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19 July 2021updated 05 Oct 2023 8:19am

National railways: How much further into Labour’s territory will the Tories go?

The creation of new public body Great British Railways will see increased government control over the UK's transport systems.

By Jonny Ball

Earlier this year, Manchester Metro Mayor Andy Burnham won plaudits from Labour’s left by announcing he would create a new public body to establish more public control over private bus operators. (Some even applauded this move for taking Manchester buses “back into public ownership”. In fact, private operators will still run services in Manchester, albeit more strictly coordinated and regulated.)

But curiously, Burnham’s move towards a more interventionist franchising model was less a triumph of “what Labour can do in power”, in the words of Keir Starmer, and more an implementation of former Conservative transport secretary Chris Grayling’s 2017 Bus Services Act. At the same time, the recent Bus Back Better strategy, published by the Department for Transport, explicitly encourages local transport authorities to embrace the very same franchising model that the Labour left has claimed as its own.

Great British Railways

On the railways, this kind of crosspollination between seemingly irreconcilable ideologies has emerged in the form of Great British Railways (GBR) – a new government-controlled public body announced in the recently published Williams-Shapps Plan for Rail. The White Paper, commissioned in the wake of 2018’s chaotic timetable changes, which left swathes of the North in a state of “service meltdown”, was drawn up by Secretary of State Grant Shapps and Keith Williams, a former CEO of British Airways and head of the long-awaited review.

Diagnosing the issues with the current, operator-led franchising model, the Plan for Rail regrets that privatisation’s failures “have remained all too obvious”. The sell-off of the old, state-owned British Rail – begun in 1994 and completed by the time the Conservatives left office after Blair’s 1997 landslide – was intended, it says, to “bring greater efficiency and innovation” by introducing competitive, freemarket principles into the rail system. But “little of this has happened”, and fragmentation, confusion and fare increases have ensued.

Over 20 private operators, many of them owned by foreign governments – Arriva, for example, is a subsidiary of Germany’s state-owned Deutsche Bahn – run services in competition with each other across the country. The system is complex, with “no leader or organisation at local, regional or national levels”, a dearth of coordination governed by “a costly, inflexible spider’s web of adversarial relationships”, and no authoritative body to take responsibility or provide accountability to passengers.

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Shapps’s solution, set out in the White Paper, is for the creation of GBR (a moniker that bears a more than passing resemblance to the “GB Rail” proposed by Jeremy Corbyn’s Labour in their own renationalisation plans), which will “run and plan the rail network, own the infrastructure, and receive the fare revenue”. Private operators will still have a role to play, and will bid for concessions, the terms of which will be strictly controlled and limited by GBR. The rail system will be brought “under a single, national leadership”, with a unique brand and identity (the old double-arrow livery of British Rail). That leadership will set fares and timetables, ending the confusion of multiple operators charging different fees for different tickets that are specific to their own routes and invalid on other trains.

Comparisons to TfL

The new system in the proposed Williams-Shapps plan has been compared to a national roll-out of Transport for London, the public body that operates under the auspices of the Greater London Authority and manages the capital’s transport network (London was the only place in the UK to escape Margaret Thatcher’s deregulation of transport services – read our piece on municipal bus networks). Rather than allowing operators to make profit by collecting passenger fares – the current system across much of the national rail network – TfL instead collects ticket revenue itself, decides on routes, ticket prices and timetables, and awards tightly specified concessions to private companies, which bid competitively on controlled, monitored contracts.

It is hoped that scaling up the TfL-style system nationwide, with the umbrella body GBR, will also simplify efforts to digitise ticketing and introduce Oyster card-style pay-as-you-go, as well as flexible season tickets. Shadow transport secretary Jim McMahon told Spotlight that the GBR plans demonstrate that “the Tories have moved far closer to us”, but says he remains “nervous that we’re not going to see the type of investment we need” in projects like electrification and high-speed rail.

“They’re still not being clear about their commitments,” he says, especially for “local transport schemes that are critical for actually connecting our towns and getting people access to good employment.” McMahon isn’t the only one who remains sceptical. In a statement, Mick Lynch, general secretary of the National Union of Rail, Maritime and Transport Workers – a union that campaigns for full renationalisation of the railways – acknowledged that the Williams-Shapps Plan for Rail represented “a substantial change for our industry”, but said it was also a “huge missed opportunity”. The government had “listened primarily to the big business community and designed a system that leaves the private companies in place, guaranteeing them profits while shifting all the risk onto taxpayers”, said Lynch.

We Own It, an anti-privatisation pressure group, told Spotlight that the review amounted to little more than “rearranging the deckchairs on the Titanic, with merely cosmetic changes that will leave private operators running rampant”. Campaigns officer Johnbosco Nwogbo called on the government to “ditch the ideological obsession with privatisation” and create a system in which “profits are re-invested directly into the service, not siphoned into the bank accounts of shareholders”.

