by Charles Loft
The 1947 Transport Act required the BTC to break even ‘taking one year with another’. This was all very well if some completely unexpected problem, a severe winter or a strike, meant the Commission lost money in a particular year and spread the cost over the next few; but once ministry officials felt that ‘we have come into an era in which the railways are going to be in the red for quite a long time, and perhaps for always’, as they did by August 1954, the Commission was arguably in breach of the Act.84 Taking one year with another, of course, it remained possible to argue that it was not; and the temptation to indulge in that pretence proved too much for ministers to resist when it offered a way out of other difficulties. In the aftermath of the 1953 pay deal, Lennox-Boyd admitted to the Cabinet that the warnings his officials had given about railway finances when the Transport Bill was being drafted had proved correct. He suggested that the BTC might need financial assistance with modernisation. The Treasury was not prepared to offer anything that might be construed as a subsidy, but the Chancellor, Rab Butler, did promise to consider any proposals Lennox-Boyd brought forward. This sort of ‘offer’ doesn’t usually mean anything. Ministers in any government rarely say they will not consider a proposal; that can seem unreasonable. It looks much better if one turns down a proposal having given it ‘due consideration’; nevertheless it encouraged the Commission to draft a plan for modernisation that would require a government loan of £500 million on special terms, complete with extensive proposals to electrify lines.
There was no chance of this being accepted by Treasury officials, who suspected Robertson was trying to use modernisation as an excuse to get a concealed subsidy to solve the Commission’s existing financial difficulties; but throughout 1954 they were increasingly anxious to see the plans. In January that year the official responsible for day-to-day Treasury work relating to the Commission, Alexander Grant, had realised that the Commission was borrowing just to keep itself going (i.e. to fund replacement and renewals rather than investment). A Bill extending its borrowing powers would have to be brought forward in the 1954–5 parliamentary session or their limit would be reached (an Act extending them was passed in March 1955). The Treasury began putting pressure on the Commission to produce even an outline of its plans by the summer, so that officials could examine the spending that would effectively be approved in this Bill. Not only had nothing arrived by September 1954, but officials now learned the borrowing the plan required would be additional to that provided for in the Bill. One consequence of the pressure the Commission was under to produce its plan quickly was that the Modernisation Plan was essentially ‘a lot of mouldering schemes which the BTC and the Regions had found after a hurried search in their pigeon holes’, hastily brushed up by a committee under Reginald Wilson.85 The committee began work on 18 November on a draft which admitted that it might be impossible to meet interest payments on the investment in the period before the plan bore fruit. On 6 December, John Boyd-Carpenter (who had replaced Lennox-Boyd as minister) sent his officials to the Treasury to pass on Robertson’s suggestion that some form of deferred interest on a government loan would solve the problem. The Treasury estimated this would amount to a subsidy and prepared to resist.
As Christmas 1954 approached, the annual wage round had once again reached the point where the threat of a railway strike was being discussed almost daily by the Cabinet. Robertson, again, did not feel the BTC could afford to increase its offer, but a government-appointed court of inquiry dismissed this resistance with the phrase, ‘having willed the end, the Nation must will the means’.86 These were dangerous words. Anxious as they were to avoid a strike, ministers were even more anxious to avoid this phrase being interpreted as meaning that if nationalised boards could not afford to pay decent wages they should be subsidised until they could. What the Cabinet needed was a formula allowing the railways to be treated as a special case. Paying the kind of subsidy the Treasury feared, linked to modernisation but in fact reflecting other problems, provided one. On 8 December, as Grant was warning his superiors to expect a further approach for a subsidy, the Cabinet discussed the possibility of ‘a government contribution towards capital expenditure on a programme for modernising the railways’, as a way of encouraging the BTC to feel justified in temporarily increasing its operating deficit to fund higher wages and avoid a strike.87 The following day, a senior Treasury official, Sir Bernard Gilbert, discussed the crisis with Sir Reginald Wilson, who agreed that the railwaymen’s claim would have to be settled and that there was nothing fundamentally wrong in a temporary deficit redeemed by the effects of modernisation. Yet he mentioned that the Commission might need help before the plan bore fruit in the form of a capital write-off. Some people, perhaps those not preoccupied with the potentially catastrophic consequences of a winter rail strike in a country where most homes were heated and factories powered by rail-carried coal, might have seen this as grounds to question whether the plan would actually improve the Commission’s financial position, or instead saddle a loss-making body with even heavier debts. Gilbert took the view that ‘all this is for the future, and anyhow a subsidy on any such ground is of course entirely different from a revenue subsidy to meet a wage claim’.88
