Fast monitor to nowhere: Nationalising the railways will value Britain pricey, warns ALEX BRUMMER

Amid the outrage from retailers and farmers over a poorly designed £40billion tax-raising Budget, Labour’s most misplaced act of socialism has gone almost unnoticed.

The railway nationalisation bill is on a serene, high-speed journey to the statute books.

Many rail users have strong views on poor service levels, long delays and eye-popping long distance and commuter fares. 

The Labour manifesto promised to end the hybrid settlement under which mainly private sector licence holders use tracks centrally controlled by Network Rail.

Public ownership: The railway nationalisation bill is on a serene, high speed journey to the statute books

Transport Secretary Louise Haigh and the Chancellor Rachel Reeves fail to acknowledge that simply transferring ownership of franchises, as they fall due, to government is not miraculously going to reform malfunctioning services.

Northern Rail – already in public hands – is notorious for its poor performance and since April has breached its contract several times and has become a symbol of broken Britain. 

It received an increased subsidy of £648.4million in the year ended March 2024 (up from £597.6million) and uses technology that is decades out of date.

The Government decision to give in to demands from militant railway unions, without embedded productivity targets, is throwing good money after bad.

Under public ownership, the railways will have to compete not just with other operators, but with the whole of the public sector for investment funds. 

If the public has the choice of better services from a Manchester hub or investment in NHS scanners, it is not hard to guess the higher priority.

Analysis done by Railway Partners shows that just a 1 per cent slippage in the efficiency of the railway network would add £1billion to the cost to the exchequer. 

Travellers looking forward to a better deal from public ownership may not have registered that within the Budget there is a built in 4.5 per cent rise in fares next March. That is more than double the Bank of England’s inflation target.

Taking the railways onto the national balance sheet also means absorbing at least £16billion of debt. It is not surprising that the Chancellor had to invent a new fiscal rules to find extra room for investment.

Postal folly

The Communication Workers Union (CWU) cannot be blamed for seeking to extract the best deal from the Royal Mail now that it appears that the £3.6billion bid by Czech billionaire Daniel Kretinsky will receive clearance under the National Security & Investment Act. 

CWU boss Dave Ward is seeking a deal which guarantees an above inflation pay rise and commits, among things, to every other Saturday off.

Before rushing into the arms of Kretinsky and his secretive backers, the CWU would do well to look at the outcome of other public-to-private deals. 

At Asda, high interest payments on the debt caused its market share to slump. 

Private equity owned local child care homes are extracting huge profits from local authorities, triggering intense financial pressure.

The Kretinsky bid largely is being financed by borrowing. 

Even if Ofcom allows a big price increase for first class deliveries there is going to be a desperate economic struggle. Job and pay agreements could be jettisoned without ceremony.

Bad business

It is disturbing to learn from senior retailers that there was pressure from Whitehall not to sign a British Retail Consortium letter pointing to the potential £7billion cost of Labour’s National Insurance and other charges and future job losses.

Not quite the business-friendly government Rachel Reeves pledged.