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18 July 2014

Why Labour hasn’t pledged to fully renationalise the railways

The party believes there have been some benefits from privatisation. 

By George Eaton

One of the key issues that Labour’s National Policy Forum is currently thrashing out in Milton Keynes is the party’s stance on rail. As I reported yesterday, the leadership has pledged to reform the franchising process to allow a public sector operator to bid against private firms for expired contracts (it hopes to reach an agreement with delegates before Ed Miliband’s speech tomorrow morning).  

In response, many have asked why it hasn’t gone further and simply promised to automatically return franchises to public ownership (the position advocated by the rail unions and a significant number of CLPs). Is it scared of being portrayed as “Old Labour”?

Party sources insist not. A Labour spokesman told me earlier today that the party recognised that there had been some benefits from privatisation, for instance improved customer service, and that the cost to the state of promising to take on all franchises could be too high. Rather than committing to full renationalisation, it will judge each contract on a case-by-case basis, something the government has refused to do in the case of the East Coast Main Line (with the absurd result that state-owned operators from other countries are able to bid, but Whitehall is not). The spokesman said: “Ours is a pragmatic, hard-headed position, which seeks to do the best by the taxpayer and passengers. We have no ideological objection to the public sector, we have no ideological objection to the private sector either.”

The question that Labour must now answer is how it will ensure neutrality between the two sectors in the bidding process. In an interview with the FT, CBI head John Cridland has warned that “the in-house bidder has to have no advantage”. Private operators fear that the state will inevitably be biased towards itself. But for many in the party this is reason to hope that, in practice, Labour will renationalise the network over time. 

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