On 10 December a small group of ministers met at Downing Street to discuss the crisis. Henry Brooke, the Financial Secretary, arrived fresh from a briefing on Gilbert’s meeting with Wilson, while Boyd-Carpenter, under no illusions that settling the pay claim would leave the BTC in the red for years to come, suggested that Robertson might be persuaded to accept this in return for financial assistance with modernisation. On hearing Boyd-Carpenter’s plan, Churchill dismissed the benefits of modernisation and proposed that the Commission be publicly directed to increase its offer, after which his colleagues’ chief concern was to dissuade the Prime Minister from doing so. Boyd-Carpenter was despatched to give Robertson ‘a hint that “subsidy” might be made respectable as “deficit”’ and the government would consider sympathetically any request for financial assistance with modernisation.89 The note of the their meeting the following day put it more delicately: Boyd Carpenter asked Robertson ‘on a purely hypothetical basis what his reaction would be if Her Majesty’s government … were prepared to assure him that in their view he need not trouble himself unduly about the size of his deficit in view of the long-term prospects of the Commission when railway modernisation took effect’.90 Ten days later the Modernisation Plan arrived at the Ministry of Transport complete with the calculations showing an eventual surplus, but omitting the cost of interest on the funds the plan required during the period of its implementation. Officially, it has never been clear on what basis this calculation was inserted by Wilson’s committee or why interest was ignored; unofficially it has long been obvious that the figures in the Modernisation Plan had more to do with settling the strike than with the finances of modernisation.
By 4 January, the Cabinet’s position was that modernisation, the new merchandise charges scheme and improvements to productivity would allow any deficit arising from the pay deal to be recouped at some point in the future. Ministers genuinely intended to push the Commission and the unions into achieving improvements in productivity, but they had no real idea of how to do so, and when Robertson objected to their proposal for an inquiry on the matter they had little option but to give way. Robertson had been reluctant to accept Boyd-Carpenter’s assurance unless it was stated publicly; but in order to maintain the fiction that they had not intervened, ministers wanted the General to settle the dispute first and then ask whether the government supported him. Naively, he agreed. On 7 January he made his request in a letter to Boyd-Carpenter, indicating that the accumulated deficit would be £50–60 million by the end of 1955 and there would be further deficits to follow, to which would be added the burden of financing modernisation, which was unlikely to produce substantial increases in net revenue for some years. The letter made it clear that he was expecting to discuss a major reconstruction of the Commission’s finances with the
minister that would encompass the funding of modernisation. The same week he publicly implied that funding the wage deal was not his responsibility but the government’s, a statement which caused discontent on the Tory backbenches. The Treasury stalled a reply while it considered four ways in which the Commission might be offered assistance: public borrowing under Treasury guarantee; a revenue subsidy from the Exchequer; a government loan for investment at an uneconomic rate of interest; and allowing the BTC to fall back on the Treasury guarantee of its existing stock (in effect allowing the railways to go bust). The last of these would ‘brand the BTC as the one [nationalised] body which had not met its obligations’,91 thereby deterring the others, and no legislation would be required. It also meant that the government could avoid an immediate decision on a subsidy and simply wait and see. This was the course officials favoured. By the time the pretence that the Commission was paying its way became untenable, the officials centrally involved in the events of December 1954 and January 1955 had all departed the scene. In 1960 a junior official was asked to go back through the files and establish just how it had been claimed that the BTC was covering its accumulated deficits before 1957. No clear answer emerged.
