Chapter 2                               Causes of railway traffic loss & deficits

 

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The conversion proposal initiated by Brigadier Lloyd (Deputy Engineer-in-Charge at the War Office) was founded on the premise that railways were declining, were losing money and would, in any circumstances, continue to lose money, whilst road transport was expanding and making profits. His paper (See Chapters 3, 4, 5) contained not one sentence to prove that he had endeavoured to research the causes of loss of rail traffic and deficits, by referring to the Annual Reports of the British Transport Commission and other publicly available data, including media reports*. Nor does he give any indication that he was aware of factors such as the excessive hours worked by road transport drivers nor reports of overloaded lorries, poor maintenance and dangerous speeding, which undermine any meaningful comparison. (See Britains Railways - The Reality, pages 186-189).

*Informed reports in the Economist, Times, Financial Times and Guardian clearly that the causes of BR problems lay with inept political policies, not management, nor were they inherent of railways as such. See Britains Railways - The Reality, Pages 167, 170, 171, 173, 174.

 

 

Factors affecting railway viability

The First World War

Canals - except those owned by railway companies - were not brought under government direction until late in the war, and then only at the suggestion of railway managers. Ships were never brought under central control.

This Act empowered Government so to do during an ‘Emergency’. Actual running and maintenance of the railways was left in the hands of professionals. An Executive Committee composed of twelve of the General Managers of the 123 railway companies was formed - on the advice of Railway Chairmen before war broke out - to undertake the task of running the whole railway system as one co-ordinated body. The Act specified that the railways would be entitled to compensation for use of railways, wear and tear from conveying war traffic and any injury, etc., arising from this sequestration.

*Canals - except those owned by railway companies - were not brought under government direction until late in the war, and then only at the suggestion of railway managers. Ships were never brought under central control.

 

Throughout the War, all conveyance connected to the war - munitions, materials, industrial purchases, soldiers, sailors, etc., - took place without a single penny changing hands. The Government interpreted its assumed power to use railways without charge very liberally, and it soon came to include allied military person­nel, nurses, munitions workers, refugees, relatives visiting wounded soldiers in hospital, and many others on ‘Government business.’ As if this were not enough, Government transferred railway assets - locos, wagons, coaches, track - and manpower to the war zones to build and operate military railways to move masses of materials piling up on the docks! Eric Geddes, Assistant General Manager of the NER. was charged with the task of organising military railway transport in France and resolving the transport congestion on the docks. Uniquely, he was given the rank of Major General to give him the required muscle with army top brass. The C-in-C of British Forces in France approved of this and acknowledged that this help by a professional railway manager was vital in pursuing the war.

During the control period, government directed increases in rail wages to match inflation  to be paid by railway companies, not government, whilst cost of all materials purchased by railways increased. Government froze rail fares & freight charges throughout the war, except for changes to discourage civilian travel who turned to road. Employees in government & munitions factories - among the best paid in the UK - were given free tickets or vouchers for half price rail tickets for travel at bank holidays and other times by government. Other government departments joined the band wagon, & the vouchers quickly topped 1m pa. This was an outrageous action to take with the income of a private company. No other company was required to provide cut price products to anyone during the war.

At the end of the war, inflation had risen 200%, whilst rail fares and charges were largely at pre-war levels. When government was due to return railways to their owners, many faced serious financial problems not faced by other industry which had worked for government on a cost-plus basis, and whose prices to all customers - including railways - had increased without hindrance*. Thus, railways had income at pre-war levels, despite a traffic growth, whilst costs had rocketed. Before handing back control, and without consulting the owners, government granted the workforce an eight hour day, and further increased wages. The effect was calamitous on many railways, despite post-war increases in fares and charges being permitted by a series of government Inquiries.

