|
Privatisation |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RETURN TO THE HOMEPAGE
RAILWAY BRITAIN |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Officially the privatisation of British Rail occured between 1994 and 1997 when this single organisation was broken up into a myriad of individual companies and privatised. However privatisation moves started long before that. From the late 1960s to the 1990s there was a gradual privatisation of all of the ancillary services once associated with the railways. These included public corporations such as National Freight Corporation (NFC), British Transport Docks Board, Atlantic Steam Navigation, Sealink UK Ltd, BR Hovercraft Ltd, British Transport Advertising, British Rail Workshops and British Transport Hotels. With the election of Margaret Thatcher as Prime Minister in 1979 there started a major drive towards mass privatisation of public corporations and other assets. This eventually affected the railways as well. Thatcherism was to bring about the biggest ideological and industrial change in British society since the Attlee administration of 1945-1951. The first transport related public corporation to be privatised was the National Freight Corporation (NFC) under the Transport Act 1980. The NFC had assets valued at £100 million, with its principal subsidiaries being BRS, National Carriers, Roadline UK, Pickfords Removals, Pickfords Travel and Tempco International. These companies employed 26,000 people, possessed 18,000 vehicles operating from 700 locations, and was Europe's largest single freight company; it had also won approximately 10 per cent of the UK road haulage market.The company was sold to its management and the National Freight Consortium plc was established on 19th February 1982. In 1989 the National Freight Corporation was floated on the London Stock Exchange and becomes the NFC plc. However this was only the beginning. Under the Transport Act (1981), the British Rail Board was instructed to privatise BR Hovercraft Ltd. As a result a new company, Hoverspeed Ltd, jointly owned by the British Rail Board and the Swedish owners of Hoverlloyd, Brostroms Ltd, was established. The British Transport Docks Board, which had been profitable and self-financing for many years, had invested heavily in order to modernise its port facilities. With the Government determined to pass its assets to the private sector, it was renamed Then came the turn of British Transport Hotels. In 1982 the British Transport Hotels were privatised and sold off individually. Starved of adequate capital and infrastructure investment for many years, the hotels were profitable but had never been able to fulfil their true potential. Private hoteliers and speculators had always been aware of their real value, and in 1983 when a management buyout failed, 23 of the hotels were quickly purchased by various companies for £50.35 million. Thus British Transport Hotels was broken up as a single organisation and the hotels were privatised individually, this caused considerable concern at the time. Next Sealink was privatised and sold for £66 million on the 27th July 1984 to British Ferries, a subsidiary of Sea Containers Ltd, an international sea freight company. This sale took place at a time when one large cross-channel ferry was valued at approximately £20 million. It was a bargain for Sea Containers who took over 37 ships of various size, 10 harbours and 9,390 staff of whom 2,529 were salaried. Thus Sealink became Sealink British Ferries Ltd. Subsequently in 1991 Sea Containers Ltd decided to sell most of their Sealink British Ferries operations to Stena Line. They are renamed Stena Sealink Line, then Stena Sealink and finally Stena Line. However Sea Containers Ltd retained the They also retained the ports of Heysham, Newhaven, Folkestone, development land in Harwich and the Lake Windermere Steamers. Sea Containers renamed the Lake Windermere Steamers as the Windermere Iron Steamboat Company, thus resurrecting a name from the distant past. They then passed control of the Windermere Iron Steamboat Company to the Sea Containers subsidiary, Orient Express Hotels. In May 1993 the company returned to private local ownership when the Bowness Bay Boating Company purchased it. Contemporarily with the Beeching Report came a plan by the BRB Deputy Chairman to reorganise BR workshops and a new organisation was formed - British Railway Workshops - which, in 1970, became British Rail Engineering Ltd (BREL). By this time its workshops had been reduced to 14, with assets of approximately £60 million and an annual turnover of