Had Treasury officials been asked to endorse fully the Modernisation Plan in January 1955 they would not have done so. Only Grant had had a chance to study it in any detail and he knew full well that while the proposals seemed sensible, the figures were ‘made to measure’.92 He had no information on the thinking behind them, could not divide the benefits derived from closures from those requiring investment and could not estimate the extent to which the plan might be accelerated or what its short-term effects might be. It was not until April 1955 that he discovered that there was no detailed programme of projects behind the plan, the figures were aggregations of estimates, the details were expected to take another year to work out and the real planning had only just begun. Why was the plan accepted with so little study? Because ‘acceptance’ appeared to involve no real commitment. Boyd-Carpenter told the Cabinet that he merely intended to give a general endorsement of the document, which was all he was required to do by law. When the Cabinet approved publication on 20 January 1955, publication was all it approved. It was generally believed in Whitehall that there would be little spending under the plan for five years and that virtually none of the borrowing involved would be covered by the Bill extending the Commission’s borrowing powers, so there would be plenty of time to study, modify and, perhaps, accelerate it.
The omission of interest was not the only flaw that Butler ignored when he told the House of Commons that ‘allowing for all the uncertainties of forecasting fifteen years ahead, there is a reasonable prospect of the Commission’s plan paying its way’. The Modernisation Plan’s calculations also took no account of the £10 million cost of the wages settlement, which wiped out the promised surplus irrespective of interest charges. This may have been a genuine mistake, but his comment that ‘I have no reason to think that the Commission counts on any Exchequer subsidy to help it in fulfilling its statutory duty’ could only be true in the sense that Robertson did not think what he was asking for counted as a subsidy.93 The reality of Butler’s endorsement of the plan is contained in a passage Grant drafted for, and Butler excised from, the latter’s Cabinet paper on it:
it may be said that [the BTC’s] figures are optimistic and that solvency is too much to hope for … but … even if hopes are not realised in full, this is still the best way to minimise losses… What is the alternative … can anyone contemplate that by continuing as we are now there is any prospect of solvency? I cannot see any alternative to the plan … something on the lines proposed is inevitable, and … the longer a decision is postponed the greater the danger of an ultimate charge falling upon the Exchequer.94
There was a danger that Conservative backbenchers would not tolerate all this. The first achievement of modernisation was to convince a joint meeting of the party’s backbench transport and labour committees in January 1955 that modernisation, not subsidy, would fund the settlement. This was just part of a wider political effect, summed up by The Economist (which was not fooled itself):
From the grime and muddle of 1955, from a very recent piece of politicking which everybody would like to forget, the public is invited to lift its eyes towards 1974. Look; there is an electric or diesel (or, just possibly, atomic) train pulling silently, briskly competitive, smog-free, out of the glistening chromium of the new King’s Cross.95
It was a railway fit for Dan Dare, yet the government was neither committed to a firm programme of specific investment nor sure that the plan would work. The Modernisation Plan – the document published in 1955 – did exactly what such documents are supposed to do. The BTC wanted the go-ahead for modernisation, which it got; the government wanted the all clear for the strike settlement, which it got. The plan was, in this sense, a remarkable success. The public were entitled to conclude that the Commission had found a way out of its difficulties and while some details needed to be worked out, the government had agreed to help. In reality the Commission had admitted that it couldn’t solve its financial problems, the government had added to them and it was hoped on all sides that at some point in the future investing in modernisation would at worst improve the position and at best resolve it, although no one knew how. The Commission expected financial help and the government had pretended it did not. How easily the railways were bankrupted.
Against this harsh judgement must be weighed the reality that there were no easy solutions to the problems facing Cabinet and Commission in December 1954. Had the government supported the Commission and faced a strike it is impossible to say who would have won and the strike would probably have cost more in the short term than the settlement (ministers decided to resist the Associated Society of Locomotive Engineers and Firemen’s claim in the summer of 1955, but the resulting strike did not resolve the railway pay issue in general). Nor were there simple solutions to the problems the Commission faced. Nevertheless, the events of December 1954 meant that when the deficit reached catastrophic proportions it was the Commission rather than the government that appeared to be at fault. The contrast between the false promise of a profitable railway and the reality of a huge deficit helped create the impression that railway modernisation had failed. Finally, the handling of the crisis, and in particular the failure to address the underlying causes, meant that the submission of the Modernisation Plan, like the passing of the 1953 Act, was a missed opportunity to ask what sort of railway was required and how much it would cost. Had it not been for the pay crisis, that debate could at least have begun before modernisation appeared to be underway, rather than when it appeared to have failed; and perhaps we would ride through Bicester today without wondering what that funny-looking bridge is all about. We might even be able to change there for Cambridge.
