McKerrell, Nicholas Iain (1998) A study and comparison of rail privatisation and bus deregulation carried out from the perspective of public law. PhD thesis http://theses.gla.ac.uk/3868/ Copyright and moral rights for this thesis are retained by the author A copy can be downloaded for personal non-commercial research or study, without prior permission or charge This thesis cannot be reproduced or quoted extensively from without first obtaining permission in writing from the Author The content must not be changed in any way or sold commercially in any format or medium without the formal permission of the Author When referring to this work, full bibliographic details including the author, title, awarding institution and date of the thesis must be given Glasgow Theses Service http://theses.gla.ac.uk/ [email protected] TITLE: A Study and Comparison ofRail Privatisation and Bus Deregulation carried out from the perspective ofpublic law. NAME: Nicholas lain McKerrell LIb (Hons). DEGREE: Phd in Law. SUBMITTED: University ofGlasgow, Faculty ofLaw and Financial Studies, School ofLaw, Department ofPublic Law. TABLE OF CONTENTS. Chapter One Introduction p4. Chapter Two Public Ownership p66. Chapter Three Privatisation pIOO. Chapter Four An Overview ofBus Deregulation pB5. Chapter Five Deregulation after a Decade p176. Chapter Six Rail under Public Ownership p216. Chapter Seven Rail Privatisation p245. Chapter Eight Conclusion p298. Appendix p329. Bibliography p340. 2 Abstract. This work aims to be part of the developing body of public law which seeks to combine empirical research with a theoretical framework. It uses the example of the privatisation of the rail network and the deregulation of the bus industry to this end. - Each phenomenonjs "'~m i n e d through both library research and direct interview. Throughout )!-his/reference is made to the overall framework of public law and the essential concept of accountability. The work concludes by drawing the two processes together and putting forward the thesis thatjin the sphere ofpublic transport) for public lawyers the question of public accountability cannot be separated from ownership. Chapter I is an examination of public law and the theoretical assumptions behind it. It explores how the subject has developed since Dicey and the competing frameworks which now exist amongst public law academics. Chapters 2 and 3 are general studies of nationalisation and privatisation in the twentieth century . They show hOVJ using different mechanisms the British State could claim to be enhancing accountability. Chapter 2 explores the public corporation in particular and how that phenomenon coincided with the general developm ent of the state and a system of administrative law. EEjuaJly-lll the following chapter ,it is shown how privatisation coincided with a disenchantment as to the arrangements of the state especially on the right. The contradictory rationale behind each concept is also explored . Chapters 4 and 5 study bus deregulation. This includes a study of how bus transport was regulated, how deregulati on came about and what the consequences of this were. It explores both the experience of public ownership and privatisation and how both were unsatisfactory in delivering accountability. Chapter 5 concludes with a case study of the Glasgow bus market which is seen as a microcosm for broader developments in the bus industry. Chapters 6 and 7 study rail privatisation. These study how British Rail operated as a nationalised industry and how privatisation came about and worked in practise. Further the intellectual underpinning of railway privatisation is critically examined. AgainIthese chapters highlight the difficulty in achieving accountability in both of these arrangements. Chapter 8 draws together the conclusions of these two studies and re-emphasises the public law framework in which the work was carried out. It concludes that public law should resist creating a system of accountability through privatisation particularly in transport and that the link between public accountability and ownership which was broken by the public corporation should be re-established. 3 Acknowledgements. This work has taken around four years to complete. In that time many people have assisted and supported me in research, writing and completion. Firstly my biggest debt of gratitude goes to Professor Tony Prosser who has acted as the supervisor of this work. His excellent advice and expertise in public law has sustained me in my work and provided me with a framework in which to carry out research. I must also thank those involved in public transport - busy as they are ­ who agreed to speak to me. Because of the state of the awarding of the Scotrail Franchise not all of these were on the record. I extend special thanks to Derek Scott of Stagecoach, Des Divers of the Transport and General Workers Union, Bill Ure of the Scottish Transport Users' Consultative Committee, The Railtrack (Scotland) Press Office, The Strathclyde Public Transport Authority and the Press Office ofthe Office ofthe Rail