Isaac Farnbank is Chairman of the London Universities Conservatives and former President of King’s College Conservative Association.
Since before William Huskinson MP became the first railway fatality in 1830, there has been a close association between politics and one of Britain’s most impactful inventions, the modern railway.
This close association has been for both good and ill. Labour’s current blinkered ideological obsession with ownership, as opposed to a positive, ideas-led plan for industry reform, promises only to shackle railway recovery and further undermine public confidence. Conservatives need a compelling alternative, rooted in a confident belief in free enterprise and a willingness to curb an overbearing DfT.
2025 marks 200 years of the modern railway. Whilst historical comparisons cannot be viewed in isolation, two centuries’ worth of experience cannot be entirely void of pertinent lessons. As President Truman observed shrewdly, “The only thing new in the world is the history you do not know”.
Following ‘railway-mania’ – the massive overgrowth of the railway network in the 19th century – over 200 separate companies ran networks of varying sizes and importance, often with little or no constructive coordination, resulting in a disjoined mismatch that failed to meet passengers’ needs and left the nation’s connectivity wanting. Contemporary observers may note faint echoes of this misalignment in today’s industry structures.
After the Great War, David Lloyd-George’s government legislated to group this chaotic cacophony of competing and misaligned companies into four, vertically integrated regional companies that owned and operated both infrastructure and train service delivery. This heralded the start of a golden era for Britain’s railways.
The first major scale electrification schemes were completed, more efficient and effective signalling systems devised, new speed records were set and beaten, an entirely new standard of service and train emerged, customer choice transformed, and passenger numbers and freight tonnage increased exponentially. Dynamic, empowered private companies, in tune with passengers’ and freight customers’ needs, delivered.
Why? Although the ‘Big Four’ undoubtedly benefited from a growing population, it was by having total control of both track and train, that the companies were able to optimise each in the interests of railway users, rather than navigate today’s disparate interfaces between Network Rail and each Train Operating Company (TOC).
Their security of ownership facilitated unprecedented investment, rooted in commercial need and benefit. Unlike today’s TOCs, the ‘Big Four’ were also afforded greater freedom in devising and delivering services whilst continuing to achieve high punctuality, reliability, and service levels. Since 2020, such decisions have been effectively made in Whitehall.
Inevitably, Britain’s railways suffered during the Second World War.
Intensive, strained use combined with a lack of investment and maintenance were bound to result in a less reliable and poor-performing network. While European countries essentially started again, buoyed by American aid, Attlee’s government nationalised the ‘Big Four’, creating British Railways.
As the industry’s governance shuddered from one bureaucratic body to another, and market mechanisms were discarded, an era of decline manifested. In place of technological advancement, British Railways wasted millions on a fleet with a serviceable life of 50+ years, only to scrap them less than 10 years later. In place of commercial necessity demanding dynamism in meeting changing customer needs and working practices, the network became dependent on taxpayer subsidy. In place of robust oversight of costs, only the highest level of management were accountable for revenue and expenditure performance.
Despite some innovations, such as freight containerisation, the short-sighted mass closure of rural and trunk lines, falling passenger numbers and a sharp collapse in freight followed. Vertical integration was insufficient alone to deliver a high performing, self-sustaining rail industry. The largest efficiency gains were realised as the state monolith prepared for privatisation, and the first influence of market mechanisms began to be felt on a hitherto insufficiently commercial outfit.
Against the view of one Michael Portillo and industry experts, John Major’s government decided upon a franchising model to privatise British Rail, separating for the first time ownership of track and train. This was undoubtedly flawed, as today’s fragmentation attests to, but even so, the return of private enterprise to the railway resulted in unprecedented passenger growth, a transformation of service, the reopening of stations and lines, and investment in new fleets and infrastructure enhancements.
Between 2010 and 2018, the taxpayer received more from train operating companies than was paid in subsidy, something never achieved during nationalisation, or indeed since the end of franchising during the Covid pandemic. Notwithstanding all that, no reader who has caught a train recently would suggest that today’s railway is high-performing, sustainable, and aligned with customer needs. Regrettably, privatisation and the market have been held up as scapegoats for what is essentially a systemic and structural issue.
The reality is that the entire industry structure prevents an entirely customer-focused and responsive railway. There are any number of perverse incentives that exist only because of unnecessary interfaces, extant by the track-train divide. For example, if a delay-causing incident is attributed to Network Rail, the infrastructure owner, the TOCs receive compensation for subsequent delay minutes, which, a cynic may argue, hardly incentivises speedy service recovery. With all revenue effectively collected on behalf of the Treasury, there is also little incentive to further drive passenger growth through improved performance and wider innovation.