† The plan indicated that modernisation would deliver net benefits of £45 million – this included benefits from measures such as closures which required no investment, so was in itself a dubious figure. This was set against the official annual deficit of £25 million and a £15 million increase in depreciation provision.
Chapter 5
The Bluebell and Primrose Line: the 1956 closure plan
Horsted Keynes sits towards the western end of the triangle of Kent and Sussex bordered by the sea, the London to Brighton main line and the South Eastern Railway’s original route from Redhill to the channel ports – just beyond the reach of London and dominated by the Downs. Is this the England people think of when they think of England? Artist Frank Newbould and filmmaker Ismail Merchant, respectively seeking a backdrop for the wartime poster Your Britain – Fight for it Now and an imagined Edwardian idyll for A Room with A View, both chose this part of the world. It is the England of Tibby Clarke and Dr Beeching, East Grinstead neighbours. Other Englands are available, of course; but Horsted Keynes station is in the process of becoming the default image of the rural steam railway, as the local station for Downt
on Abbey, Eel Marsh House, Windy Corner, The Railway Children and Miss (Beatrix) Potter, among others.† The real Horsted Keynes station lies on the former Lewes and East Grinstead railway, once the least used part of a web of railways belonging to the London Brighton and South Coast Railway (LBSCR) based around a line which, diverging from the Brighton main line at Croydon, ran south-east to Oxted and eventually divided into three routes heading south towards the sea. The Lewes and East Grinstead was the most westerly of the three, running roughly parallel with the Brighton main line from Oxted, through East Grinstead, Kingscote and West Hoathly to Horsted Keynes. Here a short connecting line branched off to rejoin the Brighton route at Haywards Heath, creating a double track relief route for the main line between Croydon and Haywards Heath. South of Horsted Keynes, the Lewes and East Grinstead, now single track, served Sheffield Park, Newick and Chailey, and Barcombe before rejoining the second route south from Oxted, which ran via Uckfield, to reach Lewes (the third route ran via Hailsham to Polegate and Eastbourne). At East Grinstead and Groombridge these north–south lines connected with one running west to east from Three Bridges on the Brighton main line to Tunbridge Wells on the South Eastern Railway’s line from London to Hastings.
Most of these lines would never have been so expensively cut through the downs were it not for the LBSCR’s determination to prevent the South Eastern Railway using the absence of railways in the area as an excuse to reach Brighton itself by building its own line south-west from Tunbridge Wells. When Henry Bessemer, grandson of the inventor Henry Bessemer, moved to the mansion next to Newick and Chailey station before the Great War, he arranged to have a special gate built to reach the footpath alongside it. His daughter Madge picked bluebells by the line. ‘The pleasantly undulating country it serves makes it one of the most attractive branches in the south of England,’ wrote the Railway Magazine in 1954,96 but the view from the carriage window came at a price. East Grinstead, Oxted and Uckfield aside, there was little traffic to be had and the lines shared not only their tactical origin but a tendency to feature stations named after stately homes (Sheffield Park), hamlets (Horsted Keynes) or two equally distant villages (Newick and Chailey). In the 1950s only 7,000 people lived in the area served by the Lewes–East Grinstead line, outside the two terminal towns. Even those stations that had a source of traffic (West Hoathly) were usually at the bottom of a steep hill on top of which lay their market. The Horsted Keynes–Haywards Heath section was electrified in 1935 and the Southern Railway hoped to electrify the whole of the diversionary route (and the Uckfield line) in the future. However, even the Southern’s faith in the power of the ‘sparks effect’ to encourage traffic did not extend to the single line south from Horsted Keynes to Lewes. By the 1950s the lines were popular with wealthy commuters who drove to the stations, particularly at the northern end where large villas spread south from London. Goods traffic, never heavy, had become very light after the war, while local passengers used the bus.
