They should wear masks
- Stagecoach: A Classic Rags-to-Riches Tale from the Frontiers of Capitalism by Christian Wolmar
Orion, 227 pp, £18.99, November 1998, ISBN 0 7528 1025 1
When I heard that Christian Wolmar was to write a book about the transport company Stagecoach I rejoiced that one of the great privatisation scandals of our time would at last be fully exposed. My hopes faded with the first sentence. ‘This book was written with the active co-operation of Stagecoach’s senior executives.’ After ‘initial doubts’, Stagecoach’s founder and driving force Brian Souter ‘gave his time for a series of lengthy interviews’. Souter no doubt worried that the hours he spent talking to Wolmar might prove a poor investment. He must be utterly delighted with the result. A billion pounds’ worth of advertising would not buy Stagecoach so extended and glittering a puff. The praise for Souter himself starts in the first chapter and goes on and on and on. He has an ‘exceptional business brain’, he is (passim) a ‘genius’, he is also ‘an ideas man’, a ‘pacifist’ and even from time to time has ‘socialist instincts’ and ‘does believe in public transport’ (provided, presumably, it is privately owned). ‘Hardly anyone dislikes him’; he is at the same time ‘an old trade-union hand’ and ‘a frontiersman who conquered the West’. ‘The secret of his success is built on relationships with people’ and ‘he is head and shoulders above most businessmen of his generation.’ The book ends with an excited little orgasm of flattery and gratitude. ‘His certainty, his confidence and his encyclopedic knowledge, combined with the fact that he is an affable, pleasant, charming and very agreeable man, made him into an extremely engaging fellow ... he lifted my sights quite substantially.’ Wolmar imagines that Souter ‘will hate to see this in print’, so we can obviously add modesty to his talents. The genius of Brian Souter carries all before it in this ‘classic rags-to-riches tale from the frontiers of capitalism’. Each decision, each acquisition, is reported as part of the ascent to the peaks of capitalism made by Souter and his sister Ann Gloag. The reader is left with the unmistakable impression that anyone can end up, as Gloag has done, in a Scottish castle, if they have charm, genius, an exceptional business brain and a few socialist and pacifist instincts.
But wait. Read the book carefully, and a benefactor emerges who, despite a manifest lack of genius or socialist principles, did much more than either Souter or Gloag for Stagecoach. Margaret Thatcher and her eager disciple Nicholas Ridley privatised the National Bus Company in 1985. The ‘thinking’ behind this measure came from organisations like the Centre for Policy Studies and the Adam Smith Institute. To the boffins there the publicly-owned National Bus Company was a vast octopus whose tentacles were strangling competition all over Britain. They dreamed instead of hundreds, perhaps thousands, of small bus companies competing with one another in the free and open market and as a result providing better services for their passengers at cheaper fares. The way to make this dream come true, they insisted, was to break up the public monopoly and offer local bus companies for sale to their managers and other entrepreneurs. After the National Bus Act was passed in 1985 the local companies and their huge public assets were flogged to local managers and cowboys. In perhaps the most ludicrous of all its whitewashes of Tory privatisations (a keenly contested matter) the National Audit Office said it was delighted with the sale of the National Bus Company for £200m, not noticing that the £168m surplus on the Company’s pension fund had been illegally swiped by the Government.
So confident were ministers like Ridley that the ‘small man’ would make a success of these new bus companies that they forgot to stop him selling his company on to the big man. Before long a few big companies were swallowing lots of little ones. Stagecoach led the charge. Companies were snapped up, their assets, especially depots in town centres, were stripped and sold (in Southampton, for instance, the sale of the bus depot and 82 buses produced twice what Stagecoach had paid for the whole company). The proceeds from the sales were used to buy more companies. Where local councils had the cheek to hold onto their bus companies, Stagecoach pioneered a typically free-market method of driving them off the road: they ran free buses in front and behind their competitors, enticed their drivers to switch companies, and even (in Keswick, in protest against a planning decision) blockaded the town centre with old buses brought in from elsewhere. These methods were denounced again and again by the Office of Fair Trading and the Monopolies and Mergers Commission. The acquisition of the bus service at Darlington was described by the MMC as ‘deplorable, predatory and against the public interest’. Ridley and other Tory ministers joined in the criticism. But by the time the reports came out, the deeds were done, and the regulators had nothing like enough power to interrupt the headlong rush to monopoly.
Out went the old fuddy-duddy bus monopolies, with their old-fashioned public control and accountability. In came new dynamic, streamlined private monopolies almost entirely free from public control or accountability. Brian Souter, as always, has an appropriate word for this process. ‘Candidly,’ he told Wolmar, ‘our review of provincial bus markets was that it would end up as an oligopoly.’ Souter even criticises right-wing Tories like Ridley, Peter Lilley and Michael Portillo for complaining about his oligopoly. Wolmar dutifully describes this argument as ‘sophisticated’. It does, however, seem a little churlish of Souter to criticise Tory ministers when they handed so many public assets to him on a plate, and his much-vaunted anti-Tory prejudices did not prevent him welcoming the local Tory MP Bill Walker onto the Stagecoach board.