Lacking long-term security of tenure, ownership, and direct control of physical infrastructure also inevitably restrains long-term, whole-system, market-based decision-making, realisable only when all aspects of service provision are managed by one organisation.
This can be achieved only by vertical integration; there have been several commendable attempts on the part of Network Rail and TOCs to work as one but, ultimately, financial and wider business objectives diverge. South West Trains and Network Rail operated a deep alliance between 2012-15, providing a single management team overseeing both train and track, resulting in significant performance and service enhancements. Owing to the industry’s misaligned and conflicting respective financial objectives, this arrangement was terminated.
As British Rail and the SNP’s more recent nationalisation experiment have demonstrated, however, resolving fragmentation through regionally based vertical integration is not sufficient to deliver a high-performing, customer-focused network. Ownership matters. Only privately owned, empowered, regional business units can deliver the efficiencies and dynamism necessary to return the rail industry to financial sustainability.
Such units need to be freed from overbearing government interference. In the current setup, there are incidences where ministers have taken undisputedly operational decisions, reportedly including absurd details about which train should run on a given day, and how many staff the TOCs can employ. Every detail of the train service is overseen by the DfT, far removed from the actual users. It is indefensible that such decisions are made by generalist civil servants rather than commercial rail specialists. Nationalisation will only embed further this undermining trend.
The current success stories of open access operators, the likes of Lumo and Hull Trains, stand as a compelling testament to the ability of private companies, genuinely free from DfT oversight, to provide a more dynamic service that delivers for passengers. Similarly, the privatised rail freight sector has been immensely successful, another area where the DfT has taken a comparatively restrained back seat.
This calamitous combination of fragmentation and DfT overreach has engendered a suboptimal mix of state oversight, complex commercial and operational interfaces, and industry paralysis.
The last Conservative government failed to seize a historic opportunity to rediscover meaningful free enterprise in the railway. Labour are now throwing their trade union paymasters red meat, at the cost of genuine passenger-serving reform.
Instead of learning from history and creating regional, vertically integrated business units and prioritising wider reform, including the outdated and vastly overcomplicated ticketing system, Labour is plowing ahead with an unnecessary, damaging nationalisation process that will cost taxpayers more and do nothing to improve the railway.
It is now for the Conservative opposition to develop a compelling alternative vision for an integrated, open, and market-led rail industry that delivers transformative connectivity and unlocks the ever-more exigent need for a productivity revolution. Learning from 200 years of history wouldn’t be a bad starting point.
Isaac Farnbank is Chairman of the London Universities Conservatives and former President of King’s College Conservative Association.
Since before William Huskinson MP became the first railway fatality in 1830, there has been a close association between politics and one of Britain’s most impactful inventions, the modern railway.
This close association has been for both good and ill. Labour’s current blinkered ideological obsession with ownership, as opposed to a positive, ideas-led plan for industry reform, promises only to shackle railway recovery and further undermine public confidence. Conservatives need a compelling alternative, rooted in a confident belief in free enterprise and a willingness to curb an overbearing DfT.
2025 marks 200 years of the modern railway. Whilst historical comparisons cannot be viewed in isolation, two centuries’ worth of experience cannot be entirely void of pertinent lessons. As President Truman observed shrewdly, “The only thing new in the world is the history you do not know”.
Following ‘railway-mania’ – the massive overgrowth of the railway network in the 19th century – over 200 separate companies ran networks of varying sizes and importance, often with little or no constructive coordination, resulting in a disjoined mismatch that failed to meet passengers’ needs and left the nation’s connectivity wanting. Contemporary observers may note faint echoes of this misalignment in today’s industry structures.
After the Great War, David Lloyd-George’s government legislated to group this chaotic cacophony of competing and misaligned companies into four, vertically integrated regional companies that owned and operated both infrastructure and train service delivery. This heralded the start of a golden era for Britain’s railways.
The first major scale electrification schemes were completed, more efficient and effective signalling systems devised, new speed records were set and beaten, an entirely new standard of service and train emerged, customer choice transformed, and passenger numbers and freight tonnage increased exponentially. Dynamic, empowered private companies, in tune with passengers’ and freight customers’ needs, delivered.
Why? Although the ‘Big Four’ undoubtedly benefited from a growing population, it was by having total control of both track and train, that the companies were able to optimise each in the interests of railway users, rather than navigate today’s disparate interfaces between Network Rail and each Train Operating Company (TOC).
Their security of ownership facilitated unprecedented investment, rooted in commercial need and benefit. Unlike today’s TOCs, the ‘Big Four’ were also afforded greater freedom in devising and delivering services whilst continuing to achieve high punctuality, reliability, and service levels. Since 2020, such decisions have been effectively made in Whitehall.
Inevitably, Britain’s railways suffered during the Second World War.