Regulator. In the last year of this work I was lucky enough to gain employment at the Law and Public Administration Department of Glasgow Caledonian University. I must thank all my colleagues for their ideas and support in the difficult last year of 'writing up'. I would particularly mention Tom McDonnell who had to put up with sharing an office with me and the secretarial staff of Jackie, Margaret and Irene for allowing me the use of their printers. I would also like to mention all my family, friends and comrades for their continual support and in the case ofWilliam use ofhis computer. Finally I must mention three people without whom this work would probably never have been completed and if it had would have had less point to it: Linda, Sarah (Age 5) and Mark (Age 9 months) thanks for your love and encouragement. Given the integrity of the above list it almost goes without saying that any errors and viewpoints expressed in this work are entirely my own. 4 CHAPTER ONE' INTRODUCTION. "Constitutional principles and forms do not operate in a vacuum ofAbstract Reason" Harold Laski, 1936.1 When studying Britain's state institutions one is acutely aware of their peculiar traditions. These traditions may be seen in the pomp and circumstance of the state opening of Parliament; the continual existence of a feudal monarchy (albeit bourgeoisified) or the entire process of making law. These structural anachronisms produce their own effects in legal studies; particularly in law that relates to the British state: administrative law and practice. In an immediate way these unique problems are shown in the absence of a written constitution which itself is an international anomaly.' But in general these traditions' effects are more subtle and sophisticated as in the case of the state's intervention in the economy. Although nationalisation and, latterly privatisation were by no means solely British concepts,' the form they took in I Britain had a peculiar identity as I shall demonstrate below. They were haphazard in developing, their rationale was unclear and largely unspoken and the primary legislation that initially started the privatisation and nationalisation process was based solely on issues oftransfers ofownership rather than accountability. 5 Any area of state power is of interest to public lawyers especially one as fluid as the state and economy. Yet such a statement (although plainly true) would have been severely frowned upon if made by a British academic lawyer thirty years ago. This again is representative of the British state, how it operates and the ideologies it uses for underpinning itself. It is the purpose of this work to study the processes of nationalisation, privatisation and deregulation whilst exploring the theoretical underpinning of modem academic public lawyers. This is not a purely intellectual exercise, it is necessary to clear the air before the implications of this are utilised to develop more empirical work. A NEW APPROACH? It is my contention in this introduction that Dicey's legacy has divided all academic public lawyers. As a result of this, to quote Martin Loughlin, "Public law is a hopelessly fragmented subject with little in terms of an authoritative structure"." During the eighties and nineties many academics have sought to challenge the hegemony of Dicey's work and have tried to replace it. Within this body of work however there are major discrepancies. Nevertheless, it will be argued that there is a common trend: each seeks to construct a framework with reference to some type of external principles. That is, in the absence of one document or statement identifiable as "The Constitution", public lawyers have had to use different reference points to give their work coherence. This is not a new observation; one of the purposes of Dicey's work was to construct a coherent structure for public law. But recently academic public lawyers have spread their net further. Some have found their 6 structure from within Dicey's work and sought to reclaim it; others have brought concepts from other disciplines, while others have sought to study the subject believing the only principle is that there are no principles. This introduction will look at each of these trends and contend that none on its own is an adequate model for administrative law. In particular the idea now propounded by two senior public law academics that contract and the market - within certain limitations - provide a system ofaccountability which has evaded us in the traditional state' will be challenged. This work will attempt to argue that accountability is central to any administrative law system: the state in its many guises must have some form of structure which is open accessible and answerable to ordinary members of society. This should involve citizens who live as consumers ofutilities or workers in the relevant industries so as to encourage their participation within the modem state." In the context of transport, participation and accountability will provide an effective way of co-ordinating activities within the state's operation.