Marples and Beeching

Wasn't it more about nationalizing the commanding heights of the economy rather than anything to do with underlying profitable?

 

Quite. It was all about political theory.

 

They did make a small profit for the first few years of BR, after nationalisation. I think this ended in about 1953 or 4.

prior to nationalisation, the Southern and GWR were profitable, the LNER was on the point of going bust and I don't think the LMS was in a great place either.

 

As noted earlier it was the imposition of interest at 8% on the funds loaned - instead of given - to BR to fund the Modernisation Plan that transformed the operating profit to a net loss in the BR accounts thus requiring Government funding (i.e. subsidy) at 8% interest to balance the books. From that point the railways were subject to an ever heavier financial cosh that attracted increasing Government intervention. Such intervention caused Marples as Minister of Transport to officially suspend the WCML electrification south of Crewe to Euston and postpone the electrification of the ECML which was officially to follow on from completion of the WCML scheme.

 

Two questions occur.

Firstly, under Attlee's administration, how far did state control over the road transport industry extend? A genuine question as it's not a subject I'm remotely familiar with.

Secondly, early motorised road traffic was certainly boosted by sales of WD war surplus vehicles in the aftermath of WWI. Presumably the same source had as much, if not more surplus kit to offload, post WWII. Is anyone please aware of the impact of such vehicles on road freight?

 

British rail was making operating losses from the mid to late 50s onwards.

whilst one can argue whether 8% was a reasonable rate of interest to charge on the money loaned by the government, it is not that far from the market rate at the time.

 

The question though is what other Government investments demand a cashable return. The point of Government is to create the conditions for a stable, prosperous economy - that means some investments are made because of the long-term benefits they bring to society, not just because they make a return. Government doesn't pay for schools because it expects an 8% cash return on what it loans; it does it because it knows in the long term, having a well-educated populace is important.

In which case - why single out the railways for needing to make a cash return? Did they demand that the roads (free at the point of use...) somehow returned 8% in cash?

Tom

 

I don't think the railway was singled out, I believe that the coal, electricity, gas industries etc were all charged interest on monies borrowed.

 

Surely the difference is between those that are run as businesses and those that are provided as services? Whether or not we should pay tolls for roads (a different debate entirely), the reality is that roads are provided free at the point of use, whereas all use of rail is charged for.

As the railways were expected under nationalisation to return a profit, charging for capital in a way that a company might have had to fund such capital isn’t a particularly unreasonable concept.

Personally, it suggests to me both that railway nationalisation wasn’t fully thought through, and that without radically changing the model on which railway services were provided to consumers, the model adopted undermined the already constrained ability of the railways to respond to changing circumstances in the 1950s.


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Yes and no - yes it was about political theory, but what that political theory was looks very different in hindsight to how it was at the time. I don't suppose I'm alone here in having 1940s Union/Labour activists in the family who I knew personally, and who had had their mindsets forged in the depression and their parents experiences of WW1. That particular generation led to a heady brew of public policy - some of which was designed for the greater good, and some of which wasn't thought through.

This can best be seen in the post war foreign policy of Attlee, which might be summed up as 'maintenance of the British Empire, but with the British worker in charge rather than the British boss'

With the railways there was very little conception of it being a public good which should be supplied by the state. It was more 'it's a public good which the public should see the profits from' - that's what many Labour voters and policy makers thought they were doing. It's all very well seizing the commanding heights of the economy for the workers - but by 1945 some of the heights were neither particularly commanding, or particularly high. But the lag in terms of what they'd been fighting for for 50 years (in some cases, for those who'd been there at the start) hadn't caught up with the changed reality.

It started as 'the railways make money therefore the public should have that money' and ended up being implemented as pretty much 'the public should own the railways so we should buy them' - I actually don't think enough has been done (perhaps surprisingly) on what the Attlee government thought they were up to across a range of fronts. The 1945 manifesto seems to be taken at face value, then there's lots on the NHS and the atomic bomb, and everything else sits in the shadows. I'd love an up to date multi-volume examination of the BTC, for example.

 

An excellent post, and I really like the analysis, which rings very true. From what I've read of the railway history, and general histories of the period, I just don't think that Labour at that time had got beyond "nationalisation is best" into thinking about what to do with the industries once they were nationalised, and especially how those industries should be run.

The evidence for this, to me, lies in the continuation of disputes between nationalised industries and their workforces. If nationalisation was a cure for exploitation of workers, then a side effect ought to have been changes in pay and working conditions favouring those workers. Yet those changes weren't part of the nationalisation programme, but were instead accompanied with fairly vague attempts at co-ordination - the BTC in particular ending up in a no mans land.

