CHAOS MADE SIMPLE

A 12-point guide to the great rail privatisation disaster, by Christian Wolmar. Overleaf, how it's been working in practice

1 WHEN DID PRIVATISATION START?

Even Mrs Thatcher hesitated to extend the privatisation programme to the railways, despite suggestions from the right-wing think tanks in the late Eighties. British Rail was performing well and it seemed unnecessary to risk the controversy. However, when Malcolm Rifkind took over as Transport Secretary, the issue was revived, and it was included in the 1992 election manifesto. Soon after the Tories were re-elected, they published the crucial White Paper, New Opportunities for the Railways.

2 WHO WAS ORIGINALLY RESPONSIBLE FOR IT?

Politically, Rifkind pushed it along. The ideological promptings came from think tanks like the Adam Smith Institute. Sir Christopher Foster, a long-time adviser to successive transport secretaries, devised much of the specific scheme that eventually emerged, while the civil servant chairing the committee in charge of implementing the scheme, Nick Montagu, did much to ensure that the politicians' rather unrealistic plans were brought to fruition.

3 WHAT WAS THE BIG IDEA BEHIND IT?

Malcolm Rifkind often spoke of breaking up the British Rail monopoly and introducing competition. In fact, Railtrack remains a monopoly, while on-rail competition between operators has been ruled out for fear that no one would take over the franchises. The only other big idea behind the privatisation seems to have been to cut back on the huge subsidy bill for the railways. Unfortunately, because of the need to ensure that Railtrack and the rolling stock companies are profitable, subsidy leapt from pounds 1.1bn to pounds 1.8bn last year - although ministers still hope that this will one day be reduced.

4 WHAT DOES IT ACTUALLY INVOLVE?

British Rail has been split into more than 100 parts. These include Railtrack, which owns the track and infrastructure; 25 train operating companies, which run the services; three rolling stock companies, which own the passenger trains and coaches; 13 infrastructure companies, which maintain the track; and some 60 others.

5 WHAT HAS HAPPENED SO FAR?

The Railways Act introducing privatisation became law in 1993. The Offices of Passenger Rail Franchising and of the Rail Regulator were created, and the privatisation process is now well underway. Key parts that have already been sold include the three rolling stock companies, which were sold for pounds 1.8bn in December; most of the13 infrastructure units; and various design teams and technology units. Of the 25 train operating companies, seven have been handed over as franchises to private operators. And Railtrack was sold last week, for some pounds 2bn.

6 WHAT IS GOING TO HAPPEN NEXT?

The Government has set itself the task of having all the remaining franchises sold in time for the general election. The bidding process for another 13 franchises is already underway, and the Government hopes to have all 25 disposed of by next spring. But several, like the West Coast Main Line, are proving difficult to prepare for sale because of the poor state of the track or arguments over services paid for by local councils; while some, like Railfreight Distribution (which has lost pounds 60m in each of the last two financial years), look simply unsaleable. None the less, this time next year BR will be a shell, with only around 60 people working at its headquarters and a few bits and pieces which have not been privatised or cannot be sold.

7 WILL ANYONE GAIN FROM IT?

The directors of Railtrack made a lot of noise publicly eschewing share options; but they still stand to make a lot of extra money in bonuses if Railtrack meets its not-too-onerous targets. Bob Horton, the part time chairman, could double his current base salary of pounds 125,000 while John Edmonds, the chief executive, could add pounds 201,000 to his pounds 168,000 pay.

Eventually, the Treasury hopes to gain, but it is far from clear that the necessary squeeze on subsidy can be achieved without unpalatable cuts in services. The only certain gainers have been the consultants and the advisers. No precise estimate of their fees has been given, but by the beginning of last year pounds 23m had been paid out by the Department of Transport, and the final figure is likely to be several times that. The other gainers will probably be the founding purchasers of Railtrack shares. The deal has been so well endowed with goodies that one City analyst reckons shareholders will make a 19 per cent return in the first nine months - the equivalent of 25 per cent per year. (How much the shares will be worth in five years' time is of course a slightly different question.)