*Government contractors were amassing vast fortunes from the war. (Realities of War by Phillip Gibbs, Page 437)

Government then welshed on the provisions of its own Act and its undertakings to put railway compensation claims for excessive wear and tear, and free use of railways for government and military traffic, to arbitration by a Court of Law. Instead it set up a political Committee under Lord Colwyn to decide what was due. Railways were not even allowed to be present to set out their claims nor to cross examine government witnesses. It took only 17 days to decide on the complex records for seven years sequestration. The media reported that the claim would amount to about £400m, the biased Committee said it should be £150m. They criticised railways for ‘a tenacious insistence on Documentary Rights’, which were contracts between railways and government! The Minister of Transport, who had appointed the members of the Committee, reduced the figure to £60m to be paid over two years - and then deducted tax from it! (See Square Deal Denied for a full account)

 

The threat of nationalisation of railways was openly voiced after the war - notably by Winston Churchill. This was a threat the railways could not ignore, and left them with no choice, but to accept the pittance offered. Many railways - especially in Scotland, Wales and other rural areas faced bankruptcy. The traffic of these smaller companies had risen during the war - but it was government traffic free of charge, and revenue had been cut by loss of profitable civilian traffic. Their costs were increased by government decisions on wages and industry fuelled inflation, and they faced heavy maintenance arrears. The prospect of widespread closure of thousands of miles of lines could not be tolerated by government. It would be electorally and economically disastrous, and would lead to de-population. With fear of nationalisation as a backdrop, the government passed an Act forcing 123 railway companies into four groups - each embracing profitable and unprofit­able railways, the former subsidising the latter. Initially, Ministers envisaged more than four groups, one of which would have comprised all railways in Scotland, but were dis­suaded when it became apparent that widespread closure in Scotland would be inevitable.

 

Inter-War Period

Railways have been criticised retrospectively, for not closing more rural lines during the inter-war years. There is no doubt that government would not have allowed railway companies to seriously undermine government policy which was intended to keep uneconomic rural lines open - at no cost to the taxpayer. The threat of nationalisation was always in the background.

As a sop to public & industry, both of which waxed fat on higher earnings whilst paying pre-war prices to use railways, but would have to face substantial increases in rail charges to bring income above costs, government legislated for a permanent control of railway charges by a Court of Law created for the purpose. Its duty was to peg total railway profits in perpetuity and without adjustment for inflation at 1913 levels! No other industry in war or peace has ever faced such commercial restraint & interference. The essence of this law remained until 1957, when the Court’s powers were reduced - but not abolished until 1968.  

Whilst this was taking place, government deliberately fostered the growth of the infant road transport industry, (see pages 7,8,12). An Act of Parliament gave anyone the right to inspect railway rate books to find out what charges applied between any two points. This was exploited by hauliers to undercut railway rates. If railways wished to cut their rates to compete for one firm’s business which had come under threat of transfer to road, the railway had to also cut the freight rate for every other customer with like traffic, whether or not their traffic was at risk to poaching by hauliers. There was no similar constraint on hauliers. Railways had to apply to the Court to alter its standard rates. Hauliers were not interested in traffic carried - by law - at very low rail rates to help inefficient industry, but only in that at higher rates, which was supposed, under the law, to cross subsidise rail traffic at low rates. It was not long before the financial balance was under strain.

Railways tried repeatedly to get government to change the law so that both forms of transport competed on an equal basis - both controlled by the same regulations. Government set up a series of Public Inquiries to consider ways of regulating road transport. Sir William Wood [Vice President of the LMSR], in a lecture to the Institute of Transport in April 1936, said either road transport must be regulated like railways or railways must be given comparable freedom from controls. (The Times 7.4.36). He overlooked the third option, viz. government inertia.

The Inquiries proved ineffective1 so railways asked to be given the same complete freedom as hauliers. Their campaign was called the ‘Square Deal Campaign’. Ministers made sympathetic noises - in public - but in private, they were adamant that they would not concede such freedom2. Government papers reveal that Ministers were well aware that if they did, the burden of subsidising inefficient industry would transfer from rail­ways to the Exchequer. They also feared closure of many rural lines which were becom­ing important - serving new airfields, military camps and munitions factories in rural areas - for the war which was imminent. As will be seen, railways - but no other indus­tries - were to be prevented from gaining any profit from the increased war traffic. Private sector industry reaped huge profits in the lead up to war. Government played ‘pass the parcel’ until, war came - as it had been forecast by a government committee five years earlier. (See Inland Transport by C.I. Savage, page 51). It has been claimed that the outbreak of war in 1939, blocked the conced­ing of equality. Public Record Office files of government and privately owned rail­ways show that Ministers had no intention of conceding equality, and used the war as an excuse. During the War, Ministers stated, that after the War, there would be no Square Deal. (HoL Hansard, vol. 129, col. 384).  