Intensive, strained use combined with a lack of investment and maintenance were bound to result in a less reliable and poor-performing network. While European countries essentially started again, buoyed by American aid, Attlee’s government nationalised the ‘Big Four’, creating British Railways.
As the industry’s governance shuddered from one bureaucratic body to another, and market mechanisms were discarded, an era of decline manifested. In place of technological advancement, British Railways wasted millions on a fleet with a serviceable life of 50+ years, only to scrap them less than 10 years later. In place of commercial necessity demanding dynamism in meeting changing customer needs and working practices, the network became dependent on taxpayer subsidy. In place of robust oversight of costs, only the highest level of management were accountable for revenue and expenditure performance.
Despite some innovations, such as freight containerisation, the short-sighted mass closure of rural and trunk lines, falling passenger numbers and a sharp collapse in freight followed. Vertical integration was insufficient alone to deliver a high performing, self-sustaining rail industry. The largest efficiency gains were realised as the state monolith prepared for privatisation, and the first influence of market mechanisms began to be felt on a hitherto insufficiently commercial outfit.
Against the view of one Michael Portillo and industry experts, John Major’s government decided upon a franchising model to privatise British Rail, separating for the first time ownership of track and train. This was undoubtedly flawed, as today’s fragmentation attests to, but even so, the return of private enterprise to the railway resulted in unprecedented passenger growth, a transformation of service, the reopening of stations and lines, and investment in new fleets and infrastructure enhancements.
Between 2010 and 2018, the taxpayer received more from train operating companies than was paid in subsidy, something never achieved during nationalisation, or indeed since the end of franchising during the Covid pandemic. Notwithstanding all that, no reader who has caught a train recently would suggest that today’s railway is high-performing, sustainable, and aligned with customer needs. Regrettably, privatisation and the market have been held up as scapegoats for what is essentially a systemic and structural issue.
The reality is that the entire industry structure prevents an entirely customer-focused and responsive railway. There are any number of perverse incentives that exist only because of unnecessary interfaces, extant by the track-train divide. For example, if a delay-causing incident is attributed to Network Rail, the infrastructure owner, the TOCs receive compensation for subsequent delay minutes, which, a cynic may argue, hardly incentivises speedy service recovery. With all revenue effectively collected on behalf of the Treasury, there is also little incentive to further drive passenger growth through improved performance and wider innovation.
Lacking long-term security of tenure, ownership, and direct control of physical infrastructure also inevitably restrains long-term, whole-system, market-based decision-making, realisable only when all aspects of service provision are managed by one organisation.
This can be achieved only by vertical integration; there have been several commendable attempts on the part of Network Rail and TOCs to work as one but, ultimately, financial and wider business objectives diverge. South West Trains and Network Rail operated a deep alliance between 2012-15, providing a single management team overseeing both train and track, resulting in significant performance and service enhancements. Owing to the industry’s misaligned and conflicting respective financial objectives, this arrangement was terminated.
As British Rail and the SNP’s more recent nationalisation experiment have demonstrated, however, resolving fragmentation through regionally based vertical integration is not sufficient to deliver a high-performing, customer-focused network. Ownership matters. Only privately owned, empowered, regional business units can deliver the efficiencies and dynamism necessary to return the rail industry to financial sustainability.
Such units need to be freed from overbearing government interference. In the current setup, there are incidences where ministers have taken undisputedly operational decisions, reportedly including absurd details about which train should run on a given day, and how many staff the TOCs can employ. Every detail of the train service is overseen by the DfT, far removed from the actual users. It is indefensible that such decisions are made by generalist civil servants rather than commercial rail specialists. Nationalisation will only embed further this undermining trend.
The current success stories of open access operators, the likes of Lumo and Hull Trains, stand as a compelling testament to the ability of private companies, genuinely free from DfT oversight, to provide a more dynamic service that delivers for passengers. Similarly, the privatised rail freight sector has been immensely successful, another area where the DfT has taken a comparatively restrained back seat.
This calamitous combination of fragmentation and DfT overreach has engendered a suboptimal mix of state oversight, complex commercial and operational interfaces, and industry paralysis.
The last Conservative government failed to seize a historic opportunity to rediscover meaningful free enterprise in the railway. Labour are now throwing their trade union paymasters red meat, at the cost of genuine passenger-serving reform.
Instead of learning from history and creating regional, vertically integrated business units and prioritising wider reform, including the outdated and vastly overcomplicated ticketing system, Labour is plowing ahead with an unnecessary, damaging nationalisation process that will cost taxpayers more and do nothing to improve the railway.
It is now for the Conservative opposition to develop a compelling alternative vision for an integrated, open, and market-led rail industry that delivers transformative connectivity and unlocks the ever-more exigent need for a productivity revolution. Learning from 200 years of history wouldn’t be a bad starting point.