Pete Stevens

With the rail network being front and centre of national debate over the past year due to the ongoing industrial action, Labour finally published its response to reform in April, “Getting Britain Moving”.  The document promises to “usher in a decade of growth, innovation and service improvement”. The headline improvement is rail renationalisation. Not really that surprising from a party that has shown itself to be driven by opinion polls. Renationalisation has been consistently popular with the public, even Tories.

But what do Labour’s plans really amount to?  One could reasonably expect that all sections of the rail industry that were part of the original 1994 to 1997 privatisation, would be reconstituted into one, efficient, organisation. This is far from what is being proposed. In fact, much of the structure of the privatised rail structure is being maintained.

Privatisation essentially split the railways into various sections. Railtrack owned the infrastructure and was entrusted with both its maintenance and improvements. The rolling stock companies, of which there are now 3, provided the Train Operating Companies (TOCs) with their rolling stock. The Train Operating Companies are the companies that run the passenger services.  Currently there are 28 TOCs providing rail services.

This whole system is governed by a series of highly complex and expensive contracts. Railtrack, the owners of the rail infrastructure, were brought back into public ownership in 2002 due to the dire state of rail maintenance leading to the Hatfield rail disaster. 

Breaking the rail network into various operating companies was supposed to bring a level of competition to the rail network. Each rail company would bid for franchise to run services on a particular route. The franchise would enable the holder to run services for a specified period while paying the government for that right. Each rail company would have to compete for passengers, and this would entail a more efficient rail network and bring reduced travel cost to the travelling public. The idea was that, as passenger numbers increased and rail companies became increasingly efficient, the subsidies provided would be reduced. 

This system was supposed to reduce the exposure of the public purse to the cost of running the rail system. The private sector would be responsible for the risk associated with running the rail network.

This was never the case. The franchises were never long enough to ensure the private sector would commit long term. But even if this were to be the case it has always been seen by the public that it is a government responsibility to see that our railways function. Consequently, strategic planning and overall responsibility for the running of the rail network always rested with the Government.

Prior the emergence of Covid the system of franchising was already in a state of collapse, and a number of rail routes had been handed back to the DfT (Department for Transport).  As a result of Covid all rail franchises were transformed into management contracts. TOCs now managed the rail services on the basis that they were paid a fee for doing so with no risk to their profits. All these contracts are due to run out over the next 5 years.

Even the current Tory government recognised that the fragmentation within our rail system was unsustainable, and a solution was needed. So, the Tories proposed a “Bold New Vision”, Great British Railways.

The White Paper places control of both infrastructure and services into an arm’s length body. Great British Railways, it is envisaged, will run and plan the rail network, sell tickets and provide compensation to passengers.  It is hoped this approach will reduce the cost of running the railways by removing a complex series of internal, friction, costs, that exist because of the complex nature of the contracts and franchising system. This it is hoped will ensure we have a far more efficient rail system. 

Currently the Bill has not been passed into law, this will have to wait until after the General Election.  This will likely fall to a new Labour Government to implement. Labour under Keir Starmer seem intent on simply following the trajectory laid out by their Tory predecessors.  Labour will now have to pass the Bill to create Great British Railways. As Network Rail is already nationalised Labour are only committed to bring the TOCs into a new GBR when the contracts end. Labour is simply implementing a Tory policy.

It is clear this is a very limited view of renationalisation and begs the question what we mean by it. Under the old British Rail all aspects of rail travel operated under its banner. British Rail was not simply responsible for providing rail services. It had its own research and development departments. It designed and manufactured its own rollingstock. Maintenance and engineering were all in house. 

It was one of the most efficient rail networks in Europe and provided services at a far lower cost than our current system.  Labour’s plan is to maintain a significant component of the current fragmented system. Rail freight and the rolling stock companies will remain outside any renationalised system. And there appears to be no plan to curtail the outsourcing of critical engineering functions. Network rail is already planning to outsource most of its rail maintenance to private companies.

It is entirely possible that much of the current system of outsourcing with private companies being able to maximise profit through contracts with Great British Rail will be maintained. The RMT has calculated over many years the exorbitant profits the rolling stock companies have extracted from the taxpayer while minimising their exposure to any risk.  Currently the Bill forming Great British Railways still contains numerous provisions for the commercialisation of our rail network. The Rail Delivery Group, an umbrella organisation representing the TOCs, is currently lobbying Starmer’s Labour party to maintain these provisions. 

The piecemeal nationalisation the Labour party has outlined, may, over time, bring some benefits to the travelling public, but it certainly won’t be quick. It almost certainly won’t be a transformative process. Significant parts of our rail network will remain in private hands and maintain the ability to derive extortionate profits from the tax payer. Even within those areas that are to be re-nationalised the commercial emphasis will probably be maintained allowing private companies to extract profits with no real benefits to the travelling public. What our rail network really needs is a return to investment and development on the basis that it is a public service. Analysis constantly shows that investment in our rail network yields very real economic and social benefits for all. The current proposals go nowhere near this objective.