1. Although they led to licensing of road passenger and freight transport, there was no comparable limit on working hours. Hauliers retained complete charging freedom, and were free to select which traffics they would convey, whilst rejecting anything potentially uneconomic. Licences designed to limit the number of lorries on the road, ostensibly to avoid over capacity, were easily thwarted by the widespread use of trailers - whose numbers were uncontrolled - and the overloading of lorries beyond their design capacities. The Inquiries were given evidence of serious malpractice in road transport of overloading, speeding and excessive hours.

2. Recorded in papers held under lock and key for up to 50 years - see Square Deal Denied.

 

The road transport industry launched an advertisement campaign to try to block the equality of commercial freedom for railways, which hauliers enjoyed. They decried the relevance of this lack of basic managerial and commercial freedom, to the loss of rail traffic to road. They did not, of course, offer to prove this - by putting their money where their mouth was - and exchanging their freedom for the legal constraints on railways!

Government set up an ostensibly independent Inquiry into the railways’ claim for freedom, but Public Record Office files show Ministers & civil servants interfered secretly with the Advisory Council’s findings, and had the draft Report altered before it saw the light of day, (See Square Deal Denied, pages 110,112). The duplicity of Whitehall warriors fooled many* into believing railways were going to get their freedom. They did not fool top executives of the Big Four railway companies. However, nationalisation ensured that railway views remained under wraps for 50 years, along with Whitehall memoranda which would have given the game away.

*Most of the media was misled, only Modern Transport saw the writing on the wall. Prof Gilbert Walker was misled for, in his book Road & Rail, he implied that long sought freedom was imminent. The book’s 2nd edition 3 years later, left out any reference to the Square Deal. He never lived to see the damning government papers released, so he would not know he had been misled. Others, who read Walker’s book were misled to this day.

 

The Second World War

Once again, Government seized control of railways - but not shipping, road transport or canals - to subsidise the war, and did very nicely out of it, to the tune of £1 billion. Once again they froze railway charges, whilst the rest of industry - including other transport - was free to increase prices to match inflation. Road transport was slapped on the wrist for outrageous increases in charges - which went way beyond inflation - but did not end the malpractice. (See Square Deal Denied, Chapter 13, & Britains Railways - The Reality.).

Masses of traffic diverted from coastwise shipping and road was carried by railways, effectively free of charge, due to the profits ceiling imposed on railways. The railway companies protested and had support from the media which described the arrangements as unfair, and made comparisons with industry which was working for government on cost-plus contracts, (The Times 16.8.40). Again, the dreaded word ‘nationalisation’ was voiced in Whitehall, and railway companies had to accede to government flouting legislation that it had passed in 1921, designed to limit profits to the level of 1913, which they were still below, entirely as a result of Government’s iniquitous and discriminatory transport policies.

Politicians of both parties concluded, during the war, that, after the war, nationalisation of railways would take place, to avoid the electorally unpalatable but inevitable alternative of increasing railway fares and charges after the war to catch up on inflation created by other industry and government - as had happened after the First War.

After the war, railways were not allowed, even, to restore to pre-war standards, much less modernise, whilst road transport was allowed free licence. (See Britains Railways - The Reality, pages 54,  55).

 

Nationalisation

In 1948, three years after the war, railways were nationalised and a more powerful Court of Law (The Court of the Transport Tribunal) created to control fares and charges. Despite industry in both private and public sectors having increased prices to match rising costs during the war, whilst rail prices were frozen, BR was not allowed to increase charges to catch up on 7 years of under-inflation pricing. In 1948, rail charges were at 1941 levels, suppliers’ prices at 1948 levels. Rulings of this Court of Law and Ministers’ Directions held fares below inflation for 40 years, freight charges for 14 years. During this time, the Court re­duced proposed increases which were below inflation and delayed those reduced increases by an aggregate 12¾ years, (See Britains Railways - The Reality, Appendix B). By the time of privatisation in the mid-1990s, BR had been denied £11.6bn in fares alone as a result of fares falling behind inflation.* BR was obliged, unlike competitors, to carry military personnel, and families at half fares. In March 1951, the Chancellor told the Cabinet that this cost BR £3m pa - 3.3% of income.

