The Labour Party’s vacillation over rail privatisation

I had managed only one speech against the war in Kosovo when I was carted off to hospital in the middle of the night with what I later discovered was an aortic aneurism. Hardly had the surgeons opened me up than my aorta, an artery which runs from heart to head, ruptured. Almost all such ruptures end in death, and for many weeks I lay in a coma. When I came round, expertly patched up but still without much prospect of recovery, I was plagued by hallucinations. Chief among these was the heroic speech I had made not about Kosovo but to the massed ranks of the women’s liberation movement in South Australia, from whose congress, I was quite sure, I was returning when I fell ill. It was only when I finally convinced myself a) that I had never been to South Australia in my life b) that if ever I did go there I was most unlikely to be a key speaker at a women’s liberation congress and c) that the hospital where I was lying was not, as I had thought, on a sandbank near New Guinea but in Homerton, East London, a quarter of an hour’s drive from home, that I asked about the Kosovo war. When I heard that it was still raging, supported not only by the New Labour Government but also by the Guardian and several left-wing journalists whose opinion I had previously respected, I was finally brought to my senses by that faithful old pick-me-up for sick socialists, indignation. Could the Government, I wondered fitfully, survive such a monstrous war? Indeed, could the Government survive at all? The war seemed to be a symptom of the diseases which had struck down the previous two Labour Governments: support for US imperialist adventures abroad and impotence in the face of corporate power at home. The Kosovo catastrophe was proof of the first. The reversal, in the face of the most extravagant and impertinent opposition from US power monopolies, of the Blair Government’s attempts to encourage the coal industry by curbing the growth of gas, proof of the second.

Yet for some reason, thanks at least in part to the abject performances of the Conservative Party, the Government did survive. One of the few political conversations I had in hospital was with a physiotherapist and trade unionist who told me, to my horror (not expressed, of course: the relationship between physiotherapist and lame patient is far too delicate for open controversy), that, taken all in all, he ‘quite liked’ the Government. Nor was this only because Prime Minister Blair and his jovial Health Secretary Frank Dobson had shrewdly chosen Homerton Hospital as an appropriate place for the announcement of the Government’s new health plans. Compared with their Tory predecessors, the New Labour lot seemed to my physiotherapist friend to be sensible, almost benign.

This approach seemed to last through the summer and early autumn – for the rest of my time in hospital. As I gradually got better, and even my legs began to show some sign of life, I kept wondering why the Blairite con-trick – ‘the class war is over, so we Ministers of the Crown can suck up to the millionaires and invite them to our dinner tables while somehow tossing the workers the crumbs they want’ – was working. It was only after my final release in early October after six months in the diligent care of the National Health Service that the same old spectre – impotence in office – arose in dramatic form once again to persecute ministers.

The main cause was the Paddington rail crash, a disaster so avoidable that it shocked the entire nation. There was an immediate and apparently universal outcry against the privatised companies who owned the wrecked trains. ‘Nationalise the railways!’ suddenly became an unlikely but highly popular demand. A furious counter-attack was launched by the supporters of irresponsible private property. The Economist devoted an entire leading article to proving that the Paddington rail crash had nothing to do with privatisation. The article conveniently overlooked powerful arguments set out in the Economist of 23 July. That article was headed ‘The Rail Billionaires’, and sub-headed: ‘The privatisation of British Rail has proved a disastrous failure. Without big changes, things are going to get worse.’ An example followed: ‘Indeed, until last year, some of Railtrack’s suppliers decided, in effect, which parts of the track needed renewal. Naturally, they appeared concerned less with passenger safety than with their own profits. Because they are paid by the mile, they have understandably tended to choose sections that are easy to renew rather than those that involve the most work.’ ‘Naturally’. ‘Understandably’. There is ‘indeed’ a link between the drive to profit under privatisation and shortcuts which threaten safety. The point is not whether the Paddington outrage can be linked directly to some technological development under privatisation. The point is that the trains which smashed into each other belonged to companies both of which were bought and sold in the marketplace and which in the process delivered up to their original directors unimaginable riches. The original Economist article spelled out the full scandal of this enrichment, of which the buying and selling of the three Roscos – the rail operating-stock companies – was the most preposterous. The Roscos were undersold by the Tory Government to the tune of £700 million. When they were subsequently swallowed by the big new private transport monopolies, almost as much as this vast sum vanished into the pockets of a handful of third-rate rail directors, whose successors decided that £700 million was far too much to invest in ATP, the safety system which would have prevented the outrages at Paddington and, before that, at Southall. The coincidence of those figures appeared exclusively, as far as I could see, in Private Eye.

All the Tory privatisations gave rise to similar scandals, but the privatisation of the railways was by far the worst. It was announced by Cecil Parkinson at a Tory Party Conference where there was little else left to cheer the Tory faithful. During the entire period that the enabling legislation dragged its way through Parliament, never more than 15 per cent of the population indicated their support for it. On all sides, including some Tory benches, rail privatisation was denounced as the latest manifestation of the Tories’ reckless greed.