approximately £100 million. With British Transport Hotels and Sealink now established in the private sector, the Government told the BRB to prepare BREL for privatisation and to distance itself from the company. In January 1986 the BRB outlined its plans to split BREL into two groups - the Maintenance Group, which was to remain with BR, formed from the workshops at Glasgow, Wolverton, Doncaster and Eastleigh, and the New Build and Repair Group based on the workshops at Crewe, Derby, York and Horwich Foundry. Then the first move towards privatisation came on 16th October 1987, when Doncaster Wagon Works was sold to a management buyout team - RFS Industries. Horwich Foundry, which had been established earlier as a wholly-owned subsidiary of the BRB, was sold on 15th August 1988 to Parkfield Group plc. On 1st April 1988 a holding company, BREL (1988) Ltd, was formed, composed of the works at Crewe, Derby and York. The company was sold on 18th April 1989 to a consortium comprising the management and employees of BREL (1988) Ltd who had 20 per cent of the shares, with Trafalgar House and a Swedish/Swiss company, Asea Brown Boveri, as the dominant partners having 40 per cent each. With a healthy order book, net assets of £72.5 million and potential land assets estimated at between £50-£100 million, BREL was sold for £13.6 million. In March 1992 Asea Brown Boveri acquired the 40 per cent of shares owned by Trafalgar House, to become ABB Transportation Ltd. ABB then merged with Daimler Benz in 1995 to form ADTranz. However the long, slow destruction of British train-building continued and jobs were lost during 1995 and 1996 at Crewe, Derby and Doncaster. The stampede to sell the profitable parts of the railway industry continued unabated and the BR subsidiaries began to prepare for privatisation. An announcement by the Minister of State for Transport on 23rd July 1987 led to the sale of British Transport Advertising to its managers (Ironlook Ltd). Gold Star Holidays (formerly Golden Rail) was sold in 1989 to Superbreak, the market leader in domestic short holidays, which had itself been sold by BR in 1983. In February 1986 BRB announced that it intended to split its catering arm Travellers Fare into two groups.Travellers Fare station catering became a limited company in December 1987 after winning the overwhelming majority of the catering units that the BRB had put out to tender. A year later, with a turnover of £74,000,000 and 3,400 staff, it was sold to a management buyout group for £20.5 million. In November 1992 it was taken over by Compass Group plc. Later it became known as Select Service Partner. In 2006 the Compass Group plc sold Select Service Partner (SSP) including Rail Gourmet to EQT Partners - a private equity firm. Today it trades as SSP - The Food Travel Experts. InterCity On Board Services, which remained with BR, was restructured for privatisation in 1994 and the following year, with 600 employees, was sold to European Rail Catering Ltd, a management buyout. In 2001 European Rail Catering, the company formed by a management buyout of British Rail's on board Intercity catering division in October 1995, was taken over by Swiss owned Rail Gourmet. Rail Gourmet was the train catering division of Swissair Group. The division also includes airline caterer Gate Gourmet. In 2001 the Swissair Group went into financial difficulties. Rail Gourmet however was still profitable and in 2002 Rail Gourmet were acquired by Compass Group plc, thus it became part of their Select Service Partner (SSP) division. In 2006 the Compass Group plc sold Select Service Partner (SSP) division to EQT Partners - a private equity firm. Today Rail Gourmet is a subsidiary of SSP - The Food Travel Experts. So the key Railway Ancillary Services public corporations that were privatised in this period included: Atlantic Steam Navigation Company Limited National Freight Corporation (NFC) BR Hovercraft Ltd British Transport Docks British Transport Hotels Sealink UK British Railway Workshops British Transport Advertising Gold Star Holidays Travellers Fare Privatisation of British Rail (1994 - 1997): In 1990 British Rail was reorganised. Regional management was abandoned and Business Units were introduced based on InterCity, Network SouthEast, Regional Railways, Trainload Freight, Railfreight Distribution, Rail Express Systems, BR Telecommunications Ltd and Central Services. The Business Units were then divided into Profit Centres and passengers suddenly became customers. In 1993 the Government told the BRB to reorganise its business to take account of the privatisation programme. The