“Under the old model, private operators took the risk”

Passengers board an old, nationalised British Rail train service in Paddington, London in 1975

Lynch and McMahon fear that the Williams-Shapps proposals will leave the state with the liabilities of running train services, while the private operators get the rewards regardless of whether passenger numbers are sufficient. “Under the old, privatised franchise model, the private operator took the risk and the reward,” says McMahon. “They were responsible for ticket sales, and they were responsible for making sure that they could cover the overheads and deliver profit. When you read the Williams-Shapps paper, it sets out really clearly how the current system is broken and doesn’t deliver. But then in the same breath says, ‘but we’re going to continue to allow the same companies to run it and then we’ll take the revenue risk’.”

And in the post-Covid world of homeworking, revenues are no longer guaranteed. As with much of current Conservative policy, the GBR plans seem to reside in a halfway house between muscular, big-spending, Labourite statism, and market-oriented, businessminded Toryism. Ghosts of Labour manifestos ridiculed and dismissed by Conservatives in the 2017 and 2019 elections abound. But according to polls – where the Conservative Party enjoys a steady and handsome lead – this so far looks to be a winning strategy.

Even before the Covid spending bonanza, Chancellor Rishi Sunak had announced a Budget that brought capital investment to its highest level since the 1970s, and the government’s Brexit negotiators had spent months locked in talks with Brussels over the UK’s right to opt out of state aid rules. Per-pupil spending in schools has been restored to pre-austerity levels. The NHS has seen a funding increase unmatched since the days of New Labour. The Tory Mayor of Tees Valley, a traditional Labour heartland, won re-election in May after he successfully nationalised Tees Valley airport (a move that was opposed by the local Labour MP, whose constituency has also now turned blue for the first time in 85 years).

The Tories seem content to borrow from their rivals

Earlier this year, the government voted through a rise in corporation tax (which Labour, again, opposed) and it is currently arranging for parts of the civil service to move from plush Whitehall to new offices in the north of England. The Treasury’s Green Book, which governs rules on best-value government spending, will be altered to privilege projects in poorer areas, and a new state-owned National Infrastructure Bank will spend on “Green Industrial Revolution” projects to support regional economies. This adoption of much of its political reasoning leaves Labour in unfamiliar territory, and perhaps understandably hoping that this strange era will conclude with a return to the kind of austeritydriven policies that generations of party stalwarts have grown up attacking. The alternative, of casting themselves as more fiscally responsible (read austere) than the Conservatives does not hold much appeal among the membership.

Labour MPs hope that once the “vaccine bounce” recedes, the post-lockdown feel-good factor fades, and Starmer’s opposition gets more visibility, something like politics as usual will return. “I think Keir’s doing a fantastic job in very, very difficult circumstances,” McMahon says. “I’m very happy about his leadership.” The forecast of an imminent end to the spending spree is not unreasonable. Come autumn, with the Comprehensive Spending Review due, more traditional Conservative instincts could kick in as Sunak reigns in No 10’s pandemic splurge. Once furlough ends, unemployment could skyrocket, and runaway inflation could even kick in as pent-up demand is unleashed, interest rates are held down, and QE continues.

But for now, the Tories seem content to borrow from their rivals – a hallmark trait of the party that prides itself on pragmatism over ideology. Disraeli “caught the Whigs bathing and walked away with their clothes” by extending the franchise to workingclass voters. Churchill acquiesced in Labour’s post-war nationalisations and Beveridge’s welfare state. And now the Conservative response to Covid-19 has been to break every rule of long-held Thatcherite orthodoxy on the role of government, the financing of debt and fiscal restraint. On transport, even McMahon concedes the Tories have embraced watered-down Labour policy not out of a desire to “nick our manifesto”, but in order to fix a system that “wasn’t fit for purpose”.

Whether this is an ideological conversion to social democracy or a technocratic policy tweak is immaterial: what’s certain is that it fits a wider pattern of shifts that have Labour on the back foot. GBR will be a litmus test of how likely the fleet-footed new Conservative agenda is to stumble on the party’s ideological roots – and how much further into Labour territory it is likely to venture if the scheme’s interventions fall short of solving Britain’s railroad woes.

A version of this article will appear in the forthcoming Spotlight issue on greener transport after COVID – on the newsstands Friday, 16 July.

The New Statesman is convening its first Regional Development Conference in Manchester this September, with a day of insights into local growth and the levelling up strategy. Speakers include Kwasi Kwarteng MP, Lisa Nandy MP and Jamie Driscoll. Find out more and register for free.

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