ABSTRACT
Debates about the effectiveness, or otherwise, of the British public sector have not disappeared with the drive to privatize most of the nationalized industries from the mid-1980s. After World War II, much of inland transport was taken into public ownership under the aegis of the British Transport Commission. The move, which was largely dictated by the poor state of the assets and their unattractiveness to private capital, offered the promise of scale economies and operational integration for the railways, bus services, and road transport, activities which were in any case either heavily regulated or already in the public sector (Anson and Crompton 2009). The operational history of nationalized transport, and especially the railways, has been analyzed in some depth (Gourvish 1986, 2002). From the beginning, one of the first things to be controlled was investment, when resources were scarce in the troubled late 1940s. There was a glimmer of light in the mid-1950s. The Railway Modernization Plan of 1955, a rare example of planned investment on a large scale, received substantial support from the Treasury, but many of the investments proved to be a disaster, damaging the reputation of public sector managers for some considerable time. The Treasury quickly moved to scale down the investment program at the end of the decade. British Rail’s investment shortages then became more acute again, as the business moved into deficit. The situation was particularly difficult in the bleaker economic conditions of the 1970s, preventing the corporation from making a more competitive response to the dominance of private motoring and road haulage. By 1976, the investments made during the period of the Modernization Plan were reaching the end of their useful lives, and Peter Parker, British Rail’s incoming chairman, was moved to warn the government of the risks associated with the “crumbling edge of quality” (Gourvish 2002, 85). The period of financial constraint under the Labour administration of 1976–1979 was followed by equally harsh treatment by Margaret Thatcher’s first Conservative government of 1979–1983, though in the latter case parsimony was accompanied by political dogma, notably the promise to “roll back the public sector.” There followed a general assault on the public sector, grounded on the neoliberal assumption that the market and private sector institutions would optimize the provision of public services (Martin 1993; Florio 2004, 27ff.; Clifton, Comín, and Díaz Fuentes 2006, 738). However, many public sector managers were excited about the prospects of privatization in all its forms, particularly where it offered the prospect of freeing an enterprise from the straightjacket of investment constraint and ministerial intervention.
