Railway Modernisation

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21 August 2009

Modernisation was not delayed, as claimed ‘because managers spent time on organisational changes & liveries’. Minutes record very little time spent on liveries. Neither was it delayed by privately owned companies after the war, ‘because Directors were too concerned with compensation for nationalisation to modernise’.

Comparison with French Railways is popular, but flawed. They used American post-war aid to modernise railways. UK used American aid to bolster Sterling, restore embassies, pay ‘compensation’ to Commonwealth countries for costs incurred protecting them from invasion. The French did not have NIMBYs opposing new routes. BR had to produce five alternative routes for a high speed Channel to London route. All were rejected by MPs, councillors, et al, who sarcastically criticised BR for not building high speed lines!

Modernisation was overdue. Railways were in a poor state as a result of wartime control, government policies & inequitable post war control of materials that delayed replacement of war worn assets.

The MoT admitted that the BTC ‘inherited the position in which they find themselves. During the war it was impossible (i.e. ‘politically expedient’) to provide resources for maintenance except to the very minimum extent. Increased strain of heavy war traffic [&] emerged from the war with equipment out of date & all run down. Since the war, Governments were ‘forced’ seriously to restrict investment in railways’. (Proposals for Railways 1956, Page 4). As Government did not act likewise on road transport, they could not claim it was forced.

The biggest current myth is that Government undertook to subsidise modernisation.

1955 Modernisation & Re-equipment Plan

In 1954, the Government authorised the BTC to submit a Modernisation Plan. ‘Government will loan £500m’. (BTC minutes, PRO: AN85/7).The BTC’s Comptroller, ex-civil servant Reginald Wilson, took responsibility to set out traffic, economic forecasts & annual cash flow statements for the Plan: Track & signalling would be improved to permit 100 mph [1] - well ahead of world standards, with colour light signalling. Power operated points & signals required fewer signal boxes & staff. £20m was allocated for the Automatic Warning System. Electrification was planned of east & west coast routes; and some commuter routes. Way & Works included a major programme of bridge renewals to catch up on deferrals from & since the war, costing £20m. At least half was for overbridges carrying heavier road traffic weights than when they were built. There would be no funding from the Highways Budget, as recommended by an independent inquiry in 1930. Faster trains & heavier axle weights of modern locos required stronger track. Freight services & depots would be modernised. Wagons would have automatic brakes & increased capacity. (Sizes were limited by clearances & curves in private sidings. Hauliers avoided problems by unloading in the street). Office systems would be modernised. It was to cost £1,240m over 15 years, funded by the BTC, not Government. (DoT memo 31.5.56, PRO: MT132/32). £400m would come from the Depreciation Fund [2] & the rest from Loans raised on the Market. It did not include level crossing modernisation, which required repeal of laws by Parliament on crossings, so that BR could adopt European pre-war practice. The law changed in 1957. £85m return pa was forecast. A better ROI required increased prices for a modernised system, but statutory interference held them down, whilst suppliers’ prices continued to rise. Only BR prices were controlled. There would be closures, but the slow closure procedure, with the MoT directing retention of loss making lines on social grounds, without subsidy, would hold down the return. The 1953 Act required the BTC only to break even. The Plan contained elements that did not produce an adequate return, but this occurs in industry, as top executives from blue chip companies informed Government's Radcliffe Inquiry in 1960. (Lords Record Office: HMSO Pub - NP Reel 2641). In January 1955, the MoT was satisfied the plan was sound.

The BTC informed the Federation of British Industry of the workload facing industry. The Plan would benefit UK industry. British Insulated Callenders Cables advertised: BR modernisation gives manufacturers experience in up to date traction & is assisting them to secure exports”. Contemporary opinion on the Plan was favourable:

‘The Plan is carefully thought out’. (Economist 29.1.55). ‘Railways are not obsolete, & there is no possibility of a major part of traffic transferring to roads. The £85m return looks adequate & is calculated on technical grounds, & allows nothing for the effect on travellers, which should mean more traffic. This should have been put in hand long ago. Government influence on railways & their capital programme has been so far reaching in many ways, they can scarcely avoid the lion's share of responsibility. Government should guarantee the cost (NB: not fund it). There is no question of the major part of railways becoming superfluous, [nor] of the major part of traffic being transferred to roads within a few decades. The Plan will be funded by £800m from external borrowing & £400m from the Depreciation Fund’. (Times 25.1.55).

‘If BR management is given freedom, responsibility & tolerance, the modernisation plan will be as wise as all the other stakes in the future voted by private business capital in Gt Britain’. (Prof. L.L. Waters, Indiana University, BT Review, April 1955).

