Transport Act 1947 - Railways

Railways

After the war the Big Four railway companies of the grouping era were effectively bankrupt, and the Act was intended to bring about some stability in transport policy. As part of that policy British Railways was set up to run the railways. (The Transport Act 1948 later transferred the lines in Northern Ireland formerly of the LMS, the Northern Counties Committee, to the Ulster Transport Authority.)

Shares in the railway companies were exchanged for British Transport Stock, with a guaranteed 3% return chargeable to the BTC. The level of compensation paid has proved to be a matter of historical controversy.

Some commentators maintain that because the Government based the levels of compensation for former railway shareholders on the valuation of their shares in 1946 (when the whole railway infrastructure was in a run-down and dilapidated state because of war damage and minimal maintenance) the railways were acquired comparatively cheaply.

However, others point out that three of the Big Four were effectively bankrupt before the onset of war in 1939 and were only saved from the ignominy of actually declaring bankruptcy by the guaranteed income provided by the wartime government and the temporary surge in rail traffic caused by the restrictions on other forms of transport during and immediately after the war. The exchange of potentially worthless private stock for government gilts based on a valuation during an artificially created boom could thus be considered a very good deal.

Whatever the case, it is clear that the 3% guaranteed return paid by the British Transport Commission became a substantial drain on the Commission's available capital in years to come.

See list of constituents of British Railways.

Despite nationalisation and the creation of British Railways (BR), the rail system changed little, and was left in much the same way as it had been before nationalisation. BR was divided into six administrative regions: Eastern, London Midland, North Eastern, Scottish, Southern and Western.

These closely mirrored the regions covered by the former companies in England and Wales, although with the addition of a separate Scottish Region. The North Eastern Region was eventually amalgamated with the Eastern Region, reflecting the English operations of the 1923-1947 London and North Eastern Railway.