Can Keir Starmer take the brakes off Britain’s rail network?

In part, Labour won the general election because of a feeling among the public that “nothing works any more”. One of the main causes of this disquiet was the state of the railways, and an increasing sense that the breaking up and privatisation of the old British Rail in the 1990s had been a mistake – or was no longer much of a success, at any rate. In fact, some parts of the rail system have since had to be nationalised, and successive governments have tightened their grip on the freedom of the remaining companies.

Both in his leadership campaign in 2020 and in this year’s election manifesto, Keir Starmer promised to bring the railways into “common” or “public” ownership. There are now two bills being presented to parliament to do just that – but some persistent challenges and questions remain...

It wants to complete the process of renationalisation that has been proceeding haphazardly for decades. The state already owns the track and other infrastructure since the privatised Railtrack plc went bust in 2001, and in recent years, ScotRail, TransPennine, London North Eastern, Northern and Southeastern, among other franchises, have ended up in public ownership.

The idea is that, when a franchise expires or a private company fails, the operation is nationalised at virtually zero cost to the taxpayer. Importantly, however, the government does not propose to nationalise the rolling stock. The state will still pay to lease the actual locomotives and carriages from private companies, many domiciled in tax havens. So not complete nationalisation after all.

Great British Railways, described as the “directing mind”, which will focus “relentlessly” on delivering for passengers and freight customers. There will be a new watchdog, to be known as the Passenger Standards Authority, as well as the Office of Road and Rail.

The first franchises to run down will be South Western and c2c (Essex Thameside) next year. The last is scheduled to be Avanti West Coast in 2032.

Labour is promising improvements in services – but not lower fares. In the King’s Speech briefing notes, it only commits to “affordable” travel. It also says that management by Great British Railways will “reform the ticketing system, to make it simpler for passengers, drive innovation across the network, replace the current ticket types and maximise passenger growth. GBR will also ensure that ticketing innovations like automatic compensation, digital pay-as-you-go and digital season ticketing are rolled out across the whole network.”

The key will be in making savings on the bureaucracy, and of course, the end of subsidies that end up in the hands of private companies. On the other hand, so it is always claimed, the profit motive makes train operators keen to maximise efficiency and cost savings.

Common sense tells us that the economics of Britain’s railways won’t be transformed simply by the change in ownership and reorganisation. Some things, such as ticketing and the duplicative costs of inter-company bureaucracy, would improve; but others, such as innovation and investment in rolling stock, might not.

It really all depends. Running a railway is costly, and investing in it even more so, as the cancellation of the northern extension of HS2 should remind us. Someone has to pay for it all. Under public ownership, the rail users (passengers and freight companies) and the taxpayers will have to fund subsidies and investment programmes.

How much of the burden each group will bear is up for debate. During the previous era of nationalisation, for example, keeping British Rail fares artificially low to help fight inflation pushed the then nationalised industry into huge losses. The Treasury can probably borrow money to invest in infrastructure more cheaply than the private sector can, but it will still add to the national debt, one way or another.

That is by no means assured. The old British Rail, the product of nationalising the exhausted old private concerns in 1948, was no stranger to rail strikes – and, given that it was a monolithic national operator, a rail strike could be, and very often was, a national affair, completely shutting down the network for more than a fortnight in 1955, for example, and leading to a national state of emergency.

That sort of action, especially if jointly mounted by both of the main unions, RMT and Aslef, could once again cause even greater disruption than we have seen in recent years. There is also no necessary reason to believe that wages and conditions would be markedly better under public ownership.