Nowhere was this denunciation more unequivocal than in the leadership of the Labour Party. At first, it seemed as though the Labour leaders recognised their power. If they announced that the privatised railways would be taken back into public ownership, then the entire privatisation project was bound to fail. After all, who would buy shares in a newly-privatised industry which the Labour Party was pledged instantly to renationalise? Not a penny profit could be made out of such a situation, and since profit was and is the only possible motive for investing in the railways, Labour’s pledge on renationalisation was crucial to the future of the industry. This understanding of their own power led to the formation among Labour’s transport spokespeople of the Crystal Clear Faction. Their leader was big bluff burly John Prescott, the man who doesn’t mince words. He told Labour’s Conference in 1993: ‘Let me make it crystal clear that any privatisation of the railway system that does take place will, on the arrival of a Labour Government, be quickly and effectively dealt with . . . and be returned to public ownership.’

Nothing could be more crystal clear than that, and by the following year it was time for a pledge. Frank Dobson, Labour’s transport spokesman at the 1994 Conference, assured his ecstatic audience that Labour’s promise on this occasion was not narrowly confined to Party members. ‘Let me give this pledge not just to this Conference but to the people of Britain. The next Labour Government . . . will bring the railway system back into public ownership.’ The following year (1995) Labour’s conference spokesman was Michael Meacher, a fully paid up member of the Crystal Clear Faction. He concentrated on the speculators who were hovering over the battered corpse of the rail industry. ‘If there are any investors listening who are thinking of buying into our rail system, I have a message for them. The railways depend on public subsidies to the tune of £1.8 billion a year. There is no guarantee that subsidy will continue. If you want to buy a pig in a poke in all those circumstances, then it is up to you, but don’t come crying to me when it all ends in tears.’

The message seemed clear but it came from Michael Meacher, and he was Old Labour, so perhaps it could be disregarded. But wait. Hark to the speech made at the same Conference by the new Labour leader himself, Tony Blair: ‘To anyone thinking of grabbing our railways, built up over the years, so they can make a quick profit as our network is broken up and sold off, I say this: there will be a publicly owned and publicly accountable railway system under a Labour government.’

For a time the message was repeated so firmly by so many Labour politicians that it was believed even in the big corporations. Brian Souter, chairman of the burgeoning bus company Stagecoach, told a Commons Committee two years later that in 1995 nobody in the industry would touch rail privatisation ‘with a bargepole’. The prospect of Labour doing what it said it would was enough to frighten off all but the small fry. When the Roscos were flogged off in January 1996, no big investor dared to bid even a fraction of what they were worth. Labour’s bold talk had worked. No serious contender was ‘thinking of grabbing our railways’ or ‘buying a pig in a poke’. If the Labour Party had stuck to its promises, the railways would never have been privatised.

Instead, at the very moment of victory, New Labour’s nerve collapsed. By 1996, the Labour Party’s last Conference in opposition, all the crystal-clear pledges to renationalise had vanished. In their place came a bromide assurance of a ‘modern integrated transport system, built in partnership between public and private finance, and restoring a unified system of railways’. Against all the evidence to the contrary, the New Labour leaders had decided that renationalisation would be electorally unpopular and too expensive. So they dropped it. The corporate giants who had been frightened off by Labour’s determination were suddenly enthused by Labour’s vacillation. One by one the Roscos and most of the operating companies, including Great Western and Thames, whose trains were involved in the Paddington crash, were snapped up by the new transport giants.

In government, New Labour ministers tolerated the profiteering as though they had never opposed it. No special levies were raised on the huge fortunes amassed by the new rail billionaires. No attempt was made to alter the subsidy or otherwise interfere with a speculator’s inalienable right to make quick profits out of a subsidised industry. Challenged about this in March 1998, John Prescott delivered perhaps the most remarkable statement of Labour’s impotence in office ever made by a serving minister: ‘The privatised railway is producing windfall profits for a few people as a result of the contracts awarded by the last Government. There is nothing I can do about that.’ He was after all only Secretary of State and Deputy Prime Minister, and under his regime crystal clarity had dissolved into fudge. In the shocked and embarrassed aftermath of the Paddington disaster, Prescott finally stripped Railtrack of its responsibility for safety, and at the time of writing it seems as if he will survive, at least partly as a result of his own self-declared impotence. A better prospect emerged from the train drivers’ union which threatened to strike if proper safety equipment was not installed immediately. At the same time, the workers at Ford, Dagenham, threatened to strike against constant harassment by racist foremen. When postal workers in Scotland struck and won their case against an arrogant and arbitrary sacking, it seemed suddenly as if my coming out of hospital had inspired a wave of revolt. As I write, the wave seems slowly to be receding, leaving behind the familiar sullen resentment which Tony Blair wrongly interprets as support.