reorganisation began to take effect from 1st April 1994, with the objective of selling 51 per cent of railway services by April 1996. BR continued to operate train services and just over 100 self-sustaining business units were formed, with each unit operating as a separate company; instead of having an integrated management structure, business relationships were now determined by a maze of legal agreements and contracts. Railtrack plc was established as a separate government-owned company, responsible for 23,000 miles of track of which 10,270 were route miles; it had 2,482 stations, 90,000 bridges and 984 tunnels, and was responsible for managing track operations and the overall safety of the network. When its first annual report was issued in September 1995 it reported a turnover of £2.3 billion and had a pre-tax profit of £189 million. European Passenger Services Ltd, with responsibility for controlling and developing business through the Channel Tunnel, was established in May 1994; and Union Railways Ltd was inaugurated on 1st April 1995 to bring the Channel Tunnel rail link to fruition; both of these were independent Government-owned companies. However Union Railways later ran into trouble and was rescued by Network Rail, the Government and London & Continental Railways. In 1996, London & Continental Railways (LCR) was selected by the Government to build and operate the high speed Channel Tunnel Rail Link (CTRL) now High Speed 1, and to own and operate the UK arm of the Eurostar international train service. As part of this deal the European Passenger Services (EPS) and Union Railways sections of British Rail were handed over to LCR as well as key pieces of railway infrastructure including London St Pancras and Manchester International and North Pole depots. EPS was the British arm of the joint Eurostar operation, along with SNCF and SNCB. LCR renamed EPS as Eurostar UK Ltd. London & Continental Stations and Property (LCSP) is developing the new international stations on the CTRL and is also the property division of LCR. The responsibility for the overall delivery of the CTRL lies with two LCR subsidiaries: Union Railways (South) Ltd (for Section 1) and Union Railways (North) Ltd (for Section 2). The whole line (Section 1 and Section 2) is now operated as a single entity by Network Rail, which will be able to integrate operations with the rest of the railway network. The project is funded through a combination of Government-guaranteed bonds, Government grants, bank debt and structured finance. LCSP has responsibility for the multi-billion-pound regeneration of land around the CTRL stations in partnership with developers and in close co-ordination with Government agencies, local authorities and communities. It is also playing a crucial role in enabling the London 2012 Olympics and in delivering homes and jobs in the Thames Gateway. In addition, LCSP has responsibility for the acquisition of land required for the CTRL and manages all of LCR's commercial and residential properties. On behalf of LCR, the new High Speed 1 line is being designed and project managed by Rail Link Engineering (RLE), a consortium of Bechtel, Arup, Systra and Halcrow, all of whom are also shareholders in LCR. RLE carries out design and procurement, and manages the contractors who are building the railway, to meet the overall requirements of Union Railways (South) and Union Railways (North), the client companies. Eurostar (UK) Ltd, another LCR subsidiary, owns and operates the UK arm of the Eurostar service. Eurostar (UK) is operated on LCR's behalf by a consortium of National Express Group, British Airways and the French and Belgian national railways (SNCF and SNCB). LCR's shareholders are the members of RLE (Bechtel, Arup, Systra and Halcrow), transport operators National Express Group and SNCF, electricity supply company EDF, and UBS investment bank. The current structure of LCR is complex due to numerous reorganisations, for example SNCF is involved in the Eurostar operation at three different levels. Current shareholders in LCR are:
BRIS, (British Rail Infrastructure Services) with its 14 Service Units, seven design offices and just over 25,000 employees, was created on 1st April 1994, to provide a service and consultancy to Railtrack for maintenance, electrification, equipment and signalling. By 1st April 1995, the Infrastructure Service Units were further reorganised, and six Track Renewal Units and seven Infrastructure Maintenance Units were formed ready for sale. Red Star Parcels Ltd went to a management buyout - Rald Ltd - in September 1995 for the nominal sum of £1. BR's Central Services were split into 24 business units, and BR Telecommunications Ltd, employing nearly 3,000 staff, (the largest, private, non-military telecommunications network in the country) was restructured into four businesses and its assets sold in December 1995 to Racal Network Services Ltd for £133 million. Transmark, with a turnover of nearly £10 million, had already joined the private sector in 1993. Three Rolling Stock Leasing Companies (Eversholt, Angel and Porterbrook) called ROSCOs, were established to lease trains to new passenger Train Operating Companies which were formed from 25 Train Operating Units. These Units had been directly derived from the InterCity, Network SouthEast and Regional Railway businesses employing, in 1995, approximately 47,000 staff. Whilst they still operated in accordance with the policies of the BRB, they were increasingly managing their operations as separate business enterprises. In November 1995 the three ROSCOs were sold to the private sector for £1.8 billion. Seven months later, amidst outrage at the original sale price, Porterbrook was sold to Stagecoach Holdings plc for £825 million - making a profit of £298 million for its management and staff buy-out team. Following the establishment of the Train Operating Companies, the Franchising Director, Roger Salmon, issued new Passenger Service Requirements for Great Western Trains Ltd, South West Trains Ltd and the London, Tilbury and Southend line (LTS Rail Ltd) on 16th May 1995. Then, on 14th September, Passenger Service Requirements were announced for the second group to be managed by the private sector - InterCity East Coast Ltd, Gatwick Express Ltd, Midland Main Line Ltd and Network South Central Ltd. The sale of BR's three main freight operations - Loadhaul, Mainline Freight and Transrail Freight - (the most efficient and profitable companies of their type in Europe) took place to the Wisconsin Central Transportation Corporation on 24th February 1996. The American-based company had already purchased BR's mail services and the Royal Train the previous year. At the end of May, Freightliner was sold to a consortium after the Government agreed to inject £75 million into the company over five years to cover track access charges. The sale of other sections of the railway industry continued throughout 1996 and the jewel in the Government's crown, Railtrack plc, was set for its flotation on the Stock Exchange in May. Thus between 1994 and 1997 the railway itself was privatised and things came full circle although this time with significant governmental controls. However the unification of a main railway company like British Rail was lost forever as the entire structure was broken up into individual companies. Sadly the option to give the private sector a 25% share in BR with the state retaining 75% like has been done elsewhere in Europe with examples such as Deutsche Bahn and SNCF was not taken. However instead the entire network was split into a myriad of individual private companies. Thus we lost forever the railway as a single integrated entity. The Privatised Railways: As a result of privatisation of British Rail by the Conservative Government under John Major, the railway was broken up into a myriad of individual private companies and the single organisation and structure of the railway was lost forever. In the early day's of the privatised railways their structure was very complex and to some extent remains so even today. The railway was divided up into several principal components: - Railtrack plc (the infrastructure owner) - The Office of Passenger Rail Franchising (lets the passenger franchises to train operators) - Train Operating Companies (train operators for the passenger franchises) - Freight Operating Companies (freight operators) - Rolling Stock Companies (own and lease the rolling stock to the operators) - The Office of the Rail Regulator (regulates the railway and ensures fair play) - Association of Train Operating Companies (ATOC) (trade association of the passenger rail operators) Passenger Franchises (1998 v. 2008):
Freight Companies (1998 v. 2008):
Rolling Stock Leasing Companies (ROSCOs) (1998 v. 2008):