*Some economists illogically focussed on fare increases above the current RPI in the early 1970s, ignoring past losses. BR was formed in 1948, not 1972 & was still carrying deficits created by 25 years of serious under-pricing and interference. These increases did not recover earlier losses. See Britains Railways - The Reality.

Losses soared as a direct result of this and other interference including, the inability to cut the dead wood of rural lines without external approval and Ministers directing BR to pay higher wages than they could afford, after managers had declined claims, (See Britains Railways - The Reality, page 131). Interest had to be paid on loans taken out to cover deficits created by these policies. (Referring to railway problems, The Times editor wrote (25.1.55): government influence on railways has been far reaching, and they cannot escape the lion’s share of responsibility).

A Draft Bill in April 1952 gave total freedom for BTC/BR, but Prime Minister, Winston Churchill told Cabinet: he would not accept they should be free even with approval of the Transport Tribunal to adjust rail rates without intervention by Government or Parliament. This was not sur­pris­ing, as government had a few days earlier overturned a legal judgement by the Tribunal. The DoT file on the Draft Bill states: ‘The main principle is that road haulage should expand to the extent that may be justified by demand and BR should effect economies to offset loss of traffic’. (PRO: MT62/138).  That was only valid if Ministers foresaw BR could not avoid traffic loss, due to statutory rates control. For someone with Churchill’s command of the English language, the phrase ‘free even with the approval of the Transport Tribunal’ is astonishing. It is clearly a contradiction of freedom.

‘Charges Schemes would provide for maximum charges giving flexibility’.1 They would ‘contain provisions precluding unduly low BR charges designed to undercut com­petitors and drive them out of business’. Road charges designed to drive BR out of busi­ness were not precluded! To match cost increases, ‘the BTC would have power to make tempo­rary increases up to 10%, which must be across the board, not discriminatory’, and seek approval of the Transport Tribunal to those increases which were needed to catch up on inflation, (They never succeeded in catching up - see Britain’s Railways – the Reality, Appendix A).  Hauliers did discriminate. The BTC drew attention to 19th century laws from which competitors are free - while a new disability is introduced giving hauliers power to object to lower charges, whilst they undercut rail charges as they please.

1. Flexibility demands no maxima - as applied in any industry except railways, even when privately owned.

 

Reporting on Tory Government’s proposed legislation, The Economist warned (29.11.51) that the Bill was flawed and that flexibility of charges would be blocked by traders’ objections. It further stated, (10.5.52): If road haulage is to be freed on those terms [i.e. free of public obligation and free to choose traffics and name its own charges], and railways left under the present forms of control, there will be no competition between the two that will serve the public good in the long run. Railways would be left with public obligations as common carriers, subject to close political control, required to provide some services below cost and impeded from altering those charges as their costs change. If the railways are to have a chance of competing with road haulage, let it be on terms that leave them less hampered by restriction applying to them alone and more free to run their affairs as an independent business. If railways can be given the chance to act less as public carriers and more as providers of such transport as can be made to yield a reasonable return over the cost of carrying, there is no reason to suppose that they would necessarily come off worse in competition with road transport. These are broadly the terms on which long distance road passenger services pay so well. They have not been the conditions under which railways have ever been allowed to operate in this country. But they are the only conditions under which competition between the two different forms of transport has any meaning. The result would be a pruning, which might not be to the public’s liking.

Until 1957, BR was compelled to hang onto the deadly rates system forced on railways in 1921, requiring BR to seek legal permission from the special Court of Law to increase freight rates to match inflation and rising costs. From then until 1962, this Court of Law still exercised control on about a third of all freight rates, and even directed the reduction of some existing rates. Suppliers’ prices continued to rise unchecked. Trade rings operating in the UK electrical industry pushed prices up. (On & off the rails, by Sir John Elliot).

