Railways Act 1921

The Railways Act 1921 (11 & 12 Geo. 5. c. 55), also known as the Grouping Act, is an act of Parliament enacted by the British government. It was intended to stem the losses being made by many of the country's 120 railway companies by "grouping" them into four large companies, dubbed the "Big Four". The system of the "Big Four" lasted until the nationalisation of the railways in 1947.

During World War I, the British government had taken control, although not ownership, of British railways. The intention behind the Act was to reduce inefficient internal competition between railway companies and retain some of the benefits which the country had derived from a government-controlled railway system during the war. The provisions of the act took effect from the start of 1923.^{[dubious – discuss]}

The British railway system had been built up by more than a hundred railway companies, large and small, and often, particularly locally, in competition with each other. The parallel railways of the East Midlands, and the rivalry between the South Eastern Railway and the London, Brighton and South Coast Railway at Hastings, were two examples of such local competition.

During the First World War, the railways were under state control which continued until 1921. Complete nationalisation had been considered, and the Railways Act 1921 is sometimes seen as a precursor to that, but the concept was rejected, and nationalisation was subsequently carried out after the Second World War, under the Transport Act 1947.

The form of the act was developed by the Minister of Transport, Eric Geddes, who was a former North Eastern Railway executive. Geddes favoured using amalgamations to create privately owned regional monopolies, and suggested increased worker participation from pre-war levels. He viewed the pre-war competition as wasteful, but was opposed to nationalisation on the grounds that it led to poor management, as well as a mutually corrupting influence between railway and political interests. In his 9 March 1920 Cabinet paper, Future Transport Policy, he proposed five English groups (Southern, Western, North Western, Eastern and North Eastern), a London passenger group, and separate single groupings for Scotland and Ireland.

Geddes' proposals became the 1920 white paper, Outline of Proposals as to the Future Organisation of Transport Undertakings in Great Britain and their Relation to the State (Cmd. 787). That suggested the formation of six or seven regional companies, and suggested worker participation on the board of directors of the company. The white paper was opposed by the Railway Companies' Association (RCA) and by MPs representing railway companies' interests. The move to greater worker participation was strongly opposed by the RCA, but supported by the Labour Party. Worker-directors were not included in the final act, being replaced by agreed negotiating mechanisms.

In 1921, the white paper, Memorandum on Railways Bill (Cmd. 1292), suggested four English regional groups and two Scottish groups. Scottish railway companies wanted to be incorporated into British groupings, and the RCA proposed five British regional monopolies including the Scottish businesses.

After consideration of the Railways Bill, it was decided that the Scottish companies, originally destined to be a separate group, would be included with the Midland/North Western and Eastern groups respectively, in order that the three main Anglo-Scottish trunk routes should each be owned by one company for their full length: the West Coast Main Line and the Midland Main Line by the former group, and the East Coast Main Line by the latter.^{[citation needed]}