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Labor has pledged to fully renationalise the passenger rail network within a first term if it wins the UK general election and promised sweeping fare reforms to get people back on trains.
The opposition’s ambitious plan to complete the process within five years would bar private companies from operating passenger trains by placing each operator under state control as their contracts to operate trains expire during the next parliament.
If necessary, Labor plans to use break clauses to early terminate a handful of rail contracts that run into the 2030s.
The decision would largely reverse the Conservative government’s privatization of railways in the 1990s. But the plan sparked warnings in the private sector about higher costs and reduced services.
Louise Haigh, Labour’s shadow transport secretary, said the renationalisation of rail companies would represent “the biggest overhaul”. . . in a generation.”
“After years of dysfunction and waste, our broken railways are no longer able to meet the needs of modern Britain. . . Doing nothing is simply not an option,” she said.
The Labor plan, which will be formally unveiled on Thursday, would see a new simplified ticketing system to replace the current byzantine fare system, which uses multiple ticket types and discounts, according to proposals seen by the Financial Times.
The party would also introduce usage-based ticketing, automatic refunds for delays and cancellations across the network, and a “best fare guarantee” to help users find the cheapest fare.
The railway would be overseen by a public body set up independently of the government.
Private companies currently operating trains on the UK rail network, including First Group, Abellio and Go-Ahead, would be forced to largely withdraw from the rail industry.
But Labor said it was committed to continuing the small-scale “open access” model, in which companies – such as Heathrow Express and the London-Edinburgh service Lumo – pay a fee for access to the rail network rather than government involvement in their business or finances.
Rolling stock leasing companies (Roscos), owned by financial investors and set up after privatization in the 1990s to supply new trains to Britain’s railways, will remain in place. These have proven to be extremely profitable and are generally considered too expensive to renationalize.
The privately run rail companies have been lobbying Labor for months to ensure they retain some role in running passenger services if the party wins an election expected this year.
But they have lost the argument for even acting as contractors under strict Whitehall supervision.
Andy Bagnall, managing director of Rail Partners, which represents the rail industry, said: “Nationalization is a political rather than a practical solution which will increase costs over time.”
“The increased cost to the taxpayer of nationalization due to the loss of commercial focus of private railway companies will result in either a reduction in train services or increased subsidies,” he added.
Separately, private operators warned that nationalization of rail companies could result in the public sector incurring up to billions of pounds in new liabilities from long-term rolling stock leases.
Large parts of the rail network have already returned to state control due to poor performance or financial problems.
Almost 40 percent of long-distance passenger rail travel in Britain now occurs on trains directly controlled by the state, including LNER, Northern and TransPennineExpress.
The government is hiring private companies to run the rest of the network but has taken on all commercial risk after the old franchising model was swept away at the start of the Covid pandemic.
The Conservatives have promised to introduce rail reform if they win the next election, including introducing a new government agency to oversee the sector and granting greater commercial freedoms to private rail companies operating in the sector.
The rail industry has expressed support for the plan, pointing to the doubling of ridership between the mid-1990s and 2019 as evidence of the private sector’s successful role in rail.
Huw Merriman, rail minister, said Labor’s plan was “unfunded” and would “do nothing to improve the reliability or affordability of trains for passengers”.