Of all transport and industry, only BR had to accept all business offered whether profitable or not. Freight traffic until 1962; unprofitable passenger traffic until 1969, when subsidies for rural trains began. A fraudulent practice of UK industry and businesses, encouraged by hauliers, was the despatch by rail of empty crates and boxes as ‘returned empties’, which had conveyed goods by road. Boxes and containers returned empty by rail attracted a very cheap rate to reflect that railways had benefited from an outward profitable transit. Those who worked in parcels offices and goods depots were warned to look out for such fraudulent practice, but among hundreds of thousands of items, they were not easy to detect. The task was made more difficult when senders of empty containers fraudulently signed a consignment note declaring that the items were actually returned empties. Some were discovered because the item was unusual in some way and stood out, and staff could be certain it had not arrived by rail. Such discoveries were attributed to human error on the part of the sender’s staff. The malpractice was known in Whitehall. The MoT told the Cabinet of this malpractice. (see Britains Railways - The Reality, Page 9)

 

In addition to the financial burden from government policies, the cost of acquiring the assets of the former railway companies fell not on the Exchequer, but on BR, which had to buy itself out of a restricted revenue, and eventually donate the assets free of charge to the State. BR had to pay interest on the loan stock forced on owners by government, & redeem a portion of the capital each year. (See Britains Railways - The Reality, Table 13). These sums averaged £32m pa. No other industry redeems all its capital. All losses had to be funded by loans. By the end of 1962, despite government interference in prices and wages, their inertia on closures, indifference to soaring materials’ prices, and directions to BR to subsidise bus companies following closures, BR managers contained the cumulative deficit before interest to £147m at 1963 prices, but were denied £1115m revenue, ( See Britains Railways - The Reality, page 176. by prices held below inflation and traffic lost to road by the archaic rates structure, (See Britains Railways - The Reality, Table 12). By the end of 1962 - before Beeching took over - BR would have had a substantial surplus instead of a loss had there been no interference.   

Deficits created by government and the Court of Law [The Transport Tribunal] and escalated by interest on government loans, by 1963, created a debt of £1,560m. Until 1969, BR had also to fund the ideological Transport Tribunal, CTCC and TUCCs, (See Britains Railways - The Reality.)

In addition to losses caused by government and its agents, BR suffered further losses, arising from its inability to offer an adequate service to passengers and freight customers because government refused to permit them to restore assets to the excellent pre-war condition in which government took them over, although the privately owned companies had the resources to do much between 1945 and 1948, and nationalised railways were making good earnings for several years, from a buoyant post-war traffic. In contrast, the road transport industry took delivery of new vehicles in much bigger numbers than the government had decreed that the availability of steel and other resources permitted, (see Britains Railways - The Reality, pages 54, 55).

At the same time, government threw taxpayers’ money at the fragmented and infant aircraft industry in a futile endeavour to make it an effective competitor to the USA which was decades ahead. Not content with that, it could afford to throw taxpayers’ money at UK industry - notably textiles, cotton, and shipping - and to give industry - free of charge - wartime factories built at government expense, whilst throwing money - it could ill afford - at the former Empire and the military. Despite this, when the crunch came, the military were unable to defend British assets abroad in the Middle and Far East. And finally, it shovelled out massive sums in compensation to shipping companies to replace ships lost in the war - with the notable exception of railway companies which owned over 100 ships pre-war, and lost many from enemy action whilst in government service.

Government carried out a promise to refund 20% of wartime Excess Profits tax to industry - but not railways, which had paid this and other taxes, and had a large percentage of its wartime profits seized by government - before tax! To facilitate diversions in the event of track and bridge damage by enemy bombers - which due to government parsimony were likely to have a free hand over the UK, government funded minor provision of track, bridges and sidings1 before & during the war. After railways were nationalised, a grasping Treasury demanded that BR pay for these paltry well-worn assets. Negotiations took place between civil servants at the Treasury and DoT on the one hand and ex-civil servant Reginald Wilson on behalf of the BTC speaking for railways. He was backed by Sir Cyril Hurcomb, chairman of the BTC, an ex-civil servant. Had professional railway managers been negotiating, they would have told government what to do with its few well-worn assets! Big Four management told government during the war, that these assets would not be required post-war, (See PRO: AN3/7). Had government been so told by BR, they would have been given BR’s bill for removing and dumping these ‘assets’ elsewhere for government’s disposal.  

1. £13m (see Britains Railways - The Reality, page 12), in contrast with railway assets which were over £1bn, and with the £129m capital investment plus £1bn in working expenses spent by railways between the wars.