8 AND WHO WILL LOSE?

The biggest losers so far have been the railway workers. Already, under British Rail, the number of staff had shrunk from 154,000 in 1988 to 112,000 in 1994. Now the industry employs around 100,000 people, and a sharp reduction can be expected in the next few years as the privatised companies "downsize". But that isn't the real scandal. On a wider level, the need for privatised railways to attract future investment will make their financial structure incredibly expensive relative to roads. Some fares have been capped, but it seems inevitable that the price of rail travel will rise and that people will therefore continue to prefer road to rail, to the detriment of the environment (and at an incalculable cost to society). In addition, those who do use the railways may find services deteriorating for reasons relating to profitability.

Finally, because Railtrack and the rolling stock companies have been sold off at a giveaway price, we have all been cheated. The shareholders and the owners of the rolling stock companies will have to be remunerated at a cost in terms of extra subsidy of around pounds 700m per year, pretty poor value for the relatively small capital receipts - around pounds 4bn - which have been used to pay for tax cuts.

9 CAN PRIVATISATION EVER WORK?

Most of the new franchisees have made commitments about more services, new trains, more comfortable waiting-rooms, and they all seem to have a passion for bus links, which may be connected with the fact that many of them are bus operators. However, there are doubts as to whether such improvements are compatible with reducing the subsidy bill. So far, passengers will have noticed little change, apart from the proliferation of logos. But there has been a serious hiatus in investment since privatisation was first mooted. Big modernisation schemes have been held up, and there have been no new train orders for two years.

10 IS PRIVATISATION SAFE?

Railtrack's record since it was split off from British Rail has been no worse than its predecessor's. However, there are widespread worries that a private sector organisation concerned mostly with profit may be tempted to cut corners or avoid making necessary investments. There has also been criticism, not least from former BR chairman Sir Bob Reid, that Railtrack retains a key role in the investigation of accidents. Sir Bob and others would like to see a completely independent organisation taking over all such responsibilities.

11 DOES ANYONE STILL BELIEVE IN IT?

Even supporters of the programme privately agree that this model of privatisation, untried anywhere else in the world, is too complex and unwieldy. It has created upheaval on the railways, cost upwards of pounds 1bn in redundancies, consultancy fees, lost revenue and extra subsidy, and so far resulted in a deterioration in services (according to Passenger's Charter figures) and a demoralised workforce. Many Tories still believe in elements of it; few believe this model was the right one. In the words of the late Tory MP, Robert Adley, it is a "poll tax on wheels".

12 IS THERE ANY HOPE FOR THE FUTURE?

It is too late to reverse very much of this. The Labour Party has promised tighter regulation and wants to claw back Railtrack's property development profits, but it cannot legally break the contracts (which range from seven to 15 years) of the franchisees, while to renationalise after the contracts expire would be ruinously expensive. Nor would a Labour government buy back Railtrack, although there is a vague promise about buying shares in it if finances allow. Given the party's myriad other priorities, this seems unlikely. Instead, Labour in government would merely bask in the comforting knowledge that, whatever went wrong, it wasn't their fault.

Arts and Entertainment
Jamie Dornan as Christian Grey in Fifty Shades of Grey

film Sex scene trailer sees a shirtless Jamie Dornan turn up the heat

Arts and Entertainment
A sketch of Van Gogh has been discovered in the archives of Kunsthalle Bremen in Germany
arts + ents
Arts and Entertainment
Eleanor Catton has hit back after being accused of 'treachery' for criticising the government.
books
Arts and Entertainment
Fake Banksy stencil given to artist Alex Jakob-Whitworth

art

Arts and Entertainment
'The Archers' has an audience of about five million
radioA growing number of listeners are voicing their discontent; so loudly that even the BBC's director-general seems worried
PROMOTED VIDEO
Arts and Entertainment
Taylor Swift is heading to Norwich for Radio 1's Big Weekend

music
Arts and Entertainment
Beer as folk: Vincent Franklin and Cyril Nri (centre) in ‘Cucumber’
tvReview: This slice of gay life in Manchester has universal appeal
Have you tried new the Independent Digital Edition apps?
Arts and Entertainment

