The Great Train Wreck: Privatizing British Rail

Let’s Be Pragmatic, However, About Private vs. Public Ownership

By Nick Gier

It is beyond dispute, in all respects, the scheme
[privatizing British Rail] has failed, and failed spectacularly.

—Brendan Martin, international rail expert

It was grand finale of our recent trip to Europe: riding the Eurostar from Paris to London under the English Channel.  After some confusion about where the train departed, we were subjected to a security check more stringent than any we had experienced at any airport. We finally settled in on a silky smooth, fast 2-hour trip to London.

Counting airport shuttles and a long check-in, a flight would have taken at least twice as long. The Eurostar now carries more passengers between Paris, London, and Brussels than all air carriers combined.

On September 4, 2007, the Eurostar set a new record of 2 hours and 3 minutes, primarily because the British had finally upgraded 68 miles of track on their side of the channel.  This train also set a new top speed record of 208 mph near Kent, and the average speed for the entire trip was 153 mph.

In 1987 government-owned British Rail entered into a joint venture with the French and Belgian national railways to provide high-speed service to their capitals.  Ever since British Rail was privatized in the early 1990s, British railways have been in disarray.  This was the main cause of the delay in finishing the high-speed line on the British side.

At one time Eurostar trains were supposed to run as far north as Glasgow, but in 2005 those plans were scrapped.  In March of 2015 the British government finally sold all its shares in Eurostar International.

Even Margaret Thatcher did not want to privatize British Rail

Even the fierce free-marketeer Margaret Thatcher hesitated to do it. As Brendan Martin describes it: “She starved British Rail investment, but she refused to privatize it.”  But finally in 1991 her Conservative Party ousted her and they liquidated the country’s last major public enterprise.

Between 1993 and 1997 British Rail was sold off to 100 separate companies, which then subcontracted with thousands more. Incredibly enough, at one time 2,000 small firms divided up maintenance on 20,000 miles of tracks.

Many entrepreneurs got into the railway business, including airline magnate Richard Branson. Some became multi-millionaires, but others went bankrupt. The company Sea Containers thought it could succeed just well on land as it did on water, but it went bust on the East Coast Line. After another private company failed on this route, the government placed in back in public hands.

Higher Fares and Poor Service

The new railway companies promised lower prices and better service, but fares (adjusted for inflation) are 24 percent higher than in 1995. Significantly, British fares are 50 percent higher than those on the national railways of continental Europe.  Passengers there are safer and travel at top speeds of 186 mph, 46 mph faster than the speediest British train.  Traveling at even higher average speeds (now about 163 mph), Japanese bullet trains have had only one derailment in 50 years, and that was caused by an earthquake.

Even though British train journeys have doubled since 1995, the stingy operators are not offering not enough seats to their passengers. The British journal The Economist reports that “22 percent of passengers commuting into London and 16 percent of those travelling to Manchester have to stand.”

The British Guardian newspaper reports that the private companies have “punctuality problems, chronic overcrowding, and terrible consumer satisfaction ratings.” Poll after poll indicates that a majority of citizens want the government to run their passenger trains.

In 1948 a Labor Party government nationalized the four major rail lines, and over thirty years the main complaints were occasional delays and lousy sandwiches.  There were about three times as many annual train deaths under public ownership, but most of those were due to signaling errors, now much reduced by better technology.  Even so, both Britain and the U. S. are delinquent in installing safety systems, common in Europe, which could have prevented the recent Amtrak accident that claimed 7 lives and injured 200.

Private Maintenance Means More Broken Rails

Significantly, since British Rail went private, there have been more than twice as many annual deaths due to poor track maintenance.  For a period of time there were just as many train fatalities as road deaths, which have always been higher anywhere in the world. Public outcry has forced the return of the tracks and their maintenance to public ownership.

Nearly 15 years ago, the conservative Financial Times (2/22/01), which once supported privatization, recognized the advantages of nationalized maintenance: “Problems were easily spotted, repairs made, and people could talk to each other. Track workers operated in gangs and knew their stretch of rails like their own back gardens. Instead, [private] workers became nomadic, moving to the next job with little or no local knowledge.” Private sub-contractors were known to cut corners and sometimes hire “workers out of pubs to fill gaps on the night shift.”