 

 BR’s suppliers increased BR losses by supplying unreliable equipment at inflated prices with unreliable delivery dates (See Britains Railways - The Reality, Chapter 14). This was par for UK industry, which is why it lost a world lead in every field since the war, despite Europe’s industries being in worse physical shape at the end of the war. Industrial customers of railways falsely attributed blame to BR for delays and phantom losses in transit, that were part of a smoke screen created to conceal industrial failures (See Blueprints for Bankruptcy, page 162 et seq, & Britains Railways - The Reality, page 120 et seq). in the face of overwhelming consumer demand, in the post-war era.

In cataloguing these external causes of financial decline, it is not intended to imply that BR managers made no errors, nor that their staff did not cause traffic loss. There is no evidence that they made more - nor even as many - errors as industry. It is certain that BR managers were more committed to their industry than much of the rest of UK industry1. Had the private sector been half as good as the media and they themselves appear to believe2, the UK would still be in the First Division on the world stage, and transfer of production to the Eastern Hemisphere would not have been necessary. There is clear evidence that UK industrial managers were lacking in imagination and afraid to implement productivity improvements that BR implemented without disputes. (See Britains Railways - The Reality, Chapters 9 & 14)

1.The Monopolies Commission found BR managers totally committed to the railway with a high degree of pride in the service which come before financial reward in importance and were impressed by managers they met at all levels. (BRB Rail Policy for 1980s, para. 6.1)

2. The author’s files bulge with complaints to UK companies and businesses, with little redress. They believe they have put matters right, if they deign to apologise. Getting redress is often like trying to get blood from a stone.

 

In 1961, MoT Ernest Marples appointed the Stedeford Committee of top businessmen, to report on the causes of railway deficits. Obviously, he expected them to expose BR failings, as it was a political belief that state industries were, by definition, inefficient, but they said political ineptitude was the main problem. He expected advice on how to make BR run like a private sector industry, but these involved freedom to decide prices, freedom to cut dead wood, freedom to invest and freedom to develop surplus lands as carparks and other purposes. All were vote losers. The Committee criticised interference in fares and charges which were below inflation, which should be left for professionals to determine, and said that the Law Court deciding rail charges, should be abolished. They said that closure of uneconomic lines should not be delayed, or if they were, government should overtly subsidise them. They stated that railways should be run by professionals, not, as hitherto, by outsiders such as Civil Servants and Generals.

The MoT prudently refused calls by MPs to publish the Report and did not disclose it to MPs. Only the MoT and Prime Minister would know the conclusions of the Report. The revelations may have brought down a Government that had been in power for nine years - too long to blame Labour. The Tories would quickly be reminded of the scale of their interference by the media and the Opposition. It may well explain why Marples remained MoT for five years - among the longest period that any politician remained as MoT - to ensure that the findings were buried.

Contrary to popular opinion, the Government did not implement the major recommen­dations of this body of private sector businessmen, which the MoT had wrongly assumed would be critical of nationalised BR, not of politicians! The Report was not released by the Public Record Office until 1991, when it was virtually ignored by the media. It would have undermined much media criticism of railways, and may well have scuppered the ill-conceived, badly designed and costly privatisation of railways.

 

Some politicians have been misinformed with regard to railway history:

Railways only got investment by borrowing £26m at 2.5% from government. (Hansard, 17.12.46, vol. 431, col. 1832). The loans were Treasury guaranteed Bonds, not loans from government, and were to help reduce unemployment, rather than help railways. Meanwhile, government spent £130m on roads and told railways to spend their own money to make bridges stronger to help road transport. The railway loans were repaid in full. Railways invested over £129m of their own money on new capital projects between the wars, plus £1bn in asset renewal and working expenses. After World War 1, government gave railways a subsidy of almost £30m. A more knowledgeable MP stated that it was in payment for free war services. (Hansard, 7.11.51, vol. 493, col. 306). (They were seriously underpaid. (See above)

Contrary to political belief, railways did not consider themselves ‘lucky when government took them over in World War I’. They accepted it as part of the war effort, although they must have been dismayed when they found that this action was not mirrored for other transport and industry, which were allowed to increase prices and profits. It could not have been considered lucky when government decreed that all war and government traffic would be carried free of charge, whilst they paid top dollar to other transport and industry. They did not consider it lucky when government forced an 8 hour day on railways but not road. They did not ‘panic when government let them have their industry back’ after that War, (Hansard, 2.2.93, vol 218, cols 199,200) despite the most iniquitous treatment by government during and after that War. They were angry when they discovered that government intended to welsh on its contractual obligations to pay retrospectively for their free use of railways, and compensate them for abnormal wear and tear, and to ignore the 1871 Act under which they were seized.

