Railway nationalisation is the act of taking rail transport assets into public ownership. Several countries have at different times nationalised part or all of their railway system.
More recently, the international trend has been towards privatisation. In some areas, notably Great Britain, resultant problems with track maintenance have led back to a more mixed solution, with a nationalised infrastructure operator but privately run train operating companies.
National characteristics influenced the structures under which countries' rail networks developed. Some national railways were always under direct State management, some were State-planned but privately operated (as in France), others were wholly private enterprises lightly regulated (as in Great Britain, Ireland and Spain).[citation needed] Nationalisation was therefore a bolder step to take in some countries than in others. While ideology has played a role, so too has the need for systematic reconstruction of vital infrastructure devastated by war, often following a period of state control over private companies initiated during the conflict.
Russia
Railroads in the Russian Empire were built by both the state and capitalists. After communist takeover the whole railway system was brought under the state control and remained so after fall of the communist rule. Nowadays the Russian Railways state-owned company holds monopoly on this sphere of transportation.
The Argentine railways developed with private British, Argentine and French capital and were nationalised by the state in 1948 during President Juan Perón's first term of office and merged into the existing state-owned railways. In the 1990s, following Carlos Menem's neoliberal reforms, services were privatised through concession, with infrastructure still belonging to the state. After a series of high-profile accidents and serious deterioration of services under privatisation, most rail lines have returned to state control by 2015, in effect re-nationalising them.
In 1878, the French government took over ten small failing railway companies and established the Chemins de fer de l'État. The company absorbed the Chemins de Fer de l'Ouest in 1908. In 1938, the French state took 51% ownership of the newly formed SNCF merging of France's five main railways (100% in 1982).
Germany
The earliest railways in the German states were often run by private entrepreneurs. Beginning in 1879, the Prussian government nationalised the major railways.[1] After World War I, the German Reich took over control of the state railways of Prussia, Bavaria, Saxony, Württemberg, Baden, Mecklenburg-Schwerin, Hesse and Oldenburg. The individual railways were merged into the Deutsche Reichsbahn-Gesellschaft in February 1924.[2] The DRG was the largest publicly owned company in the world when the Nazis privatised it in 1937. In the lead up to, and during, World War II the DR assimilated a great number of railway companies in the German-occupied territories as well as several smaller, previously privately owned lines in Germany.
Post-World War II, after being under Allied administration between 1945 and 1949, the DR was split up into the Deutsche Bundesbahn and Deutsche Reichsbahn (East Germany), both state-owned. Private railways continued to exist in the West German realm of the DB, but DB and DR accounted for most of the rail traffic in post-war Germany. After German reunification, DB and DR became Deutsche Bahn in 1994.
Whilst DB AG is a public limited company, all its shares are presently owned by the government of the Federal Republic of Germany. DB AG is now facing stiff competition in the freight and short-distance passenger sector (the latter of which is subject to franchising), although they still hold a quasi-monopoly in the long-distance passenger sector (which does not receive subsidies), which was starting to crack until the opening of the long-distance bus market destroyed the business case of any open access competition. The IPO, originally planned for 2008, has been postponed indefinitely and is currently not on the agenda of any major political party.
India
Indian Railways has been state owned since 1951. However, in 2020, the Modi government announced plans to privatise some routes. But as per the articles published in various media reports Railway Minister Sh. Piyush Goyal assured that Railway will never be privatised however private investment will be encouraged for efficient functioning of National Transporter.[3]
Ireland
In Ireland CIÉ was formed from the merger of the Great Southern Railways with the Dublin United Transport Company on 1 January 1945. Initially a private company limited by shares, CIÉ was nationalised in 1950. The final privately owned mainline railway company on the island, the Great Northern Railway, was nationalised under joint control of the Irish and Northern Irish governments in 1953. It was wound up in 1958 and its assets split between CIÉ and the UTA.
Following unification, the Italian Government entrusted the railways to five regional concessionaires. The arrangement did not work well and, long before it was due to expire, the railways were nationalised in 1905. The nationalised operator is known as Ferrovie dello Stato. Italy has an open access high-speed rail operator competing against the national railway; Nuovo Trasporto Viaggiatori which is part owned by SNCF and private investors.
Japan
In Japan, the Railway Nationalization Act of 1906 brought most of the country's private railway lines under public control. Between 1906 and 1907, 2,812 miles (4,525km) of track were purchased from seventeen private railway companies.[4] The national railway network grew to about 4,400 miles (7,100km) of track, and private railways were relegated to providing local and regional services.[4] In the 1980s the process of privatising Japanese National Railways begun that is not entirely finished as of 2016 with both entirely state and private members of the JR Group.
Spain
After years of declining profitability, the national rail network was devastated by the Spanish Civil War. In 1941, the broad gauge railways were nationalised, as RENFE (Red Nacional de los Ferrocarriles Españoles). The narrow gauge railways were also later nationalised; some of these have since been transferred to the autonomous regional governments where contained within a single region. The standard gauge high-speed lines were built as a state owned venture from the start.