Financing modernisation

The Tory Government might have financed modernisation, given a belated show of remorse for the financial mess to which they had reduced railways by rejecting the “Square Deal” (the pre-war demand by railways for equality of treatment to road transport), their inept wartime pricing policy with £1bn skimmed out of railways of which, at least, 20% should have been refunded as Excess Profits Tax, as applied to other industry. Government should have funded it to repay railways for their war effort using vast sums Government seized. They might have done so to redress the consequences of leaving BR to operate for ten post-war years with a rag bag of assets, whilst competitors were given licence to modernise using excessive wartime profits. They might have done so to compensate for selling ex-military vehicles at knock down prices to road operators whilst overpricing BR for a few wagons & track funded by government in the war, which had only scrap value in a peacetime level of industrial output. BR managers did not want these “assets”. Government might have funded modernisation to give industry a shot in the arm, as they were losing so much business to foreign industry. They didn't.

Despite the evidence of a White Paper, Hansard, BTC Reports & legislation, it is claimed that the 1955 Plan was financed by Government. One such – in a letter to me - referred to a file (PRO: MT124/177), said to mention a £250m Grant for modernisation. The file related to closure of the M&GN route. A memo to a Minister refers to a loan of £250m to tide BR over the years before modernisation could pay off. Secondly, a note of an answer by a senior BR executive at the M&GN closure hearings: “£250m is the amount Parliament has authorised BR to borrow”. The Transport [Railway] Finances Act, 1957, authorised borrowing £250m.

Colin Boocock wrote in "Spotlight on BR": “The 1955 Modernisation Plan was supported by Conservatives with hard cash: £1240m”. Christian Wolmar wrote in Broken Rails: “Professor Evans referred to the generous funding of the 1955 Modernisation Plan”.

A Dept of Transport memo (October 1954) stated: “the basis on which BTC seek to raise £600m is acceptable. Some modernisation has an element of social service. The Chancellor opposed any subsidies”. The Chancellor made it absolutely clear that it would not be funded by Government. He expressed ‘admiration for the practical manner in which the plan has been worked out & set before us. We have no intention to subsidise the plan’. (Modern Transport 12.2.55).

Parliament was told: ‘Modernisation was to be funded by issuing British Transport Loan Stock’. Later, the 1956 Finance Act stipulated that, instead of issuing Loan Stock on the market, the Transport Minister would make loans to the BTC. Loans were subject to interest & to be repaid over 25 years. The BTC 1956-62 Annual Report & Accounts confirm this formula & set out the loans, interest paid & repayments. Government loaned £729m, & £219m came from depreciation funds & scrap sales. By 1963, when the Government muddied the waters by breaking up the BTC, £117m interest had been paid on the loan, & £131m of the loans repaid. These should not be confused with loans advanced to the BTC by the Minister in pursuit of his ridiculous policy of holding fares below inflation, whilst not controlling suppliers’ prices. “The provisions of the [Finance] Act do not absolve the BTC of responsibility for the financial success of the Plan”. (BTC 1956 Report, Page 10).

BR had to justify investment by economies, reduced assets or new revenue. Government missed an opportunity to use cost/benefit criteria, as used for road improvements, to justify electrifying the North Wales Coast, which BR could not justify but local authorities desired. It would have cost less than the Conway estuary tunnel, which was a small part of the upgrading of the A55.

By 1963, interference in fares & freight charges cost BR £1115m & it had paid £690m to previous owners (see Britain’s Railways – the Reality). Subsidies for uneconomic socially necessary railways began in 1969.

Steam engines

BR was criticised for not introducing diesels earlier than 1955. In Fire & Steam, Wolmar wrote (pp 273-6): ‘Railway Executive made error in not recognising steam was on way out’. ‘There was a reluctance of managers to embark on electrification. Henshaw said there “was little excuse for slow progress in introducing diesels.’

Government would not permit modernisation before 1955. Until then, they directed BR – but not road transport - to replace like for like, & only then, if essential on safety grounds, (see Economic Survey Reports, Britain’s Railways – the Reality, pp 52-55). Without new steam locos, which were permitted within these rules, railways would have ground to a halt, as locos were under-maintained & subject to excessive loads in the war. Not many were built. On nationalisation, BR had 20,211 steam locos, mostly in poor condition after wartime use & by 1955 had replaced about 10%. By 1955, the loco fleet was 11% less, to handle virtually the same traffic volume. New diesel & electric locos, costing three times as much as steam, were treated as capital, like-for-like replacement, steam locos were maintenance. In his autobiography: Off the Rails, BR Chairman, Richard Marsh, explained that civil servants called for replacement of jointed track by jointed track instead of cheaper-to-maintain long welded, because the latter was investment! Few steam locos were built after 1955, and these were required because UK-made diesels did not have the power nor braking capability to handle big freight trains.