If railways were on the brink of collapse at the start of World War 2 as some claimed  (Hansard, 2.2.93, vol 218, cols 181/185)  it was entirely due to government’s anti-rail, pro-road policies, (See Square Deal Denied.). Despite those policies, pre-war railways were ‘not begging to be taken over by the State’, nor did they fail to make investments1\ nor did they get investment money from the Government2, nor were they ‘saved by the war’, (Hansard, 2.2.93, vol 218, col 181/5).  Railways were seriously run down during that war because government unjustifiably sequestrated them - but not road transport - ruined their assets by over-use and under maintenance and siphoned off £1bn railway revenue, (See Britains Railways - The Reality, page 18).

1. (Hansard, 29.10.92, vol 212, cols 1173/4. Railways invested over £129.6m in that period).

2. Hansard, 29.10.92  vol. 212, col 1174/7. Government provided interest bearing loans, which were repaid. (See Britains Railways - The Reality, Page 11).

No other industry has ever suffered such interference in its competitive position - either in peace or war - as that experienced by railways, both when in the private and public sectors. The effect on railway finances must have been easily predictable to the most obtuse and biased mind. No industry - other than railways - has been legally required to incur costs which benefit a competitor - e.g. strengthening bridges to facilitate use by heavier road vehicles. See Britains Railways - The Reality, Pages 128-9. Unlike other transport, hauliers introduced bigger transport without ensuring the infrastructure was improved. Railways picked up the tab for the consequences.

 

Factors benefiting road haulage

Inter War Period

After WW1, ex-soldiers and others bought ex-military vehicles at knock down prices - many were in mint condition, direct from manufacturers, had not left the UK, nor turned a wheel in military service. Some changed hands in minutes at higher prices. For many years, new hauliers used roads - financed by local ratepayers, of whom railways figured large - without paying a penny for their use, and were able to work hours considerably in excess of those forced on railway companies by politicians for electoral gain in 1919. All hauliers and many bus operators could be - and were - completely selective in the traffic they conveyed, unlike railways, which were prevented by law from exercising similar practices.

It was an open secret that hauliers exercised their legal right to inspect railway freight charges books, and to offer a small discount on those charges to carefully selected railway customers to switch to road. If conveyance of such traffic at such charges proved uneconomic, the haulier could push the rate up, or abandon the traffic, and the customer would be legally entitled to revert to rail without penalty or facing higher charges than before. Railways were hampered in retaliating by a legal requirement to seek the permission of the law court to reduce rail freight charges. Moreover, if they did so for the one customer whose traffic was - at that moment - being poached, they had to make equal reduction in charges to all other customers who may be of no interest to hauliers.

The 1930s Public Inquiries by the Transport Advisory Council into competition between rail and road uncovered a mass of evidence of irregular and dangerous practice by road hauliers. No action followed, (See Square Deal Denied.)

The Second World War

There were half-hearted and unsuccessful attempts to bring road haulage under government control in the interests of the war effort. Government took over the Big Four railways, because it could not liaise and lay down priorities with four companies, but would liaise with 300,000 hauliers! Hauliers’ charges were uncontrolled, despite being warned several times that increases were unreasonable and unjustified, (See above & Britains Railways - The Reality, page 17).  They made huge profits.

Modern Transport reported (28.2.42): the Minister of War Transport said ‘road haulage pools have not hesitated to push up rates to an undesirable degree. In October 1941 he again drew attention of the tendency of road rates to increase. In November 1941, increases in road rates were approved to reflect Sunday working costs for drivers*.  ‘The rise in road rates was out of all proportion to increased costs’.   * No allowance was made for railways’ increased Sunday working and overtime to handle their traffic increase.

Government’s Road Haulage Scheme was announced January 1941. Modern Transport pointed out, that ‘not until March 1942, did the first chartered vehicle turn a wheel under the compromise partnership scheme, evolved between Ministry and Road Haulage’ which was intended to embrace 2,500 vehicles - a fraction of the road fleet, Three years after se­questrating railways, Government was compromising with hauliers over 1.6% of their fleet. 