United Kingdom
Rail Passengers in Great Britain from 1829 to 2021
In 1914, the railways were taken into Government control - but not ownership - due to World War I, but were returned to the original owners in 1921, three years after the war had ended. However, in that same year, the government introduced the Railways Act 1921. This forced the 120 railway companies then operating to merge into just four. This grouping officially took place on 1 January 1923. The four railway companies formed from the grouping were: The Great Western Railway, the Southern Railway, the London & North Eastern Railway, and the London, Midland & Scottish Railway. After World War II, the railways were taken into State control. They were heavily damaged by enemy attacks and were run down aiding the war effort, as well as still suffering financially from the Great Depression even with it mostly ending before the war. After the war, the Transport Act 1947 provided for nationalising the four major railways. On 1 January 1948, the railways were nationalised and British Railways was created, under the overall management of the British Transport Commission, later the British Railways Board.
Railways in Northern Ireland were nationalised in the 1940s under the Ulster Transport Authority (UTA). The former LMS lines managed by the Northern Counties Committee, nationalised by the Westminster government, were sold to the UTA by the British Transport Commission in 1949.
British Rail was privatised between 1994 and 1997, involving the transfer to a series of private-sector operators of responsibility for the provision of services under contract. In all, more than 100 companies took over from British Rail. In 2001 the track operator Railtrack went bankrupt; it was reconstituted and renamed as Network Rail, a private company with no legal owner but effectively government-controlled via its constitution and financing. The United Kingdom government continues to invest in the railways, financing, for example, the acquisition of some InterCity rolling stock.[citation needed]
The positive impact of privatisation is disputed, with passengers numbers more than doubling (see graph) and increasing customer satisfaction[5] balanced with worries about the level of rail subsidies and criticism of the fact that much of the system is now contracted out to subsidiaries owned by the state owned railways of France, Germany and the Netherlands.[6]
Only 20% of Southern trains arrived on time in the year from April 2015 to March 2016, and there was an ongoing industrial dispute over driver-only operated trains.[7][8] In June 2016, amongst criticism of the performance of its services, Go-Ahead Group warned of lower than anticipated profits on its Govia Thameslink Railway franchises, leading to 18% drop in the Go-Ahead share price.[9]
Unlike British Rail, the Northern Ireland Railways remain state owned.
The franchisee system for passenger rail effectively ended in March 2020, when the Department for Transport switched every passenger line to an "Emergency Measures Agreement",[10] whereby the franchisees would still operate the line, but the government would take all cost-risk and all revenue.[11] This was initially supposed to be a temporary measure to keep trains running during the pandemic, but in September 2020, the Minister for Transport, Grant Shapps published a press release entitled "Rail franchising reaches its terminus as a new railway takes shape".[12] The government acknowledged in this release that rail privatisation "was no longer working",[13] and that a transition away from privately run passenger rail would begin with "Emergency Recovery Measures Agreements" with rail franchisees, which have much stricter guidelines that operators must adhere to.[14]
It took control of the railways on 28 December 1917, and introduced several reforms to increase efficiency and reduce costs. It standardised rolling stock and steam locomotive designs. The war ended in 1918.
In March 1920, control of the railways was returned to their original owners. Freight operations and most of the track have remained private enterprises, even as changing markets forced railroad companies to restructure in the post-World War II years. On 27 December 1943, President Roosevelt nationalised the railroads for a few weeks to settle a strike.[15]
Due to changes in transportation after the construction of the interstate highway system in the postwar years and a shift to trucking, railroads in the late 20th century went through widespread restructuring and reduction. Passenger traffic particularly had declined as more families owned and used private automobiles or took flights for long distance trips. Under President Richard Nixon, Amtrak was established to try to continue passenger operations by using existing tracks. It has been subsidised in order to continue service to some areas that had no alternative transportation, as well as to relieve congested roadways in more dense areas, as on the Northeast corridor. Amtrak subsequently bought some tracks from bankrupt railways as well as Conrail.
The railway system in Great Britain is the oldest railway system in the world. The first locomotive-hauled public railway opened in 1825, which was followed by an era of rapid expansion. Most of the track is managed by Network Rail, which in 2017 had a network of 9,824 miles (15,811 km) of standard-gauge lines, of which 3,339 miles (5,374 km) were electrified. In addition, some cities have separate metro, light rail and tram systems, among them the historic London Underground and the Glasgow Subway. There are also many private railways, some of them narrow-gauge, which are primarily short lines for tourists. The main rail network is connected with that of continental Europe by the Channel Tunnel and High Speed 1, opened in 1994 and 2007 respectively.
British Railways (BR), which from 1965 traded as British Rail, was a state-owned company that operated most rail transport in Great Britain from 1948 to 1997. Originally a trading brand of the Railway Executive of the British Transport Commission, it became an independent statutory corporation in January 1963, when it was formally renamed the British Railways Board.