Initially, the private companies were given government subsidies until they were able to work out the “inefficiencies” of government “maladministration.” The supreme irony, however, is that government aid was not phased out; rather, it has now risen to $6 billion a year, more than British Rail ever had.  In stark contrast, the larger, safer, nationalized German railway system requires a $1.2 billion annual subsidy.

Privatizing the London Underground Also Fails

Starting in the early 2000s, there were two attempts to privatize the Tube, London’s famous subway system. This was undertaken against the wishes of former Mayor Ken Livingstone, who called the program “a scheme which every independent transport expert opposes.”  Sure enough, the experts were right.  Two private companies took over two lines, but they soon went bankrupt, caused unnecessary disruptions, and their franchises were returned to public ownership.

GOP is Right: Amtrak is “Third World”

America’s high-speed Acela attains 150 mph only on 35 miles of track on the Northeast Corridor.  Amtrak runs on rails not properly maintained and unsuitable for high-speed traffic. Bridges and tunnels in the Northeast, half of which are over 100 years old, slow trains down to as little as 30 mph. European trains cover the distance between Boston and Washington in less than half the time Amtrak does.

The worst bottleneck is the conjunction of tracks under the Hudson River between New York City and New Jersey.  Building a new tunnel required funds from New Jersey, but Gov. Chris Christie rejected the idea.  The existing tunnel was flooded by Hurricane Sandy and salt water corrosion will make it unusable in the next 15-20 years.

GOP Rep. John Mica is correct to call Amtrak a “third world rail system,” but the reason that the average age of its cars is 29 years and that train trip from Chicago to Denver takes five hours more than it did 85 years ago, is that congressmen such as Mica have refused to fund a first-world system.

GOP plans to sell off the profitable ($15 million a year) Northeast Corridor to the highest bidder would be a disaster. The rest of the Amtrak system would be more underfunded and would definitely not be attractive for private operators.

After realizing the great profits from hauling freight and predicting future competition from the airlines, the railroad companies began discontinuing passenger service left and right.  My father, who started on the Chicago Northwestern and then became a trainmaster on the Union Pacific, told me that one tactic to discourage passengers was to stop cleaning the toilets.

Let’s Not Be Purists about Private vs. Public Ownership

Japan’s very efficient regional freight/passenger lines have always been in private hands, and in 1987 the world famous bullet train routes were sold off to seven private firms. JR East, however, is the only line that runs without a government subsidy. As The Economist explains: “One reason for its efficiency is that JR East owns all the infrastructure on the route—the stations, the rolling stock and the tracks.” And just like our own long western rail lines, they were given ownership of the land adjoining the tracks. The Economist author continues: “Nearly a third of JR East’s revenue comes from shopping malls, blocks of offices, flats and the like.”

The Economist ran an article in 2010 (7/24) praising America’s private freight railways as the best in the world. Their rates for hauling goods is half that of Europe and Japan.  ConRail, however, was originally a nationalized company, which, in 1976, saved many railways in the Northeast from bankruptcy. In 1987 it was returned, with reduced government regulation, to private ownership as CSX Transportation and the Norfolk Southern Railway.

America’s railways would never have begun running with government help, especially the huge land grants in the West.  But most importantly, they would not be making their huge profits if it had not been the fact that they were allowed to discontinue all passenger service. Amtrak is the underfunded step-sister of America’s successful private railways.

The reduction of government regulation has made American and European airlines more competitive and has reduced fares considerably.  (A disappointing experience with no-frills Ryan Air during my recent Europe trip has convinced me to fly the traditional carriers next time.) Therefore, let us not be ideological purists about private vs. public ownership.  If private ownership is profitable and responsible, then let it rule, but if public service and the general welfare are our principal goals, then the government should subsidize and administer by the most efficient means possible.

Conservatives support the building of roads and airports with public funds without expecting that they make a profit.  The government should help finance the building of dedicated passenger rail lines and their maintenance with same commitment to public service and the general welfare.

Nick Gier of Moscow taught philosophy at the University of Idaho for 31 years. Read his column on the world’s high-speed trains at www.nickgier.com/020309_BulletTrains.htm