A Select Committee reported April 1944 of complaints by industry of increases in road rates. ‘Protesting firms said charges were absolutely ridiculous’. (Report Para. 32 f).

Post-War Developments

After the war, road transport was given a head start, with a blind eye turned to an excessive increase in fleets over pre-war, in contravention of government controls of resources, whilst railways were directed not to restore railways to pre-war standards*. Hauliers were again able to obtain ex-military lorries, many in mint condition, at knock down prices, and to buy brand new post-war built lorries. Two years after the war, privately owned road haulage industry had a fleet nearly 50% bigger than before the war. In contrast, railways were blocked from restoring assets even to pre-war numbers and condition* - much less modernising - for ten years after the war. * Government Economic Surveys Cmd 7647, 7915, 8509 & Britains Railways - The Reality.

*See Government Economic Surveys 1947 to 1951 inclusive. These Surveys are summarised in Britain’s Railways - The Reality, page 54-55.

Marketing Ploys

One popular claim, made by hauliers to gain traffic was that a sender’s goods would always be secure, as the driver was always with the vehicle. We now know that to be nonsense. If they cannot prevent a dozen illegal immigrants climbing into a lorry, they cannot prevent one person getting in and removing a package. Moreover, the security of goods by road is diminished by the scale of overturned lorries, shed loads, spillage of liquids, especially of chemicals and fuel into watercourses. (There should be an annual report entitled Road Accidents to compare to the analogous one prepared by the HMRI on railways, with detailed analysis of individual road calamities, which usually only grace the media for one day).

In the 50s and 60s, BR sales staff reported that some hauliers were giving Christmas gifts to the person who decided whether goods would go by rail or road. BR sales staff were unable to do so - there were no BR funds for this purpose.

Road transport drivers were permitted - by law - to work for 50% longer each day than all railway staff - not merely engine drivers. The hours of all railway staff had been pegged at eight per day since 1919 by the government, against the wishes of railway companies. It was an open secret that even the excessive hours permitted for road transport, were routinely exceeded. Indeed, a White Paper stated as much: ‘Many bus and coach drivers are working hours substantially in excess of their limits’, (MoT Paper: Public Transport & Traffic, Cmnd 3481, pages 23-24).

In British Railways after Beeching, W. Freeman Allen quoted from Sunday Times arti­cles that revealed examples of road transport malpractice which made their use economi­cally appealing to commerce and industry. It was clear that the hopes of BR that the, then new Freightliners may attract substantial freight traffic from road, would be limited by these practices which held road freight prices artificially low. This situation still prevails, (see Juggernaut by John Wardroper. There are references to some of his findings in Chapter 12).

Articles by John Barry published 23 & 30 August 1964, Scandal of cowboy lorries and Phantom drivers who mock the law. ‘Such is the cut-throat rivalry, that in practice a substantial proportion of hauliers - not solely cowboys - infringe the law’. ‘At least 65% of firms on the road are fiddling in some way or other’. He had interviewed three drivers who had slept for a few hours in their lorries. (By law, rest was required to be taken away from the vehicle). One from Shropshire had delivered a load, and was waiting orders when the office opened, for a return load. Another from Sunderland would deliver that morning in Luton and London after two nights on Tower Hill, and return loaded to Sunderland. A third left Newcastle in the early hours for Slough, was awaiting a load to Avonmouth, where he would load back to Newcastle. By law, a driver should work no more than 11 hours daily. (Clearly these were breaking the law). He  refers to queues of lorries with sleeping drivers at Covent Garden and Billingsgate, waiting for markets to open. He drew attention to the huge scale of defective vehicles discovered in roadside checks. One driver drew into a checkpoint and asked for a check, as he hadn’t had one for a year! His vehicle had four serious defects and was ordered off the road. Over 12% vehicles were found seriously defective in 1963. The ‘phantom driver’ is a name of another person, entered on a fresh log-sheet when the legal hours of the original driver have expired. A different set of log-sheets were prepared for the purpose of calculating wages.

BR was criticised if unstaffed stations were vandalised. By contrast, vandalism of bus shelters does not produce criticism of bus companies nor the councils who provide shelters, but is acknowledged to be the fault of vandals, who in all probability are the ones who vandalise stations. Vandalised bus shelters are restored at public expense, not, as applies with rail [bus-type] shelters, at the expense of passengers or operators.

 

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