Re: Dr Beeching

[R.J.Drew@lboro.ac.uk (Richard Drew)]

On Fri, 08 Jan 1999 20:04:46 GMT, news@nospam.freeserve.co.uk (Tony Polson)
wrote:

>On Fri, 08 Jan 1999 13:20:00 GMT, in uk.railway Geoff Bannister
><gbannister.rcts@argonet.co.uk> wrote:
>
>>The interesting thing here, in hindsight as ever, is that Robert Riddles,
>>when he was the CME of BR, set his face firmly against dieselisation,
>>arguing that the way forward was to electrify and pointing out that, if we
>>dieselised, we would then set back electrification by a generation while the
>>book cost of the diesels was reduced. This is precisely what happened in
>>respect of the ECML. It was for that reason that Riddles stuck to his guns
>>over the Standard steam programme. 
>
>Absolutely right.  It also irrevocably affected the long term future of the GWML
>and the Trans-Pennine lines and probably others too.
>
>>If BR had been able to keep to its stated
>>way of developing the Modernisation Programme - ie by running the Pilot
>>Scheme diesels for 2/3 years before bulk ordering, we might not have seen
>>the railways in the financial mess they got into and might have avoided the
>>waste of huge sums of money which occurred as a result. 
>
>If only that were true.  BR completely failed to respond to the massive changes
>in its market during the 1950s.  BR senior management fiddled while Rome burned,
>meanwhile huge losses rapidly mounted.  

A more reliable source for you this time: BTC report and accounts for 1948 and
for 1960:

                               1948       1960
Route mileage (total)         19630      18369  
Freight ton miles          21456842   18650261
Increase in year               .45%       5.3%
Passenger miles            21259000   22270000
Increase in year              -7.6%       3.4%
Freight Reciepts          181696313  247320163
Increase in year                16%       1.9%
Passenger Receipts        122572809  151274093
Increase in year               4.2%         8%
Total Receipts            337314996  478571057
Working Expenses          311057259  546223137

>From this it can be seen the market changed little in size between 1948 and
1960, and the indications were that traffic levels were on the increase in 1960,
and likely to return to the levels before the poor yeas of 1958 and 1959.

>>It was the
>>Government which stampeded BR into accelerating the Modernisation Programme
>>by massive orders for untried (and sometimes unbuilt!) classes and started
>>the worsening financial slide which brought Beeching, who by the way was not
>>a railwayman but a hard nosed businessman, into the equation.
>
>Why blame the Government?  Government rightly insisted BR act because the
>taxpayer was having to underwrite BR's massive and mounting losses.  BR's chosen
>response was merely to accelerate their half baked and unnecessarily grandiose
>Modernisation Plan.  Herein lies the root of the problems on British Railways
>for the next 40 years.

It is interesting to compare the BTC anual reports for 1960 and 1961. In 1960:

"3. Looking back over the thirteen years of the Commisson's existance it may be
said that over the first eight years, 1948 to 1955, the finances were broadly in
balance. As the report for 1955 pointed out, the accumulated deficit at the end
of that year could be wholly accounted for by delays in obtaining authority to
adjust fares and charges to compensate for the fall in value of money. In 1956
the policy of deficit borrowing was introduced and the commission did not raise
fares and freight rates by the amounts which they had contempated. The White
Paper of that year explained that the expected annual deficits which would be
held in suspense on a Special Account set up for the purpose, would be of the
order of £50m. a year to begin with. Later the anual deficits would gradually
fall until such time as hte steps being taken to improve the economics and
competitive power of British Railways had restored the position. For the first
two years, 1956-57, the results were very much as predicited, but in 1958 the
servere recession in coal and in iron and steel carryings made itself abruptly
felt, equivalent to a revenue loss at the rate of about £30m. a year in 1958 and
1959. Steel traffcs have since recovered, but not coal.

4. The benefits achieved from technical modernisation, though well up to
expectations, have thus been masked and heavily outweighed by the decline in
heavy traffics coupled with the trend in wages and the weeknesses of the freight
market. In a Re-appraisal of the situation published in July 1959 (Cmnd. 813)
the commission explained why the expected scale of the deficients in the
transitional period was being over-run, and why the prospect of breaking even
had receded.

