On 1 January 1923, almost all the railway companies were grouped into the Big Four: the Great Western Railway, the London and North Eastern Railway, the London, Midland and Scottish Railway and the Southern Railway companies. A number of other lines, already operating as joint railways, remained separate from the Big Four; these included the Somerset and Dorset Joint Railway and the Midland and Great Northern Joint Railway. The “Big Four” were joint-stock public companies and they continued to run the railway system until 31 December 1947. The LNER Class A4 streamlined express trains of the 1930s offered a high-speed alternative to road transport.
The competition from road transport during the 1920s and 1930s greatly reduced the revenue available to the railways, even though the needs for maintenance on the network had never been higher, as investment had been deferred over the past decade. Rail companies accused the government of favouring road haulage through the construction of roads subsidised by the ratepayer, while restricting its ability to use flexible pricing because it was held to nationally-agreed rate cards. The government response was to commission several inconclusive reports; the Salter Report of 1933 finally recommended that road transport should be taxed directly to fund the roads and increased Vehicle Excise Duty and fuel duties were introduced. It also noted that many small lines would never be likely to compete with road haulage. Although these road pricing changes helped their survival, the railways entered a period of slow decline, owing to a lack of investment and changes in transport policy and lifestyles. During the Second World War, the companies’ managements joined together, effectively operating as one company. Assisting the country’s ‘war effort’ put a severe strain on the railways’ resources and a substantial maintenance backlog developed. After 1945, for both practical and ideological reasons, the then Labour government decided to bring the rail service into the public sector.
So On 1 January 1948, the railways were nationalised to form British Railways (latterly “British Rail”) under the control of the British Transport Commission.Though there were few initial changes to the service, usage increased and the network became profitable. Regeneration of track and stations was completed by 1954. In the same year, changes to the British Transport Commission, including the privatisation of road haulage, ended the coordination of transport in the UK. Rail revenue fell and, in 1955, the network again ceased to be profitable. The mid-1950s saw the hasty introduction of diesel and electric rolling stock to replace steam in a modernisation plan costing many millions of pounds but the expected transfer back from road to rail did not occur and losses began to mountThis failure to make the railways more profitable through investment led governments of all political persuasions to restrict rail investment to a drip feed and seek economies through cutbacks.
This desire for profitability led to a major reduction in the network during the mid-1960s. Dr. Richard Beeching was given the task by the government of re-organising the railways (“the Beeching Axe”). This policy resulted in many branch lines and secondary routes being closed because they were deemed uneconomic. The closure of stations serving rural communities removed much feeder traffic from main line passenger services. The closure of many freight depots that had been used by larger industries such as coal andiron led to much freight transferring to road haulage. The closures were extremely unpopular with the general public at that time and remain so today.Passenger levels decreased steadily from the late fifties to late seventies. Passenger services then experienced a renaissance with the introduction of the high-speed Intercity 125 trains in the late 1970s and early 1980s.The 1980s saw severe cuts in government funding and above-inflation increases in fares, but the service became more cost-effective.
Between 1994 and 1997, British Rail was privatised Ownership of the track and infrastructure passed to Railtrack, passenger operations were franchised to individual private sector operators (originally there were 25 franchises) and the freight services sold outright (six companies were set up, but five of these were sold to the same buyer). The Conservative government under John Major said that privatisation would see an improvement in passenger services.