The other great contribution which the Thatcher Government made to Stagecoach was anti-union legislation. In his best chapter, Wolmar shows how much of Souter and Gloag’s fortunes are founded on cutting wages. Souter masquerades as the unions’ friend. He is sharp enough to see that it is easier to deal with a neutered union than no union at all, and the unions were so paralysed by successive Tory laws restricting their strike power, and are therefore so grateful even to be recognised, that they have repeatedly accepted heavy wage cuts in bus garages. Souter wowed the Scottish TUC last April by singing a dreadful doggerel version of the ‘Red Flag’. He did not mention the bus workers at Ribble, whose meagre wages Stagecoach slashed by 15 per cent; or the fact that before privatisation bus workers’ wages were 7 per cent above the national average and after it 13 per cent below. He did not quote the bus workers at Burnley who were interviewed in secrecy by Wolmar. ‘Why should they come and reduce our wages by 20 per cent?’ the men complained. ‘We’ve all got mortgages and children and we just can’t afford it. These people are bandits – they should wear masks.’
It was, primarily, the devastating wage cuts which made Souter and his sister rich. In 1993, when Stagecoach was floated on the Stock Exchange, Souter told me he and his sister had ‘realised’ £11m. And just as Brian and Ann realised their fantastic windfall, so their bus workers realised that they would have to work much harder for much less time off and much less money. Only once did they vote (by 94 per cent) to take industrial action – and then only for a marginal demand. Workers at Stagecoach’s rival, Badgerline, later called First-group, had gone on strike at Chelmsford. The strike was supported by a ballot and sought only to defend trade-union bargaining rights. Yet every time the workers asked their union to spread the strike to other garages in the same company, they were told they must not break the law. The strike was smashed. The laws which made such victories possible were of inestimable value to Stagecoach. ‘One senses,’ writes the sensitive Wolmar, ‘a touch of unease between the man who feels a genuine affiliation with the working class and the driven capitalist out to maximise profits.’ By coincidence, however, whenever these two characters clash, the driven capitalist wins.
After the denationalised buses, Souter and Gloag turned their attention to the privatised railways. In a desperate bid to flog off British Rail before they were defeated at the polls, the Tories divided up the railways into areas, and sold them off as oligopolies to the highest bidder. At the same time, all BR’s carriages and engines were handed over to three huge rolling stock companies known as Roscos, which were empowered to lease them out to the operating companies. When the Government offered the Roscos for sale in January and February 1996, the Labour Party was still firmly committed to renationalising the railways. Naturally, therefore, the bidding for the companies was slack. Porterbrook, the first in line, was bought very cheaply by a group of British Rail managers led by a not very remarkable man called Sandy Anderson, who invested £120,000 in the venture. Later in 1996, the Labour Party changed its tune and effectively accepted privatisation. The value of the Roscos soared. In August Stagecoach nipped in and bought Porterbrook for £300m more than the Government had got for it six months earlier. Without a single carriage or engine being leased, Sandy Anderson’s little investment was turned into a clear profit of £33m. This scandal was, once more, effectively nodded through by the National Audit Office and the Public Accounts Committee. The new multi-millionaire Sandy Anderson now works closely with Stagecoach, which still makes vast profits from Porterbrook’s leasing of rolling stock to the operating companies, including South West Trains, which is owned by Stagecoach.
Stagecoach started at South West Trains as they had on the buses: sacking some workers and making the rest work harder and longer for the same money or less. Many drivers left and Stagecoach discovered a fact which they had apparently not anticipated: they couldn’t run trains without drivers. They were obliged to negotiate with the regulator for 39 train cancellations. The new South West Trains director Brian Cox tried to blame this management disaster on the workers. The service which had not seen a major strike since 1982 was, he declared, ‘a hotbed of Trotskyism’. He told MPs that there was a fundamental clash between Stagecoach and South West Trains – ‘we are at one end of the cultural spectrum, far out at one end, and they are at the other.’ Right out at his end of the cultural spectrum, Brian Souter was shocked to discover that train passengers, unlike bus passengers, are likely to complain when services are cancelled or delayed. The easy-going, casually-dressed charmer liked by everyone was beside himself with fury. ‘SWT receives forty thousand complaints a year,’ he bellowed. ‘That means more than eight hundred people a week get off our trains, go to their work and write a letter of complaint to us. What I want to know is this: do their bosses know?’
In 1985-86, the year provincial buses were privatised, 4489 million journeys were made on them. Ten years later there were 3178 million – a substantial decline. Did the number of bus journeys decline everywhere in those years? Not at all. In London, where buses were publicly owned for most of the decade, 1152 million bus journeys were made in 1985-86 and 1205 in 1995-96. Like his sister, Brian Souter is a worshipper at the evangelist Church of the Nazarene. ‘If we were to apply the Sermon on the Mount to our business,’ he wrote in 1991, ‘we would be rooked within six months. Don’t misunderstand me, ethics are not irrelevant, but some are incompatible with what we have to do because capitalism is based on greed.’