5. As to wages, the periodical increases which had been granted in earlier years
weer quite overshadowed by those which were recommended on March 1960 by the
Guillebaud Committee set up to enquire into pay of the railway staff. Although
both the Commission and the Government endorse the principle of paying
railwaymen an equitable wage, not only were the financial expectations of the
Commission profoundly affected, but also the further outlook for the railways
was brought into question, as subsequent proceedings in Parliment made clear.
....
8.... For the railways alone, the additional revenue cost in 1960 of the
Guilleband settlement was about £33m. This figure was substantially higher than
the amount which the Commission had in mind when preparing their Re-appraisal in
1959; it more than offset some recovery in revenue from heavy traffics and
pushed up hte working deficient on Britsh Railways to £67.7m, an increase of
£25.7m....
...
10..1960 was a year of considerable progress under the railawy modernisation
plan.... The diesel mult-unit programme, for instance, has transformed railway
travel in many areas of the country, but hte modernisation of freight services
and electrification take much longer... the full benefits of modernisation...
are not realised until arge areas of operation have been dealt with. Meanwhile
working expenses may be temporarily increased as a result for example of mixed
steam and diesel working, and normal running is disorganised by engineering
works in progress....

11... Of more immediate effect was the drive for greater productivity which was
successfully undertaken in all parts of the undertaking. The speed at which
money wages were to rise in a business in which labour costs represented over 60
per cent. of total working expenditure could not be fully foreseen when the
Modernisation Plan and its financial estimates were being worked out in 1954....
...
13. The year ended with the publication in December of the White Paper...
reorganisation.... of the Commissions undertakings..... The Commission welcome
the reorganisation of the financial structure which, as they said in the
RE-appraisal of July 1959, they have for some time regarded as essential.... the
Commisssion remain convinced that British Railways should achieve an operating
surplus within a few years...."

And from the 1961 report:

"5. The year 1961 was not a good year financially for the Commisssion's
undertakings as a whole... £87m working deficient of the railways...

7. Since 1953, the last year in which British Railways can be said to have paid
their way, there has been a steady worsening of their financial position, with a
deficient increasing each year at an average of about £15m. Last year's annual
report included the statement that "... the Commisssion remain convinced that
British Railways should achieve an operating surplus within a few years." By the
time the report was issued, however, it was already expected that operating
losses for the year would, once more, be about £15m. worse than in the previous
year. In the event the increase in dept was £19m., the further worsening result
from the general decline in the national economy and, in particular, from the
fall in the activity of the steel industry.
...
20. It must again be empasised that stopping trains have long ceased to be the
must suitable form of transport for the traffic for which they cater. In the
interest of the railways as a whole, most of these services should be
discontinued as quickly as possible....

22. ...Therefore, the closure of branch lines should be seen as a part , and
only a minor part, of a much wider withdrawal of one form of service and
modified operation of another.

23. It is encouraging to realise that those forms of service for which the
country still depends and will continue to depend predominately on rail, the
long distance passenger traffic, coal traffic, mineral traffic, and commuter
services around Lonodon and a few other large centres of population, are either
self- supporting or potentially so."
 
If traffic levels were fairly steady, what was the cause for the losses?
Obviously the rates and fares were not keeping pace with the increase in
expenses. In particular, in 1960 railwaymen were being paid more than double the
pay in 1948.

                               1948       1960
Number of staff              648740     514500
Average male staff earning  137s11d       285s

The modernisation plan resuted in significant intestment, and thus depreciation.
But levels of maintenance were also significantly improved:

                               1948       1960
Expenses include (in part)
Rolling Stock Depreciation 11353884   25509241
Civil maintenance          47974348  132077896

The increase in spending on maintaining the track, structures and signalling is
interesting considering recentcritism of the lack of spending by Railtrack.

The big question is, were the closures necessary? Personally I believe not. A
significant number of these closures were of heavily staffed lines with
significant overheads. The lines that weer closed were very different from the
similar lines that are still open today. There was significant scope for cutting
costs without closure.

The extracts from the 1961 report show the powers that be had already decided
branches were to close. The only consideration was whether the lines paid,
without consideration of potential savings that could be made in the operation.
By ignoring the losses predicted by the Moderisation Plan, and the ecconomic
problems, it was easy to justify the closures. 

But Beeching make the promised savings? Under hte 1968 Transport Act, revenue
grants were made to retain services on loss making lines. According to the 1961
report, it would be reasonable to assume commuter lines would not require this
subsidy. However the 1971 BRB annual report lists services receiving grants.
These include the Glasgow Suburban network, Fenchurch St - Shoeburyness via
Tilbury and Liverpool St to six commuter terminals (however, there are few
services south of the Thames listed). Desipte a grant of over £67m, profits were
only £30.2m before interest (the bottom lines was £15.4 in the red).

Political expediency may have allowed the loss of many lines in Beeching's day,
and this continued until the concept on revenue grants was accepted. If the idea
of grants had been accepted in 1960 (when suggested by the Select Committtee),
they lines would still be open.

-- 
Richard Drew