Since then there has been a rationalisation of the privatised railway structure. In 2001 the Office for Passenger Rail Franchising was replaced by the Strategic Rail Authority. Its main function was awarding and ensuring compliance with passenger rail franchises - contracts between the state and private sector operators under which the operators committed to provide certain levels of service in return for public subsidies; some franchises were cash-positive, which meant that the operator paid the SRA for the right to provide the services. The SRA's other functions were concerned with the financial support of other unviable services, such as the giving of grants to support marginal rail freight services and the building of freight facilities. However in 2006 the SRA was abolished and rail franchising powers were taken in house by the Government and taken over by the DfT Rail Group. The aftermath of the Hatfield crash led to severe financial difficulties for Railtrack and just under a year later - on the 7th October 2001- the company was put into railway administration on the orders of the then Secretary of State for Transport (Stephen Byers). Railtrack was then "re-nationalised" by the Government and a new organisation Network Rail was created to replace it. This was a company limited by guarantee which was nominally in the private sector but with members instead of shareholders and its borrowing guaranteed by the government. As part of devolution to Scotland and Wales those devolved Governments have been given powers to handle the passenger rail franchises for those areas instead of the DfT Rail Group i.e. First Scotrail and Arriva Trains Wales. For Merseyside due to the self contained nature of the Merseyrail Electrics network, Merseytravel (the Merseyside PTA/E) has been given the concession to act on behalf of the DfT on that rail franchise. Following this example recently the Mayor of London was given the concession to act on behalf of the DfT on the London Overground franchise. In 2004 infrastructure maintenance, (Track, Signal, and OHLE), was taken back 'in-house' by Network Rail, but track renewal remains contracted out to the private sector. So despite some rationalisation the privatised railway structure remains very complex. Also in recent years the franchised passenger and main freight operators have been joined by open access operators. Today's private rail companies are dominated by the major players in the transport industry. There is even involvement of other European state rail companies in Britain's railways such as SNCF Participations Group (via Keolis), Nederlandse Spoorwegen (NS) and most recently Deutsche Bahn (DB) Group. National Express Group plc http://www.nationalexpressgroup.com - National Express East Coast - National Express East Anglia + Stansted Express - National Express c2c Stagecoach Group plc http://www.stagecoachplc.com - South West Trains + Island Line - East Midlands Trains - Virgin Trains (Virgin Rail Group - Consortium of Virgin Group plc and Stagecoach Group plc) Arriva plc http://www.arriva.co.uk - Arriva Trains Wales - Cross Country Trains First Group plc http://www.firstgroup.com - First Great Western - First Capital Connect - First Scotrail - First TransPennine Express (Consortium between First Group plc and Keolis) - First Hull Trains (Consortium between First Group plc and Renaissance Trains) - Heathrow Connect (Consortium between First Group plc and BAA plc) - First GB Railfreight (GBRf) Go-Ahead Group plc http://www.go-ahead.com http://www.govia.info - London Midland (GOVIA Consortium - Go-Ahead Group plc and Keolis) - Southern Railway (GOVIA Consortium - Go-Ahead Group plc and Keolis) - South Eastern (GOVIA Consortium - Go-Ahead Group plc and Keolis) Virgin Group plc http://www.virgin.com - Virgin Trains (Virgin Rail Group - Consortium of Virgin Group plc and Stagecoach Group plc) BAA plc http://www.baa.com - Heathrow Express - Heathrow Connect (Consortium between First Group plc and BAA plc) SNCF Participations Group http://www.sncf-participations.com http://www.sncf.com http://www.keolis.com http://www.govia.info - London Midland (GOVIA Consortium - Go-Ahead Group plc and Keolis) - Southern Railway (GOVIA Consortium - Go-Ahead Group plc and Keolis) - South Eastern (GOVIA Consortium - Go-Ahead Group plc and Keolis) - First TransPennine Express (Consortium between First Group plc and Keolis) - Eurostar UK Group (Consortium between SNCF Participations Group, SNCB and London & Continental Railways) Nederlandse Spoorwegen (NS) http://www.ns.nl http://www.nedrailways.com http://www.serco-nedrailways.com - Northern Rail (Serco-NedRailways Consortium) - Merseyrail Electrics (Serco-NedRailways Consortium) Deutsche Bahn (DB) Group A.G. http://www.db.de - English Welsh & Scottish Railway (EWS) - Chiltern Railways - London Overground (Consortium between Deutsche Bahn and MTR Corporation Ltd) - Wrexham & Shropshire (Consortium between Deutsche Bahn and Renaissance Trains) |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||