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Labour will effectively renationalise the railways ‘soon as is possible’ as part of a major reform of public transport, Downing Street said today.
New legislation will be introduced to create a simplified rail system by bringing services into ‘public ownership’ once their contracts expire or if operators fail to deliver on their commitments.
Most existing railway contracts are set to expire by the end of 2025, and while some extend into the 2030s, senior Labour sources suggested the Government could take advantage of break clauses to bring services back into public ownership sooner.
It aims to have the change completed by 2029, with a ‘shadow GBR’ set up immediately even before contracts end, with a remit to also include ‘industrial relations.
The Prime Minister’s official spokesman said the Bill is an ‘early step in achieving the Government’s vision for the railways’.
‘It will amend existing railways legislation so that appointing a public sector operator is the default position rather than just a last resort,’ the spokesman added.
‘We are introducing this quickly so that we are able to bring these first contracts back into public ownership as soon as is possible.’
Labour’s proposals were set out in a 26-page document earlier this year
Asked about the timing of the legislation, the spokesman replied: ‘It’s hard to get ahead of parliamentary timetables but the intention is to get this done as soon as possible and hence it’s one of the first bills to be introduced.’
A No10 source suggested the Bill was being prioritised as existing rail franchise contracts are due to expire within the current Parliament.
Labour claims this approach will avoid the burden falling on taxpayers to cough up for compensation to operators.
‘Transferring operations to the public sector will save the taxpayer millions of pounds currently paid out in fees to private operators each year. It will end the fragmentation of our railways, establishing a more efficient and reliable rail service for passengers – helping to get people to work on time and boosting productivity,’ a spokesman said.
But industry chiefs have warned Labour were chasing a ‘political rather than a practical solution’ to Britain’s struggling railways.
They claimed Labour’s plan would see ‘increased costs over time’ and said a loss of ‘commercial focus’ would lead to less train services and increased subsidies.
Rail Partners chief executive, Andy Bagnall, said: ‘We want the same outcomes as the new Labour Government – a better railway for those that use it and pay for it.
‘But to change the railway for the better, we must correctly understand the causes of the current challenges to get the right solutions – and full nationalisation is a political not a practical solution, which will increase costs over time.’
It is also feared that transferring the cost of leasing rolling stock from private to public balance sheets would cost up to £10billion over the next Parliament.
And the RMT union has demanded that rolling stock leasing companies also be put into public ownership.
Under Labour’s plan, almost all passenger train operators will be transferred into public ownership within the first term of a Starmer government.
This will see the nationalisation of Avanti West Coast, c2c, Chiltern Railways, CrossCountry, East Midlands Railway, Gatwick Express, Grand Central, Great Northern, GWR, Greater Anglia, London Northwestern Railway, London Overground, Merseyrail, South Western Railway, Southern, Stansted Express, Thameslink, and West Midlands Railway.
Labour has pointed to how many failed train franchises have already been put into public ownership by the Tories.
And the last Labour government previously brought rail infrastructure into public ownership and control in 2001 following the collapse of privatised Railtrack.
LNER, Northern, Transport for Wales, Southeastern, Scotrail, Caledonian Sleeper, and Transpennine Express are all currently publicly-owned.
The Government-owned ‘Operator of Last Resort’ controls LNER, Northern, Southeastern and Transpennine Express after they suffered a myriad of failures under private operators.
During the Covid pandemic, all train companies were effectively renationalised after ministers assumed the financial risk when passenger numbers dwindled almost to zero.
Labour will still allow privately-owned ‘open access’ train operators – such as Grand Central, Heathrow Express, Hull Trains, and Lumo – to run services.
These are operators that don’t receive any subsidies from the Government for running trains with all their revenue self-driven.
They use spare network capacity to supplement existing train operators on some lines.
Under Labour’s plan, freight operators on the rail network will also remain within the private sector.
Darren Caplan, chief executive of the Railway Industry Association (RIA), which represents railway equipment manufacturers, said: ‘A new body with strategic oversight and responsibility for rail can focus on meeting growing passenger demand and boosting industry revenues.’
Meanwhile, the Better Buses Bill is aimed at giving local authorities in England the power to franchise local bus services, by removing barriers that mean only metro mayors can currently do this.
This will enable local leaders to deliver better bus networks reflecting the needs of communities relying on them, according to the Government.
The Bill will also attempt to provide enhanced accountability of bus operators, and give councils more control and flexibility over bus funding.