Blain’s Morning Porridge 26^th Sept 2025: Happy 200^th Birthday to The Railways!

“This is the Night train crossing the border, bringing the cheque and the postal order…”

The Age of Steam was perhaps the most influential technological paradigm shift since the innovation of agriculture. Railways and Steam Ships made the World smaller and fostered global growth and industrial innovation – leading to where we are today, perhaps on the cusp of the next big leap forward; AI technologies (although I would argue they are just the evolution of computing!)

On September 27^th 1825 the World first ever railway opened for business when George Stephenson’s steam-powered Locomotion No 1 pulled  first its first wagons along the track of the Stockton & Darlington Railway. It included a purpose-built carriage for passengers, called “Experiment”. They needn’t have worried, over 600 people piled on board the train, such was the public interest. For most it would be the furthest they’d ever travelled from the birthplace.

So began the Railway Age.

I have a love/hate relationship with railways. There is a photo of my Grandma wiping coal smuts off my face on the steam trains that still ran between Edinburgh and Glasgow into the 1960s. Show me a steam train today I will bore you with all the details of the class, and critically, who designed it. But ask me to catch a train today and I’d rather have root-canal treatment instead of worrying about how delayed, or what the excuse for its cancellation will be. (Pretty much the same with air travel – the airport experience leaves me frustrated and bored.)

I built a trainset in my attic – it was magical. Then we converted the house and the roof became a new reception room. It gives great views of the yachts on the Hamble, but I’d love it if there was a  4-4-0 Schools Class, designed by the great Richard Maunsell for Southern Railways, or even a common 4-6-0 Black Five (William Stanier of the LMS) puffing down the other side of the river. Watching the preserved engines of the Dartmouth Steam Railway clattering down the banks of the River Dart in Devon is always a highlight whenever we sail westwards.

Some say today’s AI revolution will be the greatest paradigm shift in history, but without the Age of Steam – railways and ships – the world would have remained a much bigger and poorer place.

And just like all great technological revolutions, Rail demonstrates highlights, lowlights, appalling managerial decisions, flawed strategic decisions, and hopefully rather than obsolescence a transformation into something mature. Sadly, the history of Railways in the UK is a history of repeating boom and bust, managed decline, renaissance, deeper decline and an uncertain future.

For almost 100 years the early Railways were the bubble of their day. It was an age of Railway Mania as entrepreneurs over-estimated demand and overbuilt on the grand scale. Private companies in the UK financed and built over 120 different lines, most of which did badly or very badly, triggering multiple M&A opportunities. Fortunes were made and lost.

The triumph was to link every City, Town, Village and Hamlet to the mainline through multiple branch lines. London was hours away rather than weeks. It changed the nation – agricultural produce could be transported to the Metropolis overnight. (I live on what was once called the “Strawberry Coast”, and every night a late train loaded with the Red Berries went direct to London and Covent Garden fruit market. Just up the road is the restored  Water Cress Line – guess what it trundled from the chalk-streams of the South Downs to London early each day?)

Railways allowed the expansion of the middle classes, creating prosperity and consumption. That created wealth, opportunity and growth for smart entrepreneurs. Suburbs could be built around cities, and dormitory towns sprung up. The Railway Industry became one of the Empire’s great exports; British Engines, Carriages and Expertise built Railways around the World. Great towns like Swindon, Eastleigh and Doncaster grew to service the Railway boom.

By the early 1920s the railways were beginning to struggle. The next industrial paradigm shift into lorries, buses and cars, was beginning to compete with rail – more personal transport was able to do point to point in a way railways never could. The tracks and signalling were tired, and investment was proving harder to find in post WW1 Britain as it paid off the costs of the Great War. A series of failures led Government to rationalise the multiple railways into the Big Four: God’s Wonderful Railway (GWR), LNER, LMS and Southern. Each had their own livery and trains.

But the technology was changing. Everything in technology is ultimately about power and energy. We can see this today with the power requirements of data centres and LLMs. By the 1930s the main cargo business of UK railways was transporting the coal required to power the trains. Coal was bulky, dirty and vulnerable to the demands of militant coalminers who knew their importance to the economy.

The apogee of Steam was Mallard – this morning’s photo – the fastest ever Steam train.  It hit 126 MPH on a specially staged run from York to London. The drivers of these fast trains were the celebrities of their day. The Flying Scotsman could do the London-Edinburgh run without stopping, faster than trains today.

But even as the Brits were still drawing up blueprints for more steam, the Germans were building the first Diesels which were nearly as fast, cheaper, simpler and less expensive to maintain requiring less logistical effort. The Brits were experimenting with electric rails while other nations were building all-electric lines powered by more effective overhead lines. (90 years later and UK rail is still only partially electrified!)

WW2 left the railways broken and exhausted. The Government finally nationalised the whole set-up and thus was born British Rail. And for a while it worked, until a succession of badly executed modernisation plans left it with Diesels that didn’t work and massive costs to modernise the network. That became a political football, passed to the Tory minister for Rail, Ernest Marples, who’d made his money building motor ways. He and his henchman, Dr Beeching, were determined to cut costs and end any public involvement. They announced a plan to save money and rationalise the system, by slashing most of the branch lines, leaving most of the UK dependent on road.

The UK was effectively fragmented. They rail system was reduced to a mainline system between most, not all, larger towns and cities.

It has never really recovered. As the rest of the World was building ultra-fast bullet trains, the UK was disinvesting in railway infrastructure and trying to make modern trains fit the Victorian rail-tracks. The French were building brand new straight-line tracks for their TGVs while Britain built the Advanced Passenger Train which lent around the curves making passengers horrendously sick.

By the 1980s the Intercity Lines and suburban feeders were profitable, but the Tory Government again intervened, and privatised them in 1994. It was a hodgepodge of bad ideas splitting the track from the new operators. There was zero coordination. Within years the new system was costing UK tax-payers much, much more in subsidies than the government had been making from the profitable British Rail.

As roads became increasingly congested, passenger numbers were rising, but services were declining. Plans to modernise they system with new fast lines became bogged down in planning and escalating costs. Franchise owners saw little profit, and many walked away. The lack of direction and a focus on cost savings saw the rail unions turn bolshy and militant – strikes are a regular feature of the system. There has not been much in the way of leadership.

A railway professional chum, tells me nothing, absolutely nothing strategic was reky decided during the last 15 years regarding the future of UK Railways. UK trains are least reliable in Europe, and by far the most expensive. It’s much, much cheaper to fly or drive.

So where does the UK rail system go from here?

Now that is a question…. It would be nice to use the train. If only I could rely on it.

The current Government plans to take over the private franchise contracts as they expire. They have reconnected the track business (lines and signaling) to the rail operators, but otherwise I don’t see any real strategic plan to use railways to connect the UK economy. I would love to be told I’m wrong.

Out of time and have a great weekend.

Bill Blain

CEO – Windshift Capital

Author – The Morning Porridge

Partner – Shard Capital