Re: Dr Beeching

[news@nospam.freeserve.co.uk (Tony Polson)]

On Mon, 11 Jan 1999 06:00:26 GMT, in uk.railway R.J.Drew@lboro.ac.uk (Richard
Drew) wrote:

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

Thank you for posting these, Richard.  I hope you didn't have to type them all
out manually.  I appreciate your effort in putting this together because it
gives a very good picture of what was happening.

>                               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.

Freight ton miles were down by 13%.
Passenger miles were up by just under 5%.

Freight receipts up 36% in cash, rate per ton-mile up 18%.
Passenger receipts up 23% in cash terms, rate per passenger-mile also up 18%.

Profit in 1948 £26.2 million (7.8% of turnover).
Profit in 1960 (£67.6 million) (loss) (-14% of turnover).

The 1948 bottom line figure (7.8% profit on turnover) is not at all bad for what
was still effectively a private enterprise (nationalisation having taken place
at the start of that year) but the 1960 figure (14% loss on turnover) clearly
shows how desperate things had become in 12 years.

Taking figures from lower down your posting, the wage bill in 1948 must have
been of the order of 648,740 x 137s11d (£6.90) x 52 =   £232 million ....
and in 1960 of the order of 514,500 x 285s (£14.25) x 52 =   £381 million
Increase in the total wage bill was 64% in cash terms.  Increase in pay per
employee was 107%.

Here was a business that was *rapidly* going down the pan.  With freight
ton-mileage dropping (especially wagonload, whose massive reductions were partly
balanced in the overall figure by increases in other freight traffic) and
passenger miles essentially static (rising at only 0.4% per annum) the railways
managed to more than double wages paid per man yet reduced staff by only 1.7%
per year.  A lamentable record on productivity if ever there was one.  Herein
lay the seeds of Beeching's appointment. 

(large snip) 

>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...

By now things were getting desperate.  In 1998 terms £87 million may sound like
not very much money, but I suggest we should multiply it by at least 20 to bring
it to 1998 values giving £1740 million.  I do not have figures for the Gross
Domestic Product of the UK economy in 1960 but this £87 million loss must have
been a significant proportion of it.  

Given that the nationalised coal and steel industries were also having major
problems it is not surprising that Government needed to appoint Beeching to act
extremely effectively to stem these losses.  That they took so long to do so is
a direct result of the determined, if wholly misplaced optimism of the
BTC/Railway Executive (I apologise for referring in previous posts to the
British Railways Board which was not set up until Beeching arrived) that the
operation could be brought into profit.  Their continuing blandishments in the
annual accounts must have been a source of much irritation to the Government in
view of the hundreds of millions of pounds that were being invested via the
Modernisation Plan to no avail - just look at the figures! 

The following text from the 1961 report is significant because it demonstrates
that the branch line closure agenda was well established long before Beeching
was appointed. 

>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.

The last sentence was probably intended to point out that branch line closures
/per se/ were not on the agenda, but stopping services (which made up the
majority of the branch line traffic) were.

>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."

Well this was quite prophetic, because it foresaw precisely what happened and
this was never better demonstrated than in the Sectorised BR of the early 1990s,
thanks to the transparency of accounting that was brough to BR for the first
time.  For "long distance passenger traffic" read InterCity, for "coal traffic,
mineral traffic" read Railfreight and for "commuter services around Lonodon
[sic]" read Network SouthEast.  Under the sectorised BR the first achieved
profit and the other two were well on their way towards doing so.

>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.

This is a point well made, but unfortunately I believe that distortions make the
figures meaningless.  

Rolling stock depreciation in 1960 at 125% greater than in 1948 showed only a
small increase over wage inflation at 107% over the same period.  Assuming the
policy on estimates of depreciation remained the same over the period, this
would not seem to indicate a huge increase in investment.  A mystery, unless the
overall rolling stock fleet had been reduced, or possibly the majority of the
investment went into infrastructure?  Can anyone confirm (using facts please)?

On civil maintenance, the nationalised British Railways inherited huge
maintenance backlogs from the "Big Four" companies largely as a result of the
lack of asset replacement (1990s term) during and after the Second World War.
The 1948 figures for asset renewal will be artificially depressed to a very
significant degree by (1) the shortage of steel as a result of wartime damage to
steelworks and (2) the after effects of the devastating 1947 Winter which
decimated coal and steel production and brought the economy to a standstill. 

For these reasons I think it's virtually impossible to interpret these
particular figures.

>The big question is, were the closures necessary? 

The $64,000 question.

>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.

That is perfectly true, and I have no doubt that some lines could have remained
open given new Diesel trains and de-manning of most stations.  But it is *not*
true to say that the majority of the lines would not have closed, because so
many of them had *virtually no traffic at all*.  There could be no economic case
for keeping those lines open except for reasons of sentiment, because they could
not carry on as they had, with time expired locos, rolling stock and
infrastructure and fare/freight/parcel income measured in fractions of a
percentage point of the costs of running the services. 

>The extracts from the 1961 report show the powers that be had already decided
>branches were to close. 

Yes, and that decision was made by the railway, not by Beeching.  That clearly
explains why railway management were completely indifferent to the closures.
They would have happened anyway.  Yet people still blame Beeching.

>But [did] 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).

£30.2 million profit is a very, very good result, in view of the astonishing
losses we have discussed in pre-Beeching years.  The interest payment of £45.6
million can be explained by the fact that interest rates had skyrocketed to
never before known heights (thanks to the Heath Government and particularly the
Chancellor, Tony Barber, who sowed the seeds of hyperinflation and then wondered
why the economy fell apart) so interest payments suddenly became a killer for
all industries which borrowed and spent - and for home owners too.  Don't forget
that the knock-on effect of this (high real interest rates) has been with us for
a quarter of a century, and only now have interest rates returned to anything
resembling what they were pre-1970.

So yes, Beeching achieved what he had set out to do.  As a railway enthusiast I
mourn the closures that his report instigated (although we have now agreed that
the branch line closure agenda was in place and being implemented well before
Beeching arrived) but I thank God that he kept the railway alive and, for the
first time, truly forward looking to the great extent that he managed.

>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.

Economic rather than political expediency, and certainly not party political.
The nation, whether governed by the Tories or Labour, could not possibly
withstand losses of the kind being generated by BR, with hundreds of millions of
pounds of taxpayers money being squandered on "investment".  And, as the figures
you kindly provided have proved beyond doubt, the investment was making no
headway towards reducing losses precisely because *nothing* was being done to
improve productivity or efficiency.

And here is the crux of the matter.  If economies had been made in manning, the
figures would have taken on a different hue.  However, under the Modernisation
Plan, money was thrown at the railways in obscene quantities (£30 billion at
1998 prices) without even a thought being given to the corresponding efficiency
savings that were equally desperately needed, and that would have kept some
lines open.  

By the time Beeching was called in, it was too late.  The money had been spent,
but the savings had in no measure been achieved.  Beeching had no alternative.
What annoys me is how he has somehow been blamed for having to sort out a
desperate situation which was not of his making, while the faceless and grossly
incompetent top management of BR got off scot free.  How adept they must have
been at pointing the finger at Richard Beeching.

Just as some people on this newsgroup still do.

--
Tony Polson, North Yorkshire, UK