Privatisation of British Rail - Organisational Structure Created By The Railways Act 1993

Organisational Structure Created By The Railways Act 1993

The original privatisation structure, created over the three years from 1 April 1994, consisted of:

Infrastructure Owner

Railtrack took over ownership of all track, signalling and stations. Railtrack let out most of the 2509 stations to the franchised passenger train operators, managing only a handful (12, later 17) of the largest city termini itself; maintenance and renewal of the infrastructure was also contracted out to British Rail Infrastructure Services, leaving Railtrack's directly-employed staff consisting mostly of signallers. In the original privatisation plan, Railtrack would have been the last part of British Rail to be sold, but with the approach of a General Election in 1997 at which the Conservatives faced almost certain defeat, Railtrack was hastily privatised in May 1996 in an attempt to ensure that the new structure could not be reversed.

Regulation

The Rail Regulator (the statutory officer at the head of the Office of the Rail Regulator (ORR)) was established to regulate the monopoly and dominant elements of the railway industry, and to police certain consumer protection conditions of operators' licences. He did this through his powers to supervise and control the consumption of capacity of railway facilities (his approval was needed before an access contract for the use of track, stations or certain maintenance facilities could be valid), to enforce domestic competition law, to issue, modify and enforce operating licences and to supervise the development of certain industry-wide codes, the most important of which is the network code. Probably the Rail Regulator's most significant power was the establishment, usually every five years, of the financial framework in which Railtrack (now Network Rail) operates, through the carrying out of access charges reviews. This settled the structure and level of access charges which the infrastructure provider is entitled to charge train operators for the operation, maintenance, renewal and enhancement of the national railway network. ORR's role only covered economic regulation; safety regulation remained the responsibility of the Health and Safety Executive, but that position changed in 2005 when safety regulation was transferred to ORR under the Railways Act 2005. The first Rail Regulator was John Swift QC

Franchising

The Director of Passenger Rail Franchising took responsibility for organising the franchising process to transfer the 25 passenger train operators (known as Shadow franchises) to the private sector and then develop the refranchising programme for the future. The first round of franchising was based solely on the lowest cost bidder wins. The first Director of Passenger Rail Franchising was Roger Salmon.

Passenger Train Operators

Twenty-five passenger train operating units (TOUs), converted to Train Operating Companies (TOCs) shortly before each was privatised, split by geographical area and service type. This meant that, for example, a major city terminus would be served by an ex-InterCity TOC and one or more local commuter TOCs, with consequent competition for train paths into and out of the stations, which had to be resolved by Railtrack and the Rail Regulator. The TOCs owned virtually nothing, hiring most of the assets required from Railtrack and the ROSCOs and contracting suppliers to undertake heavy maintenance on the trains or provide onboard catering. (The special adviser to the UK chancellor of the exchequer, Ms Shriti Vadera, memorably described the privatised passenger train operating companies as "thinly-capitalised equity profiteers of the worst kind", a phrase which betrayed a disdain which was intensified when it came to the collapse of Railtrack in October 2001.)

Train Owners

Three Rolling Stock Leasing Companies (ROSCOs):

• Angel Trains
• Porterbrook Leasing
• Eversholt Leasing, later HSBC Rail

These were allocated all British Rail's passenger coaches, locomotives, and multiple units. Freight locomotives and wagons were owned by the freight train operators.

Freight Train Operators

Six Freight Operating Companies (FOCs):

• Geographical units for trainload freight
  • Mainline Freight in the south-east
  • Load-Haul in the north-east
  • Trans-Rail in the west
• Other units
  • Railfreight Distribution, international and wagonload trains
  • Freightliner (UK), container-carrying trains
  • Rail Express Systems, parcels and mail trains

Infrastructure Maintenance and Renewal

British Rail Infrastructure Services (BRIS), which took responsibility for the engineering requirements of the railway. BRIS was subsequently organised for privatisation on the basis of 7 Infrastructure Maintenance Units (IMUs), which maintained the railway, and 6 Track Renewal Units (TRUs), which replaced rail lines, both organised geographically.

Specialist Companies

A variety of other companies created to undertake specific functions, including European Passenger Services (to operate the UK part of the Eurostar service) and Union Railways (to implement the High Speed 1 construction project).