Twenty five years ago the Conservative’s passed the Railways Bill which ushered in the privatisation of British Rail. Labour promised to fight it every step of the way. Once in government they baulked. There will be no backtracking this time.
This week the government announced that it will intervene to manage the East Coast rail franchise for the third time in a decade. Inching the Tories ever closer to part-nationalisation, it adds credence to Labour’s claim that British Rail should be resurrected. Nationalisation, once seen as an extremist political viewpoint, is now popular amongst voters of all political parties and age groups. But for the Labour leadership it symbolises more than just a policy. It restores the party’s historic link with the very founders of the movement. In 1894, the Amalgamated Society of Railway Workers passed the first resolution calling for the nationalisation of the railways. It would be fourteen years before a firm commitment to public ownership of industry was adopted through Clause IV:
‘To secure for the workers by hand or by brain the full fruits of their industry and the most equitable distribution thereof that may be possible upon the basis of the common ownership of the means of production, distribution and exchange, and the best obtainable system of popular administration and control of each industry or service.’
When Labour finally nationalised rail in 1947 it would remain in public hands until the John Major privatisation of 1993. The Attlee post-war planning of industry saw coal, iron, steel, cables and wireless, electricity, gas, the Bank of England and transport requisitioned. It marked the high-point of state socialism in Britain. Nationalisation within itself however, did little to improve the fortunes of the rail industry. Severely damaged during World War II, the rail network they inherited was in severe financial difficulty. The issue of just how to finance it has proved contentious ever since.
When a rail commission first proposed a modernisation plan to Winston Churchill in 1955, he was advised that it was a waste of time “bolstering up an obsolete form of transport.” The £1.2bn plan – around £30bn today – to electrify the main lines and introduce diesel models is now regarded as a missed once-in-a-lifetime opportunity to revitalise the Victorian system. Instead, another radical shake up was proposed less than a decade later through Richard Beeching’s The Reshaping of British Railways (1963) and The Development of the Major Railway Trunk Routes (1965). His cuts programme, dubbed the Beeching Axe, aimed to eliminate the rail deficit by 1970 with the closure of a third of passenger services and 4000 stations. Labour had campaigned in the 1964 election to reverse the plan but soon backtracked. The issue of financing would continue to dominate the political agenda right through the 1980s as British Rail became synonymous with bad customer service, industrial strikes and tired jokes about curly sandwiches. By 1989 British Rail received the lowest government subsidy of any rail network in Europe and its perceived failings made it an ideal venture for privatisation. After the sale of Britain’s other key industries – British Telecom, British Gas, British Airways and the electricity boards – the government could be confident of another deal.
It was the Adam Smith Institute who proposed separating the track and the train services before tendering each line out to private bidder. After the 1992 election the Major government produced their own 21-page plan: New Opportunities for the Railways. The aim was to divide the sale into three parts; track, rolling stock and train operators. When the bill was brought before the Commons, the Transport Secretary, John MacGregor lamented the current system that “has the classic shortcomings of a nationalised industry. It is an entrenched monopoly…and an instinctive tendency to ask for more taxpayer subsidy.” In a letter to the national newspapers MacGregor argued that injecting the market into the industry would “identify what the customer wants” and adapt to deliver it. Privatisation would produce “greater value for public money” and bring the network into the 21st century. The infrastructure was renamed as Railtrack and franchises were awarded to private companies to operate trains on each of the lines. Far from offering the value for money it intended, the rate of subsidy immediately increased from £390m in 1993-94 to £1.7bn in 1994-1995. John MacGregor had forecast “no reason why fares should increase faster under the new system than they do under the present nationalised industry structure…In many cases, they will be more flexible and will be reduced.”
Having opposed privatisation from the beginning, Labour were in a prime position to take advantage of the initial rail failings. John Smith – enjoying an unprecedented honeymoon as Labour leader and a 20pt poll lead – used his first conference speech to attack the policy. Referring to John Major as “barmy”, Smith astutely predicted that privatisation would lead to “a system which will provide fewer services, which…will force substantial fare increases, and which sadly threatens the very existence of many rural lines.” Smith would not get the opportunity to take up the fight in government. Just a year later Tony Blair would be stood in his place at the conference podium. Blair initially promised to restore “a unified system of railways with a publicly owned, publicly accountable British Rail at its core”. There was political posturing too when the Shadow Transport Secretary Clare Short warned the City: “to think very seriously before they buy shares in Railtrack. New regulation will impact their rate of return.” The funds to buy it back, estimated at £4bn, would run counter to Gordon Brown’s tight spending plans. In March 1997 Brown finally persuaded the party to drop the pledge. Instead, New Labour promised to lead a government that “establishes more effective and accountable regulation” rather than large-scale nationalisation.
Once in government, multiple train crashes in a short period of time highlighted the under-investment and neglect that had emerged under Railtrack. In the aftermath of the 1999 Paddington disaster, where 31 people died and 500 were injured, a Guardian/ICM poll found that 73% of voters would support rail nationalisation. Railtrack required a £1.5bn from the government to meet the increasing demands for maintenance and repair. Deciding it was no longer viable to fund, the government took the track, signalling and stations out of private hands, and brought in the not-for-profit company Network Rail. At the same time Peter Hain, Labour’s Europe Minister, labelled Britain’s railway system the worst in Europe. He was supported by a government report that compared transport investment in Britain to its European counterparts. Britain came out worse on almost every single count.
Throughout the period, two Labour backbenchers championed the unfashionable cause of British Rail. Both Jeremy Corbyn and John McDonnell sat on the RMT Parliamentary Group at the turn of the century and made various interventions on the merits of public ownership. Even in the halcyon days of New Labour, the rank and file remained wedded to the nationalisation of rail. When the government reviewed the franchise system in May 2004, Jeremy Corbyn argued in the Commons: “It is curious for a Labour Government to say that a franchise must now return to the private sector: that is nothing but re-privatising something that is better run in the public sector.” Admitting that he “read the rail press avidly” Corbyn labelled the system “bizarre” and when the issue was debated at Labour conference a few months later, two-thirds of delegates voted for an amendment to re-nationalise rail. The vote prompted Gordon Brown to defend Labour’s stance: “If we had £22 billion to spend it will not be for an expensive re-nationalisation. We will put investment into schools and hospitals first.” The Transport Secretary Alistair Darling was subsequently heckled for saying “even if we had that money spare, we wouldn’t use it to buy back the railways.” That same year, Britain’s railways carried over a billion passengers for the first time in four decades and it has risen ever since.
It would be another ten years before Ed Miliband nudged the party further down the route of nationalisation. He used a 2014 appearance on the Andrew Marr Show to propose the return of some franchises; but remained constrained for fear of being labelled a Marxist: “We are not going back to the old monolithic model that was British Rail…Old-fashioned socialism was somehow about wholesale nationalisation of the commanding heights of our economy. That is not what I am about.” When Labour lost the 2015 election on a centre-left manifesto, a strong desire emerged to unashamedly commit to nationalisation. When it came to the 2015 leadership election, Corbyn’s ‘unfiltered’ approach defined him against the New Labour era early on. He defended nationalisation resolutely: “Why have we got this obsession with not getting public involvement in what is the essential basis of our society and our economy?” It forced his rival Andy Burnham, who was still the bookmakers favourite to win, to adopt a similar policy. Since the summer of 2015 few within the party have questioned the merits of rail nationalisation. It has been a rare unifying policy for the party and has become a signature of the proposed Corbyn programme. And with each fare rise, government bail-out and Tory ‘mis-calculation’ the clamour for public ownership gains more and more momentum. What happens after nationalisation, however, remains to be seen.