Sell-off signals long goodbye to British Rail: The railway system faces its most radical and controversial shake-up since nationalisation in 1948. Christian Wolmar reports
Wednesday 30 March 1994
British Rail will lose its track and infrastructure to the only national body in the new system, Railtrack, and the services will be the responsibility of 25 new train operating companies (TOCs) which, for at least the next year, will be under the aegis of BR. The rolling stock is to be handed to three companies called Roscos, which at first will be owned by the Government but are expected to be privatised within a couple of years.
From 1 April, British Rail will be responsible for the timetable and scheduling, but will not own the trains or the track. The TOCs, BR subsidiaries for the time being, will run the trains and from next year will be offered to the private sector as franchises, probably for periods of about 15 years.
Only when the private sector starts taking on some of these services will passengers notice much effect from the most comprehensive reorganisation of the railways since nationalisation in 1948. Even then, the change will be gradual. Concern about fares, particularly discounts for off-peak travel and for groups such as young people and the disabled have led to concessions from the Government. Some discounts, such as the disabled persons' and senior citizens' railcards, have been protected by legislation. While the future of savers and supersavers has not been guaranteed, ministers have emphasised that these make commercial sense for operators to retain. There will undoubtedly be pressure for rural lines to be closed. Under the new arrangements, the subsidy for each line will be made known for the first time. However, it will be politically difficult for the Government to close any before the next general election.
While the role of Sir Bob Reid, the chairman of BR and his board, becomes greatly diminished, a group of new people become involved. The most important is probably the franchising director, Roger Salmon, a former merchant banker with Rothschild. Mr Salmon has the task of allocating the pounds 1.8bn subsidy that the Government will give to the railways in the next financial year to the various train-operating companies.
Mr Salmon will negotiate with private companies seeking to obtain franchises and will allocate the franchises between competing bidders. John MacGregor, the Secretary of State for Transport, has told him that 51 per cent of the railway must be franchised out by April 1996 and Mr Salmon is obliged to give preference to companies that have existing railway staff involved in the bid. These are likely to be the only successful bidders.
There have been a few hints of what is to come for people travelling between Gatwick and Victoria over the past few months. Last autumn, Gatwick Express became the first line to operate as a shadow franchise, in readiness for offering to the private sector.
However, even such a simple service has proved more difficult to separate from the rest of BR than the Department of Transport expected.
There were also delays in calculating the track charges the service would have to pay and despite initial hopes that Gatwick Express would be offered for franchise this spring, the offer has been postponed until next spring.
Passengers to Gatwick now have two options at Victoria - to take a Network SouthEast train, which costs pounds 7.50, or a Gatwick Express which costs pounds 1.10 more but is a few minutes faster. Tickets are interchangeable, provided the extra pounds 1.10 is paid on a Gatwick Express train, but in future train-operating companies may refuse to accept other companies' tickets.
Another key person will be the rail regulator, John Swift QC, a competition lawyer, whose job is to protect consumers and ensure the opportunity for free competition. He will also decide on line closures.
Opponents of the privatisation argue that it will cause a decline in railway use, while its supporters say it will lead to a more efficient railway. After two years of political battles, the reorganisation on 1 April will finally give both sides a chance to prove their points.
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