AJ Pearson wrote (Railways & the Nation, p.112): ‘Riddles (CMEE) had grave doubts about diesel reliability’. Sir John Elliot (On & off the rails p.84): ‘BR engineers said UK diesels were unreliable, without new steam locos, BR would have been in real trouble’. American diesels were too big for UK’s gauge. There was no prospect, as hindsight critics claim, that BR would have been allowed to buy American - given precarious currency balances, especially when, to protect industry they denied airlines American aircraft. (Barnett, The Lost Victory, p.338). If Ministers would not admit that our infant aircraft industry could not meet UK needs, the prospect of admitting that an older loco industry could not do so was nil.

The Dept of Transport noted that the cost of steam locos was £20-25,000; compared to £80,000 for a diesel.

In 1957, the BTC stated: "Modern locos are heavier & have smaller wheels requiring improved track design. The cost of improved track was ignored by critics who said that dieselisation should have started in 1949, when steel supplies were inadequate, & Government blocked restoration of track even to pre-war standards. Diesel & electric locos required purpose built facilities which were disproportionately costly for small numbers. Steam depots were unsuitable. When government authorised BR to modernise, they were pressed to favour UK suppliers. Their inability to match USA standards caused failures in traffic for which BR was blamed.

In July 1960, the Cabinet debated assisting the ailing North British Locomotive Co.: “The Company employs 3,300, under not very effective management. It has lost a great deal of money switching production from steam to diesel. Loans made from Government Development Areas Committee: £1.75m; Clydesdale Bank: £1.5m & GEC: £0.5m to keep the company afloat”. The Cabinet considered telling the company to reduce their tender by 8-10% to match lower tenders so they may get the contract! In view of impending unemployment, the Scottish Secretary advocated BTC being given capital to buy more expensive NBC locos. (PRO: CAB). It would, almost certainly, have been an interest bearing loan. The Cabinet rejected all options, but it is revealing that they considered action that would have increased BR losses to support an ailing private sector company.

‘Progress - & delay - of modernisation is in the hands of contractors’. (BTC Minutes, December 1956).

“The programme of 782 locos is in excess of the total UK productive capacity”. (PRO: AN85/11). “The types of locos which were bought from the private sector were, in effect, what was available & were not as powerful as needed. The largest type was less powerful than a class 8 steam loco”, (BTC minutes, 10.7.58).

When diesel locos lost control on falling gradients of wagons – unbraked due to restrictions imposed by industrial private sidings, BR created brake tenders - a wagon weighted with concrete, or reverted to steam.

Defects in new locos & multiple units led to serious problems, fires & loss of revenue, coupled with increased costs. Manufacturers kept their heads below the parapet when the shooting started. Regrettably, there was no PR campaign to publicise manufacturing failures, but that was unlikely with railways run by ex-public servants & an anti-BR media apprehensive of alienating private sector advertisers. (see Britain’s Railways – the Reality)

Wagons

Alleged Modernisation Plan failures included retention of loose coupled wagons not fitted with automatic brakes. This was due to objections to their use in collieries, power stations, steel works etc., because uncoupling would take longer, & brake pipes could be damaged on wagon tipplers. Tight curves in sidings prohibited bigger wagons. Because all wagons could not be fitted with automatic brakes as envisaged in the Modernisation Plan, brake vans – & hence guards - had to be retained for safety reasons. When the MGR concept (1000+ tons trains of coal, loading & unloading on the move) was introduced, a reluctant NCB replaced traditional loading screens by bunkers at some collieries, losing the customary massive pool of empty wagons. Where bunkers were not built, but coal was to go to bunker equipped power stations, BR staff had to be supplied to uncouple/recouple every wagon instead of keeping them continually coupled.

Journalist David Wragg wrote in Signal Failure - Politics & Britain’s Railways (p142) “A brighter spot in freight was the bete noir of BR – private owner wagons”. (BR did not oppose private owner wagons as such, only the ‘wretched boxes on wheels’ used to convey coal which had changed little from the earliest days - clapped out, grease lubricated axle boxes prone to catch fire, poor braking, mostly 10 ton capacity. They were a pain. BR was forced to buy these for £43m - well above their real value, by Government which saw BR ownership as a means of forcing modern wagons – with its ensuing effect on manufacturing - which the previous owners would not entertain. Government had enacted powers 20 years earlier to buy up these wagons with Government money, but failed to do so. POWs did not disappear. Industries owned tank wagons and some other specialised vehicles. The old POWs bore no similarity whatsoever to the 1980s POWs which had high capacity roller bearings and braking! BR managers were glad to see them because they represented a commitment to use rail.

