Privatiation of BR ‘flawed’, top official admits

The senior civil servant who pushed through rail privatisation admits in a forthcoming television programme he knew that the whole idea was flawed from the start.

Patrick Brown, the permanent secretary at the Department of Transport in the early 1990s, says in a BBC 4 programme, Witness to history: privatising the railways that it was the Treasury’s insistence which resulted in the separation of the infrastructure and the operations, a split which has not only led to the recent expensive failure of the infrastructure company, Railtrack, but has also been the root cause of several train disasters since privatisation.

Brown, the permanent secretary between 1991 and 1997 says that the split had become a ‘totem’ which was being pushed by the Treasury and he was not in a position to change it.

Brown’s admission has not stopped him benefitting from the flawed privatisation as last week he became part time non-executive chairman of the Go Ahead group which has three rail franchises at a salary of over £60,000.

The structure of the railways for privatisation, with the creation of a separate Railtrack, had been developed by the Treasury before the 1992 election in order to encourage competition between different train operators.

The idea was that the 25 operators created at privatisation would bid against each other to run lucrative services because the there would be ‘open access’ to the tracks but the plan was proved to be impracticable from the outset.

Very soon after the 1992 election, John MacGregor, the then transport secretary, realised that it would not be possible to franchise out the train operations if rival companies could then ‘cherry-pick’ profitable services and he was forced to abandon the concept of open access.

Yet, Brown and his colleagues at the Department of Transport kept pushing through the model which involved splitting up British Rail, even though they realised that there was no good reason for doing so.

He says in the programme: ‘The fact that to do the franchising successfully would mean that we would have to essentially ditch competition didn’t surprise me at all….I don’t think any of us in the Department of Transport thought that open access as described could have any part in the privatisation. But you couldn’t say so.’

He goes on to say that it was the Treasury which insisted on the model: ‘Because the Treasury were very keen on it, it was impossible to admit openly what later became obvious and you knew to be the truth earlier which was that open access was impossible’.

John Welsby, the chairman of British Rail in its dying days before privatisation, challenges Brown in the programme by putting to him that ‘basically, all the operational and managerial problems that derived from splitting off the infrastructure from the operations were being incurred for no benefit’.

Brown responds that ministers refused to consider changing the scheme at that late stage: ‘At this point you’ve got a Bill in front of Parliament, you’re on the way. I don’t ever recall the possibility of returning to vertical integration ….being more than a cursory thought in the night.’

The British model of rail privatisation, which has not been copied anywhere else in the world, has foundered largely because of the split created by separating off Railtrack. The British Rail managers who, as the programme shows, argued at the time of privatisation that the split was a bad idea have been proved right as the lack of coordination in the industry has not only resulted in an increase in delays but also led to soaring costs which has made investment in the network much more expensive than under BR.

Railtrack, which made losses of £534m in 2000/01, was put into administration last October after running out of money and was replaced earlier this month with the not-for-profit Network Rail.