The report formally known as Modernisation and Re-Equipment of the British Railways, more commonly the "Modernisation Plan"[1] was published in December 1954. It was intended to bring the railway system up to date. A government White Paper produced in 1956 stated that modernisation would help eliminate BR's financial deficit by 1962. The aim was to increase speed, reliability, safety and line capacity, through a series of measures which would make services more attractive to passengers and freight operators, thus recovering traffic that was being lost to the roads. The important areas were:

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  • Electrification of principal main lines, in the Eastern Region, Kent, Birmingham and Central Scotland;
  • Large-scale dieselisation to replace steam locomotives;
  • New passenger and freight rolling stock;
  • Resignalling and track renewal;
  • Closure of small number of lines which were seen as unnecessary in a nationalised network, as they duplicated other lines.
  • Building of large freight marshalling yards with automated shunting to streamline freight handling.

However most railway historians now regard it as a costly failure and a missed opportunity; an attempt was made to simply update the railways as they already stood rather than reacting to changes in the way goods and people were travelling in the post-war years. Massive investments were made in marshalling yards at a time when the small wagonload traffic which they dealt with was in steep decline and being lost rapidly to the roads. The Modernisation Plan called for the rapid and large-scale introduction of diesel locomotives - a total of 2500 locomotives to be procured in 10 years at a cost of £345 million. With political considerations all-but requiring that all these locomotives be built by British firms, the scope of this project was beyond the existing capacity of the British locomotive industry. This led to many designs being submitted, and accepted, from manufacturers with little or no direct experience in main-line locomotive construction. The short timescale of the Plan also meant that there was little time for prototype locomotives to be properly evaluated, trialled and, if needed, modified or improved. Several large orders for hundreds of locomotives were placed while the prototype was still undergoing tested or even, in some cases, before the prototype had even been built. Accepting orders from a myriad of manufacturers also led to BR acquiring an unnecessarily diverse locomotive fleet, with large numbers of different but similar classes. This increased the cost and complexity of maintenance and led to operational difficulties (for instance there was no universal system for multiple working). The poor reliability of many of the locomotive designs procured under the Modernisation Plan led to much lower availability ratings than predicted and the large-scale withdrawal of several classes or the curtailing of planned orders, leaving BR short of suitable motive power in some areas. Some of the diesel classes ordered in 1955 were withdrawn before the steam locomotives they were intended to replace.

Moreover, steam locomotives were replaced by diesel types on a 'like-for-like' basis with BR ordering, for example, large numbers of light-duty diesels intended for local mixed-goods services (such as the Class 20 and Class 24), which failed to take into account the decline in local and branch line goods services which was largely switching to the roads. In conjunction with the new marshalling yards, large numbers of diesel shunters were ordered which would soon be rendered virtually obsolete by the rise of container freight and, like the yards they served in, often only served a few years before being scrapped.

Both these factors were related to a failure by the Modernisation Plan to successfully redfine what the purpose of the railways were - British Railways remained bound by its legal status as a common carrier, which obligated it to provide carriage for virtually any type of goods, regardless of quantity (large or small) from any two stations on the network, at set and published rates. This legislation dated back to the 19th century to prevent the railways abusing their monopoly as the sole practical long-distance transport provider for much of the country but the growth of road transport had left the railways locked into a highly disadvantageous position. Road freight operators had no legal restrictions and could turn down work that was uneconomic, which BR could not, and could easily undercut BR's carriage rates which the railway could not alter without legal consent. The common carrier requirements also saddled BR with the necessity to maintain thousands of goods yards and other facilities, plus rolling stock and staff to service them, even when there was ever-decreasing actual demand for such services and such traffic as did exist was very rarely profitable. This issue had been identified during the Great Depression and the Big Four had campaigned for repeal of the common carrier legislation as a 'Fair Deal' during the 1930s. However this did not happen until the Transport Act 1962 gave BR freedom of contract - until then the Modernisation Plan had to commission locomotives, rolling stock and facilities to manage the ever-declining but legally-required wagonload freight traffic.

Finally, the replacement programme was also a sudden change in attitude by BR, which until 1955 had continued to favour steam traction and was still building large numbers of steam locomotives. The wholesale phasing-out of steam required by the Modernisation Plan meant that many steam locomotives were scrapped when only a few years old and often before a reliable and practical diesel or electric equivalent was available.

The failure of the Modernisation Plan led to a distrust of BR's financial planning abilities by the Treasury which was to dog BR for the rest of its existence.

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