In Fire & Steam (page 275), journalist Wolmar said: “As BR had to scrap 85,000 POWs of 550,000 it had bought, it was an expensive mistake”. He criticised the £40m paid for the wagons, (On the wrong line, p.28). BR had no option - they were compelled to do so by the 1947 Transport Act, failure to do buy would have meant breaking the law. BR managers certainly did not wish to own the antiquated fleet of private owner wagons forced on them.

Economist & one time Australian railway clerk, Stewart Joy claimed (The train that ran away, p.77) “The BTC rushed to buy 0.5m decrepit colliery wagons”, when it had to do so under the 1947 Act, passed before the BTC existed! The Act specified price, according to age and size, for each of these antiquated wooden ‘Private Owner Wagons’, mostly of 10 ton capacity.

‘The price was not “pre-war new prices” as stated by A.Vaughan (Railway Blunders, p.60), but based on depreciated values. Regardless of their condition (see PRO: MT47/223). The prices were set out in the Transport Act, 1947, Sixth Schedule.

The total came to £43m. Government tried vainly for 20 years to persuade railways to buy and replace them with a modern fleet, to cut unemployment. They were not in good condition before the war and limited, even then, to lower speeds than railway owned wagons. Within a year, 55,000 had to be scrapped. With limitations on BR expenditure and inequitable economic policies limiting steel allocations, 27% were still in use 10 years later causing delays. Wagon fleet reduction was limited by inefficient use by collieries, industry & traders. Companies, with 10,000 staff building & repairing these wagons at 280 works & 900 repair depots, were not nationalised. BR was required to pay them to maintain ‘ex-Private Owner Wagons’.

Keesings Archives (8362A): ‘The Transport Bill says 585,152 privately owned wagons will be compulsorily acquired. They were owned by 5000 companies – collieries, factors and traders, who were individually compensated’. 76% had grease lubricated axle-boxes, (Railway Study February 1944, PRO: Rail 1098/39)

Evidence to the Minister’s Special Advisory Group (PRO: MT132/82) reveals: ‘in 1951, BR gave six months notice to wagon repairers to cease placing wagons with them, to reduce costs. Repairers described BR policy of new bigger coal wagons as over wagonning, leading to scrapping thousands of wooden bodied wagons’. They appealed to Government & BR was told to withdraw the notice. It is revealing that replacing 19th century design wooden wagons by steel wagons of up to 100% higher capacity was seen in such a light. Little wonder UK industry lost a world lead in so many fields. “British wagon builders will not get foreign orders when all they show in their shop window, are their present wretched little trucks”. (Modern Transport, 22.6.46).

Freight

In December 1956, ex-civil servant Sir Reginald Wilson [3], member of the BTC, who had already signed off to the Plan - having written parts dealing with traffic forecasts & finances - proposed that top priority be given to modernising freight, & low priority to suburban electric services. (BTC Minutes, 13.12.56). This would have gone down like a lead balloon in Whitehall, & its tens of thousands of commuting civil servants. Ministers, who denationalised road haulage in 1953, & refused concurrent freedom to BR, would not have accepted that tactic.

Hindsight critics have pointed to parts of the Plan that were of limited value. Government required the BTC to break even, not make a profit, to please electors, BTC’s subsidiary, BR was not required to do so. BR was criticised retrospectively for building marshalling yards. In 1957, Ministry & industry forecast increasing traffic. BR coal forecasts were in the bottom range of Ministry statistics quoted in a recent debate. (PRO: MT115/279). The file shows that the Treasury “do not pretend to be able to forecast the level of economy from year to year”. BR would have been damned had it said that they would not modernise freight wagons, handling, etc., on the grounds that industrial traffic would disappear. Industrial traffic was in wagon loads, so Yards were essential.

Freight decline circa 1961 undermined the Plan’s return. Criticism by media, politicians & authors was aimed at BR managers who had not out-guessed politicians & industry who had forecast &/or accepted traffic forecasts of the Plan. None foresaw UK industry would go into decline & textiles, motor cycle, shipbuilding, engineering & machine tools industries would throw in the towel. No one forecast mega power stations in coalfields seriously shortening train mileages. Replacement of coal gas by natural gas was not mentioned to BR planners.