Southern is the brand name used by the Govia Thameslink Railway (GTR) train operating company on the Southern routes of the Thameslink, Southern and Great Northern franchise in England. It is a subsidiary of Govia, a joint venture between transport groups Go-Ahead and Keolis, and has operated the South Central franchise since August 2001 and the Gatwick Express service since June 2008. When the passenger rail franchise was subsumed into GTR, Southern was split from Gatwick Express and the two became separate brands, alongside the Thameslink and Great Northern brands.
The Deutsche Bahn AG is the national railway company of Germany, and a state-owned enterprise under the control of the German government. Headquartered in the Bahntower in Berlin, it is a joint-stock company (AG) and the largest railway company in the world.
The Railways Act 1993 was introduced by John Major's Conservative government and passed on 5 November 1993. It provided for the restructuring of the British Railways Board (BRB), the public corporation that owned and operated the national railway system. A few residual responsibilities of the BRB remained with BRB (Residuary) Ltd.
There are effectively two separate mainline railway systems in the United Kingdom – the Great Britain system and the Northern Ireland system, which are regulated and operated separately, and are constituted under separate pieces of United Kingdom legislation.
The privatisation of British Rail was the process by which ownership and operation of the railways of Great Britain passed from government control into private hands. Begun in 1994, the process was largely completed by 1997. The deregulation of the industry was in part motivated by the enactment of EU Directive 91/440 in 1991, which aimed to create a more efficient railway network by creating greater competition.
FirstGroup plc is a British multi-national transport group, which is based in Aberdeen in the north-east of Scotland. The company operates transport services in the United Kingdom and the Republic of Ireland. It is listed on the London Stock Exchange and is a constituent of the FTSE 250 Index.
A train operating company (TOC) is the term used on the railway system of Great Britain for a railway undertaking operating passenger trains under the collective National Rail brand. TOCs have existed since the privatisation of the network under the Railways Act 1993.
The Go-Ahead Group Limited is a passenger transport company based in Newcastle upon Tyne, England. The majority of its operations are within the United Kingdom, Ireland, Australia, Singapore, and Norway. Go-Ahead was formerly listed on the London Stock Exchange prior to being purchased by Kinetic Group and Globalvia by 2022.
The Southern Region was a region of British Railways from 1948 until 1992 when railways were re-privatised. The region ceased to be an operating unit in its own right in the 1980s. The region covered south London, southern England and the south coast, including the busy commuter belt areas of Kent, Sussex and Surrey. The region was largely based upon the former Southern Railway area.
Govia is a transport company based in the United Kingdom. It was formed in November 1996 as a joint venture between Go-Ahead Group (65%) and Keolis (35%) to bid for rail franchises during the privatisation of British Rail.
The Deutsche Reichsbahn or DR(German Reich Railways) was the operating name of state owned railways in the East Germany, and after German reunification until 1 January 1994.
Passenger rail franchising in Great Britain is the system of contracting the operation of the passenger services on the railways of Great Britain to private companies, which has been in effect since 1996 and was greatly altered in 2020, with rail franchising being effectively abolished in May 2021.
The Single European Railway Directive 2012 is an EU Directive that regulates railway networks in European Union law. This recast the "First Railway Directive" or "Package" from 1991, and allows open access operations on railway lines by companies other than those that own the rail infrastructure. The legislation was extended by further directives to include cross border transit of freight.
Thameslink, Southern and Great Northern (TSGN) is a management contract for the provision of passenger services on the Thameslink and Great Northern routes to Bedford, Luton, Peterborough, King's Lynn, Cambridge, London King's Cross, London Moorgate, Sutton, Wimbledon and Brighton, as well as the whole Southern network and the jointly operated First Capital Connect Southeastern services, which were added to the franchise on 25 July 2015, with the Southern and Gatwick Express brands retained.
Govia Thameslink Railway (GTR) is a British train operating company that operates the TSGN rail franchise. Within the franchise, GTR runs trains under the sub-brands: Thameslink, Great Northern, Southern, and Gatwick Express. GTR is a subsidiary of Govia, which is itself a joint venture between the British Go-Ahead Group (65%) and French company Keolis (35%).
The impact of the privatisation of British Rail has been the subject of much debate, with the stated benefits including improved customer service, and more investment; and stated drawbacks including higher fares, lower punctuality and increased rail subsidies. The privatisation of British Rail began in the 1990s.
An operator of last resort is a business in the United Kingdom that operates a railway franchise, on behalf of the government, when a train operating company is no longer able to do so. Since May 2023, there are six such operators in England, Wales and Scotland.
DfT OLR Holdings Limited (DOHL) is a holding company established by the Department for Transport in the United Kingdom to act as operator of last resort for rail franchises that are nationalised.
References
↑ Ing. M. Alberty, Der Übergang zum Staatsbahnsystem in Preussen (Jena: Verlag von Gustav Fischer, 1911)
↑ Verordnung über die Schaffung eines Unternehmens "Deutsche Reichsbahn" vom 12. Februar 1924, RGBl. I Nr. 10, 14 February 1924, p.57
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