary. ‘That seat of the pants operating was very Blair.’
But as government neared, the leadership became more careful, and the 1997 manifesto was deliberately downbeat: ‘Our task will be to improve the situation as we find it, not as we wish it to be.’ Gordon Brown, the incoming chancellor, was implacably opposed to renationalization on grounds of expense. Tony Blair was not interested in railways, in keeping with a prime ministerial tradition that John Major would have done better to uphold. Indeed, though the threat of climate change became ever more obvious throughout his ten years in Downing Street, he displayed little interest in anything to do with the environment except as an occasional rhetorical device.
The railways did have a much louder and more influential voice in this government, perhaps louder than ever before. John Prescott, as deputy prime minister, was crowned as emperor of a new and sprawling department, Environment, Transport and the Regions, which lasted throughout Labour’s first four-year term, with a shifting cast of understrappers taking turns as transport ministers. Prescott, the son of a railwayman, actually cared about the industry, which was a novelty. And he really preferred doing this job to strutting the world like Blair, starting wars here and there.
It was easy to believe that he would have renationalized the railways if only Brown had let him. He insists this was not the case. He remembered British Rail too well and was not enthusiastic. ‘It was an old-boy network,’ he told me in an interview. ‘It was run by the military and still had military concepts. Even the canteen was still called the mess. The idea wasn’t to run the railways more efficiently or more effectively – you just ran it.’
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