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26 April 2024

How radical is Labour’s new rail policy, really?

The party describes it as the “biggest reform of our railways for a generation” while avoiding the word “nationalise” – and building on Tory policy.

By Jonn Elledge

A variant of the word “nationalisation” appears precisely once in the document outlining Labour’s new rail policy – and it’s to say the party won’t do it. “With ten current rolling stock companies owning and leasing trains and carriages worth billions,” argues “Getting Britain Moving: Labour’s Plan to Fix the Railways”, “it would not be responsible for the next Labour Government to take on the cost of renationalising rolling stock as part of our urgent programme of reform.” The newly established Great British Railways will instead continue leasing rolling stock but, by allowing different routes to share, will do so in a more efficient and cuddly way.

This decision to otherwise avoid the term is clearly a deliberate presentational choice. The question is not whether the new rail policy counts as nationalisation: it very clearly does, which is why it’s been widely reported as such. The big question is how radical a policy this really is.

What Labour describes as “biggest reform of our railways for a generation” would see the operation of the British railways almost fully nationalised within the first five-year term of a Labour government. This will be done not through contract buy-outs or other such expensive things, but simply through letting the franchises expire and revert to public management. (The reason it’s only “almost” is because not quite every franchise will have expired.) This has, in fact, happened rather a lot these last few years, as the franchise system created in the 1990s has collapsed, post-pandemic, and the government’s Operator of Last Resort has been forced to fill the gap: Labour’s plan simply means embracing this as a good thing, rather than an annoying necessity.

In addition to all that, the next Labour government would also create a new watchdog, the Passenger Standards Authority, which will ensure travellers are offered the best priced tickets, rather than deliberately bamboozled to reduce their chances of finding it. Passengers will receive automatic payments in the event of delays – at present, they have to actively claim which, since train operating companies (TOCs) are repaid automatically if delays are not their fault, perversely means TOCs can actually profit from delayed services. They’ll also be able to buy digital season tickets that work across the network, rather than only on the bits run by TOCs that have got around to implementing the technology. Shadow transport secretary Louise Haigh’s description of herself as the “passenger-in-chief” is so cringeworthy it makes me want to turn my whole head inside out; but it does recognise that the public frustration with the railways today has less to do with ideological matters of state versus market than with the simple fact they’re paying world-leading prices for a bloody terrible service.

These structural changes, Labour claims, would save £2.2bn a year by the end of the term. Of this, around £680m of this will come from ending shareholder dividends and the cost of bidding for contracts. The other £1.5bn, though, will be rather harder for the Tories to contest: that figure comes from the current government’s estimate of the savings to be found in its own proposal for a simpler structure, in which the network would be run through an arms-length body called, er, Great British Railways. For all the apparent radicalism, Labour is building on the Tories’ current policy: Keith Williams, who designed that plan, and for whom it would have been single-handedly named had Grant Shapps not muscled in, has even tentatively backed the Labour version. When rail minister Huw Merriman commented that Labour “don’t have a plan to pay for the bill attached to their rail nationalisation”, it felt suspiciously like he hadn’t bothered to do the reading.

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Whether this will work is an open question. TOCs are obviously acting out of self-interest when they claim that, without their relentless commercial focus (citation needed), costs would rise and revenue growth slow. But it is true that their preferred concession model, in which private companies run the trains but the state sets the fares, designs the services and takes on the revenue risk, has worked well on both London Overground and Merseyrail; full-fat state operation, meanwhile, gave us British Rail. Nationalisation will also do nothing to address high fares, or the limited capacity that necessitates them: doing that would take cash, whether through infrastructure investment or increased subsidy, and both history and the current state of the public sector suggests the Treasury is unlikely to oblige. One thing the policy will change, though, is the transport secretary’s space to pretend that problems are someone else’s fault. That may be good for the service. It may not be good for the government.

It is likely, however, to be popular. Support for renationalisation, whatever one wants to call it, has always been strong, and has climbed strikingly these last few years, while opposition to it has all but collapsed. The inability of the country which first invented the passenger railway to provide a half-decent service today has come to seem a symbol of national decline: little wonder a generally cautious Labour party is willing to stick its neck out.

But is it radical? In some ways, as a more enthusiastic embrace of what a Tory government was begrudgingly doing anyway, no: as nationalisations go, this is an easy win. (There’s strong public support for water nationalisation, too, but that, alas, would cost money.) On the other hand, though, the idea of any renationalisation – of the state moving back into a space which it had vacated – is a big shift away from both the last Labour government and the economic orthodoxy of the last forty years, one visible in talk of Great British Energy and more council-run bus services, too. Perhaps a new Labour government might change things after all.

[See also: The Tories are facing a moment of great peril]

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