ebooksNow available in paperback
Arts and Entertainment

ebooks
Arts and Entertainment
‘A Day at the Races’ still stands up well today
film
Arts and Entertainment
‘The Royals’ – a ‘twisted, soapy take on England’s first family’
tvAnd its producers have already announced a second season...
Arts and Entertainment
Kraftwerk performing at the Neue Nationalgalerie (New National Gallery) museum in Berlin earlier this month
musicWhy a bunch of academics consider German electropoppers Kraftwerk worthy of their own symposium
Arts and Entertainment
Icelandic singer Bjork has been forced to release her album early after an online leak

music
Arts and Entertainment
Colin Firth as Harry Hart in Kingsman: The Secret Service

film
Arts and Entertainment
Brian Blessed as King Lear in the Guildford Shakespeare Company's performance of the play

theatre
Arts and Entertainment
In the picture: Anthony LaPaglia and Martin Freeman in 'The Eichmann Show'

tv
Arts and Entertainment
Anne Kirkbride and Bill Roache as Deirdre and Ken Barlow in Coronation Street

tvThe actress has died aged 60
Arts and Entertainment
Marianne Jean-Baptiste defends Joe Miller in Broadchurch series two

tv
Arts and Entertainment
The frill of it all: Hattie Morahan in 'The Changeling'

theatre
Arts and Entertainment
Gillian Anderson and David Duchovny may reunite for The X Files

tv
Arts and Entertainment
Jeremy Clarkson, left, and Richard Hammond upset the locals in South America
TV
News
A young woman punched a police officer after attending a gig by US rapper Snoop Dogg
people
Arts and Entertainment
Reese Witherspoon starring in 'Wild'

It's hard not to warm to Reese Witherspoon's heroismfilm
Arts and Entertainment
Word up: Robbie Coltrane as dictionary guru Doctor Johnson in the classic sitcom Blackadder the Third
books

Arts and Entertainment
The Oscar nominations are due to be announced today

Oscars 2015
Arts and Entertainment
Hacked off: Maisie Williams in ‘Cyberbully’

Maisie Williams single-handedly rises to the challenge

TV
Arts and Entertainment
Eddie Redmayne in The Theory of Everything and Benedict Cumberbatch in The Imitation Game are both nominated at the Bafta Film Awards
Latest stories from i100
Have you tried new the Independent Digital Edition apps?

ES Rentals

    Independent Dating
    and  

    By clicking 'Search' you
    are agreeing to our
    Terms of Use.

    Isis hostage crisis: The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power

    Isis hostage crisis

    The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power, says Robert Fisk
    Missing salvage expert who found $50m of sunken treasure before disappearing, tracked down at last

    The runaway buccaneers and the ship full of gold

    Salvage expert Tommy Thompson found sunken treasure worth millions. Then he vanished... until now
    Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

    Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

    Maverick artist Grayson Perry backs our campaign
    Assisted Dying Bill: I want to be able to decide about my own death - I want to have control of my life

    Assisted Dying Bill: 'I want control of my life'

    This week the Assisted Dying Bill is debated in the Lords. Virginia Ironside, who has already made plans for her own self-deliverance, argues that it's time we allowed people a humane, compassionate death
    Move over, kale - cabbage is the new rising star

    Cabbage is king again

    Sophie Morris banishes thoughts of soggy school dinners and turns over a new leaf
    11 best winter skin treats

    Give your moisturiser a helping hand: 11 best winter skin treats

    Get an extra boost of nourishment from one of these hard-working products
    Paul Scholes column: The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him

    Paul Scholes column

    The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him
    Frank Warren column: No cigar, but pots of money: here come the Cubans

    Frank Warren's Ringside

    No cigar, but pots of money: here come the Cubans
    Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

    Isis stands strong as its numerous enemies fail to find a common plan to defeat it

    The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
    Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

    Virtual reality: Seeing is believing

    Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
    Homeless Veterans appeal: MP says Coalition ‘not doing enough’

    Homeless Veterans appeal

    MP says Coalition ‘not doing enough’ to help
    Larry David, Steve Coogan and other comedians share stories of depression in new documentary

    Comedians share stories of depression

    The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
    Has The Archers lost the plot with it's spicy storylines?

    Has The Archers lost the plot?

    A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
    English Heritage adds 14 post-war office buildings to its protected lists

    14 office buildings added to protected lists

    Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
    Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

    Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

    Scientists unearthed the cranial fragments from Manot Cave in West Galilee