Blueprints for Bankruptcy
Ø Government sequestrated railways in two Wars, without having put a penny into them. It skimmed off profits before tax! No other industry or business was similarly mistreated.
Ø During both wars, government sent all its war traffic, and much more, either free of charge or at much reduced charges. In both wars, it froze rail charges virtually for the duration of the war in order further to help the war effort, whilst road transport, shipping, the crucial coal industry & all other industry was allowed to make hay. The effect was that after both wars, railways faced financial ruin. In contrast road transport made huge unhindered profits.
Ø Industry sent empty crates & boxes by rail, falsely claiming that they had arrived full by rail, in order to claim low charges for returned empties laid down by a court of law, on the premise that railways had benefited from a loaded journey.
Ø During the war, in common with other industry, privately owned railways paid taxes, including Excess Profits Tax. The latter was supposed to prevent profiteering – it didn’t, except by railways. Industry was promised a 20% refund of this tax after the war to modernise. Only railways did not get a refund.
Ø A special & unique court of law was set up to decide the level of fares & freight charges. They continually held these well below industry-fuelled inflation, eventually admitting that they had cost the railways money. Users of railways were able to object in this courtroom to any increases on the most specious grounds – none did so on the grounds that they would then guarantee not to increase their own prices. Incredibly, competitors – road hauliers and bus operators were empowered to object to railways charging prices which might undercut them! There was no converse power for railways to object to undercutting.
Ø State owned railways were directed to purchase half a million decrepit vintage railway wagons owned by collieries for the specified sum of £43m. Their standards were well below that of railway owned wagons. They were unreliable. Within a year, large scale scrapping was necessary.
Ø Initially, the media was critical of government’s inequitable policies towards railways and opposed interference by politicians and the law court. After a few years, the media lost interest, forgot the effect of interference, and blamed railways for losses which stemmed directly – as they had earlier forecast - from government policies.
Ø This book accurately forecast the problems that would arise with privatisation, and warned that performance would not improve, but that subsidies would increase. The first edition of the book, published on the eve of privatisation, carried these warnings and advocated the preparation of measurable benchmarks to facilitate meaningful comparisons. No benchmarks were prepared by government.
Author – E.A. Gibbins, joined the LMS Railway in 1946 as a junior & retired from BR as a Chief Officer after 40 years.
The book was reviewed by Railway Magazine July 1996: ‘An immensely thorough study’; Chartered Institute of Transport 1996: ‘Does not deserve to be neglected’; Railway & Canal Historical Society, July 1997: ‘A store of missiles to hurl at government’.
Paperback: pages v, 218.
ISBN 0-9521039-2-3 This was the second edition. Both editions are out of print, but the second edition is available through libraries