Wolmar (Fire & Steam, p.277) criticised “Daft schemes such as the Bletchley flyover”. BR was not warned that freight – the prime reason for the flyover - would decline as industries collapsed or threw in the towel. No one can assess its benefit to safety & punctuality. A flyover planned at Colwich was deleted by the Minister, creating delays & at least one fatal collision, costly damage to trains, track, signalling & OLE.

Road Transport

It is stated by Wolmar (On the wrong line, p.25: “there were 7,000 horses hauling wagons in shunting yards, a method which lasted in some areas until 1964”. Of 8,793 horses inherited at nationalisation, over 97% were delivering goods & parcels in towns - a post-war practice common in the UK. There were only 238 horses engaged in shunting & they were in small goods depots. (BTC Accounts, 1948, Table VII-7). Those on shunting declined each year, until by 1959, none remained. Horses on C&D totalled 90 in 1957. BR, unlike road haulage, was not allowed to use its own money to replace all horses by motor vehicles earlier.

Railway owned trunk road haulage: Hays Wharf , Carter Paterson & Pickfords transferred to BRS on Day 1. Road hauliers – in the new guise of BRS - did not ‘take on Collection & Delivery for BR in 1953’, as claimed in Railway Blunders by A.Vaughan, (page 60). Over 11,800 C&D motor vehicles transferred to BR in 1948, which retained control until 1968, when government created NCL to take over BR & BRS road transport.

Closures

“The operation by more economic means or elimination of unremunerative passenger services is an essential feature of the Plan”. (Cmd 9880: Proposals for Railways, para 50). Opposition to closures by MPs was fierce.

Manpower

The successes of the Plan included replacing track maintenance labour with machinery (a practice begun in 1948); reducing 12,000 signal boxes to a few hundred; labour-saving modern level crossings (despite savage objection by MPs & councillors to introducing methods permitted in Europe for decades); replacing jointed rail by long welded rail from 1956 to cut labour & maintenance costs, reduce delay-inducing track defects and produce a smoother ride.[4] These changes were made with virtually no dispute. Had UK industry implemented similar changes, we might still have an industry worthy of the name & in the First League.

Reappraisal

‘Government debated the Reappraisal of the Modernisation Plan, which stated that the shortfall was due to circumstances outside BTC control’. (Cmnd 813). The Reappraisal drew attention to the limitations caused by raising capital solely by Fixed Interest Loans. (BTC 1959 Accounts, p.4). ‘Costs rose £400m due to higher costs’. (PRO: MT115/279) ‘Progress of Modernisation is in contractors’ hands’, (BTC Minute December 1956).

The MoT's Special Advisory Group (Stedeford Committee) reported in strict secrecy in 1961. Their Report was released in 1991 when it was ignored by the media. It covered, inter alia, the Modernisation Plan, the return on which had been approved by Government. ‘They were impressed by the thorough & detailed technical investigation, & concluded that much of the investment being spent was repairing obsolescence of the past 20-50 years that had to be spent’ said Group member Dr. Beeching, not then BR Chairman. (PRO: MT132/32).

The Group criticised the ‘value of electric locos for coal traffic, because speed was of no benefit’. They had been used for six years on a steep Pennines route. Two electric locos - one front & one rear to prevent a runaway on the gradient - moved what had required four steam locos. Unlike diesels, electric locos could control wagons down a gradient with rheostatic & regenerative braking, pumping power back into the overhead line.

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1 BBC radio 27.2.03 said Beeching initiated 100mph trains. He opposed electrification - the only form of traction then capable of 100 mph.

2 The Financial Times claimed (18.11.91), that in 1948, assets were written off, depreciation was met from taxes. In 1967, Railway Policy (Cmnd 3439, Appdx E): ‘Depreciation should continue to be assessed on a replacement cost basis. EEC Regulations in 1974 provided for a transfer of infrastructure renewals from capital to revenue account, representing nearly a third of BR capital spending, reducing depreciation provisions’.

3 A Daily Telegraph obituary said he was a lone outsider trying to put BR on an even keel, opposed by career managers on closures. Career manager Blee initiated closures, (see The Railway Closure Controversy). Wilson was one of 13 ‘outsiders’ on the 15 strong BTC which called the shots! Requested for the source of this claim, the paper said it was in the PRO – but could not give a file reference. There were over 9m files!

4 Daily Mail (26.12.05): ‘100 years of clickety-clack of trains is to be replaced by silence’. In fact, jointed track replacement by long welded dropped immediately on privatisation. (see Britain’s railways – the Reality)