 

I agree its an excellent post. However in relation to your post, there was little more than 3 years between nationalisation taking affect and Labour losing power. In that time, the railways were, in the round, profitable and there was perhaps more pressing issues to deal with for the government.

There were attempts to improve the working conditions, but there wasn't really the money available to improve pay at the rate the workforce thought was due.

 

But it was in those 3 years that the foundations were - or were not - laid for the future direction of the railway as a nationalised entity. And, fully accepting the argument of competing priorities, it's there that Labour failed to set out the strategy for what nationalisation would do, and be for.

There are echoes now, with calls for nationalising the railway. Calls that go conspicuously silent when asked what they would do that is different, or how that would make things better.

Nationalisation is a tactic, which many have mistaken for a strategic goal.

 

Road haulage was regulated under various licence categories. The most important were A licences-- for hire or reward-- and C licences, own account. Much of the A licence capacity was brought together post war under the BTC in what became British Road Services. After some hot debates, own account was left in private hands and free to develop as opportunities permitted.

So, in terms of ownership it was a mixed economy. In terms of control, there was little or no attempt at integration between BRS and BR. They were rivals within the BTC.

 

TBH, I don't know if Labour had or didn't have a strategy for what nationalisation would do, I do think there was some naivety that may have lead them to think that workers in nationalised industries would 'put the country first' , but that's speculation on my part.

I agree that nationalisation without a plan is tactical but then so was privatisation without thought through plans tactical not strategic.

 

Hmm, not convinced there. There absolutely was a plan for privatisation. It may well have been rubbish, but the government could point to millions of words that said 'this is what we're going to do, this is why, and this is how' - most importantly, they were even daft enough (in retrospect) IIRC to publish the metrics by which the whole thing was going to be regulated and performance monitored. That, like it or not, *is* a thought through marriage of ideology, strategy and tactics.*

The equivalent was conspicuously lacking from rail nationalisation which, and I'm not really over-simplifying, amounted to 'we should own the railways because we think we should, we're buying the railways, we've bought the railways, er...'

*again, I'm not remotely arguing it was a success, but the chapter and verse of what, when, why, who and how (and to what hoped for ends/aims) of privatisation was pretty clearly set out.

 

Sorry I should have been clearer, I was talking privatisation as a whole, not of the railways specifically. As to the railways, I feel that although the intentions were published the real intention of privatisation was that the railways would return to a programme of closures thus reducing the deficit, but as with other privitisations, the withdrawal of services could be blamed on the market and not the government, but that's a tangent.

 

The continuation of those disputes was that nationalisation of the "basic" industries actually provided Governments of either ilk the means to affect inflation by imposing a wage freeze in the expectation of keeping prices down for basic goods and services (i.e. heat, light and transport) but by so doing the workers in those industries quickly fell short of the increased wages being earned by the private sector companies hence the growing labour disputes that bedevilled the public (i.e. nationalised) industries. Among the most obvious were the ongoing disputes in the coal industry and - for railways - the cause of the 1955 strike - when the Government suddenly became aware of the importance of the railways to the economy and hastily "found" the monies to fund the Modernisation Plan. The consequence of this was the railways taking the money, despite it being attached to an 8% interest charge, immediately it was offered and spending it before the monies could be withdrawn. Another factor in the morass was that the monies were spent on UK-built locomotives (albeit some parts built under licence from foreign firms) thus the Government could claim immediate credit for benefitting UK employment. For those who lived through the 1950s the coal industry was another constant source of disputes as Governments continued to use the nationalised industries as the prime lever of inflation-busting by the imposition of wage freezes.

 

Fair comments, but I'd make two comments:
1. The 1950s disputes were in a period of Conservative government, not necessarily ideologically committed to nationalisation on the basis of the Attlee government's policies.
2. In a situation where the balance of payments was seen as critical, I think the greater pressure was to avoid cash leaving the country rather than managing employment - the experiment in oil firing didn't stop due to employment concerns.

 

Although well aware of much of the outline aims of the 1955 Modernisation Plan, this discussion has raised one ever so slightly significant fact: I'd never actually clapped eyes on, let alone read the document itself.

Having just downloaded the plan in it's entirety, such as as is (! .... do that from the url below and you'll soon enough see what that exclamation mark is about), even before finishing reading, I'm rather less surprised by it's failure than hitherto. Here you go folks (note lack of my customary warning about mobile data use):
https://www.railwaysarchive.co.uk/docsummary.php?docID=23