First published in Rail Review

Within the last few weeks, the government has assumed direct responsibility for Britain’s railways - this is a watershed moment for the industry. The private sector has lost the argument over nationalisation and the focus will shift towards safe implementation, but that doesn’t mean it is wrong about the principles. The government – and Shadow Great British Railways – must now be held to account for improving the service for passengers. 

The Passenger Railway Services (Public Ownership) Bill received Royal Assent at the end of November. Despite the hiccup of a change of Transport Secretary, the King’s signature triggered notice being given a few days later to the first three train operators that their contracts are ending and they are being transferred to the newly renamed Department for Transport’s Operator. 

Rail Partners and its members have been calling for radical reform of the railway for several years and want the same outcomes as the government – a better railway for those who use it and those who pay for it. Since the train companies’ submission to the Williams Review in 2019, we have consistently argued for greater public control through a new arm’s-length body – effectively Great British Railways (GBR) – while harnessing train companies to drive down subsidy in a way that the evidence here and across Europe shows they are able to achieve more effectively than a state monopoly can alone. 

Simply changing who runs the trains won’t mean more reliable or affordable services, regardless of what some proponents claim. Public sector operators are already running a significant proportion of Britain’s trains – you could travel from Dover to Inverness uninterrupted on publicly-operated services. And yet there is no evidence that public operators are performing any better than private ones. One of the largest train operators, Northern, has been in public hands for four years and the latest ORR data shows it had the highest cancellation rates of any train operator, and its punctuality and reliability also declined over the last year. LNER and Scotrail have both seen high-profile industrial action disrupting services. And, the latest annual industry finance data shows public sector train companies increased their subsidy by around half a percent (0.45%) compared to the previous year, whereas private sector train companies reduced subsidy by over a quarter (26%). Moreover, over six in ten of the delay minutes experienced by passengers are the responsibility of the public sector infrastructure manager, Network Rail, mostly due to infrastructure issues such as points or signal failures. This is not to criticise the public sector per se – however, it is to say that Network Rail, the DfT Operator, and the department itself, are no more likely to fix these problems than if private operators remained involved. 

There is also no evidence that ejecting private operators will bring down fares. It is true that there will be a one-off saving of the fees that are currently paid to operators – but they equate to less than 1% of the overall cost of running the railway. And the government announced at the Budget in October that fares will rise by 4.6% next March. There is no realistic prospect of a fares freeze, let alone cheaper fares, as a result of nationalisation. 

If anything, the loss of the service that train companies provided in return for their fees – driving growth and bringing down subsidy – means it is more likely that fares will continue to rise to plug the gap in the railway’s finances, as the Budget document explicitly stated. Only by closing the yawning deficit that the pandemic opened up, will there be money in the system for the investment that is needed without further increasing fares. The private sector had a track record of delivering growth to reduce subsidy – that is exactly what is needed again now. It is counter intuitive to remove the one part of the system that has a proven ability to rise to the challenge just at the moment it is needed most. This is especially true when every comparable European railway is trying to use competition between operators to drive better outcomes for taxpayers and passengers. 

But, with Royal Assent, the course is set. Train companies have lost the argument over nationalisation. While it was not debated as a central issue during the recent election campaign, it is long-standing Labour policy since Jeremy Corbyn included it in his 2017 manifesto, and there is no arguing the mandate that the government has to pursue the policy. So the focus for train companies will now shift to implementation, transferring services in a safe and sensible way. Our trade body, Rail Partners, has decided to wind itself up in good order next year. 

As government takes over responsibility, the test is how it will deliver for passengers and taxpayers while ensuring a favourable environment exists for freight and open access operators to flourish, following the commitment to keep both in the private sector. 

This first piece of rail legislation only serves to ban the future contracting of train companies to run services. While Shadow GBR is an attempt to bridge the gap, all the difficult questions have been parked until the much larger Railways Bill, expected in 2025. The new Transport Secretary has the more challenging job in the second Bill of explaining how GBR, the regulator and the passenger watchdog will be configured to drive the necessary reductions in subsidy while ensuring the passenger experience is one of more reliable and affordable train services. 

For the remaining private sector operators running open access and freight services, as well as other non-GBR operators, including devolved operators in the public sector, the big question for the second bill is the design of GBR and how the system can manage the inherent conflict of interest of the infrastructure manager running its own trains in competition with other users. 

With the watershed of this first Act, the government and Shadow GBR have now taken responsibility for what happens on the railway. But with that power comes the accountability for ensuring the problems in the system are fixed.