British Rail came into being with the Transport Act 1947, and was the result of the big 4 railway companies from all over the country merging and being nationalised. The nationalisation came into force in 1948 and within a few years there were massive upheavals, such as the move to electric trains.
However, the Railways Act 1993 privatised the railways and allowed for 25 franchises to be bought by private companies to operate trains across the country. Other areas of British Rail were subsequently split up and prepared for privatisation. The private company Railtrack took ownership of all the tracks and stations.
When the Labour Party came to power in 1997, more changes were made to the organisation of the former British Rail. After the Hatfield Rail Crash, Railtrack went downhill and eventually dissolved in 2002 and was replaced by the company Network Rail. Unlike Railtrack, however, Network Rail is (as of 2006) run by the government, although still technically a private company.
The aims of rail nationalisation were to improve customer services, improve efficiency, get value for money and for ideological reasons. Also, the railway network was badly damaged during World war II, and government control made recovery much quicker. However, over time and because of neglect, these aims were never satisfactorily achieved. This coincided with a shift in attitude that meant that the Conservative governments of 1979 – 1997 were in a position to starve the railways of nurture and then privatise them.
The aims of rail privatisation were very similar to the aims of nationalisation – improve customer services, improve reliability and lower prices. Prices on some tickets were actually lowered, but on uneconomical lines the prices actually soared – this combines with a lack of other public transport to mean that people in rural areas need cars, which has an adverse effect on the environment.
Another core aim of privatisation was to introduce a liberalised market economy into the the rail service. One of the fundamental arguments in favour of privatisation is that by having a liberal market with competition there is consumer choice and due to consumer demand the prices are kept down. However, rail privatisation can never actually work like this, because although there are 25 franchises there each operate in their own area and there is actually no consumer choice. So what the end result is is private companies with a total monopoly on rail transport.
The nature of private companies is that they want to make a profit for their shareholders. Companies make profits by increasing income from sales and keeping costs as low as possible. This inevitably means that they will have to 'cut corners' at some point in time and not spend as much on infrastructure or similar things than they really should. So for uneconomical train lines such as those in rural areas, the rail companies are not going to spend much because they do not make much money. This means dirty trains and poor customer service – something that privatisation was supposed to solve.
A major difference between a private company and a nationalised industry or service is attitude. With a company the main goal is to deliver profits to the shareholders, whereas a nationalised industry should in theory concentrate more on the quality of service and maintaining jobs in the interest of the general public and the employees. For this reason, a nationalised rail industry could venture into an initiative that would be a loss-maker (so a private company would not want to get involved) but creates jobs and provides a decent service. So long as overall the nationalised rail network at least breaks even the general public and the government will be satisfied. It is unacceptable, however, for a nationalised industry to not break even because the taxpayer will have to pay off the defecit, which would lead to people questioning the value-for-money of the industry.
It could be argued that if a nationalised railway industry would be expected to break even or make a small profit it is very much the same as a private company, only run by the government. This is not true as the obligations and goals of the two are different.
The efficiency of the privatised railways is very dubious, as there is no single authority making decisions. It is safe to say that efficiency has not improved and will never improve under privatisation.
Improved customer services and punctuality have not been achieved due to cuts in infrastructure and because the general public certainly does not understand how the system works and who to complain to.
All of this is evidence that privatisation of the railways does not fulfil its purpose effectively.
Because of various scandals over the years either directly or indirectly caused by rail privatisation, the franchise owners are not doing particularly well. Network Rail is government funded, and taxpayers' money is being pumped into the system so that the franchise owners can stay afloat. Because of this no matter how much the government invests in Network Rail, the customers will never see any improvement in services. It is totally up to the private companies to improve services.
The only way the railways can actually improve and become more efficient is through nationalisation. Private companies will not improve and update the system because they are happy the way things are. They do not want to risk building a new line unless it is not as economical as they thought it would be.
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