Posted 18th July 2014 | 10 Comments

Renationalisation to be 'resisted' by Labour

LABOUR leader Ed Miliband is reported to be resisting pressure from trade unions to renationalise the rail industry. The Labour leadership is said to be moving towards a hybrid system, which would allow state-run bodies in Britain to bid for franchises or 'operating contracts'.

When the railways were being privatised in the 1990s, the Conservative Government of the day refused to allow the British Railways Board to bid for franchises in competition with private sector bidders, and the BRB ceased to be a train operator in 1997.

Rail policy will be discussed by Labour's National Policy Forum this weekend. The RMT and other unions want the present franchises to be the last, simply ending painlessly when the present contracts run out and therefore achieving gradual renationalisation. However, new contracts awarded over the past couple of months include a new 15-year franchise for National Express to operate Essex Thameside (c2c).

East Coast has been the focus of much of the lobbying. The Department for Transport is progressing with the letting process with the intention of handing over the operation to a private sector company before next May's general election, but the return of East Coast to the private sector is being resisted vigorously by unions.

The RMT has also been concerned that the East Coast service specification could mean fewer services from Newcastle and local stations in Northumbria.

Earlier this year, RMT acting general secretary Mick Cash said; “It is scandalous that the Government are prepared to give the private sector vultures hovering over the East Coast route a green light to rip up the timetable and to leave passengers and communities cut-off and stranded in the name of private greed and private profit.

“The campaign to stop Ministers from wrecking the highly-successful, publicly-operated East Coast services in order to suit their own ideology, and to line the pockets of their mates in big-business, will be stepped up. After two previous private sector failures we have no intention of allowing a third reckless gamble on the East Coast that would not only destroy the best-performing rail operation anywhere in Britain but also leave whole communities without proper transport links.”

Reader Comments:

Views expressed in submitted comments are that of the author, and not necessarily shared by Railnews.

  • Roshan, Leeds

    I would certainly prefer to see more competition between franchises. The whole system needs to be re-structured I think, so that maximum competition between companies occurs. Freight companies compete with each other and look how successful the UK freight industry is. In the golden days of the railways in the UK it was all private companies competing with each other. I would like to return to that sort of structure. Open-access operators seem to resemble these companies, and they should really be encouraged. I would still like to see Network Rail owning the infrastructure, but leave maintenance to TOCs.

  • david c smith, milton keynes

    The government run Direct Rail Services may well have done a good job of day - to - day running of East Coast , but would it be capable of innovation, enterprise and associated invertment that I thought had been the main justification for privatisation in the first place ?

  • Dave, Durham

    We already have a state owned railway company, and it is very well run. Direct Rail Services (DRS) maybe its about time they were allowed to run franchises.

  • Tony Pearce, Reading

    Privatisation doesn't mean more expensive, whatever it looks like on Paper. First of all any privatised Company pays Tax on all its Profits which is now down to 21%. Secondly most Government Pensions are paid out of current Taxation - that means the Government does not save money into a pot for when its employees retire. Privatised Comapnies do have to put money aside for every employee for every month they work. I presume that this will apply Railway Employer pensions will be the same if Nationalised. I believe that there is a 'big hole' in the pensions of East Coast Main Line employees which will have to be made good by their new 'owner'.

  • david c smith, milton keynes

    Partial renationalisation seems to me to be the wrong answer to the right question. Yes, real , effective competition is needed ; this would give a better, more flexible means of getting accountability to stakeholders together with greater freedom to innovate and invest, than franchising. Wherever possible, services should be given over to multiple competing TOC open access.

    Wherever operations are natural monopolies with captive markets ( mainly commuter and local ) is where a form of public ownership is most needed - hopefully some kind of direct democracy with directly elected local management boards , bypassing townhall / Whitehall buraeucracies.

    Over time, as each franchise comes up for renewal, they can be replaced by the above arrangements.

  • Melvyn Windebank, Canvey Island, Essex

    How ironic that in the rush to privatise the railways ahead of certain electoral defeat the government out lawed British Rail from bidding for franchises and yet did not bar foreign state owned railways like DB or SNCF !

    If we were to set up a state owned railway to bid for franchises it would need to be more independent of government than DOR and more akin to the bus company former Mayor Ken Livingstone set up to operate bus routes in order that TFL knew true operating costs of buses to judge tender awards against. Of course soon after Tory Mayor Boris Johnson was elected he closed the company and put limited number of routes out to private tender.

    If a state owned franchise was set up perhaps it could even tender for EU contracts and earn profits for British taxpayers !

    The main danger for Network Rail new set up is it could find itself back in the bad old days of BR who competed for money with NHS and so a set up which ensured the record takings of railways at present stayed with the railways and not siphoned off is needed . Whether NR could have a set up like the BBC state owned but at arms length bit like re BR is worth asking?

  • Ian Shaw, taunton

    Some parts of our network are already in state hands. Sadly, they are owned by foreign governments, just like our utilities

  • Lutz, London

    Utter rubbish: all that the recent Labour Party announcments show is that Ed is on teh hook to the unions, and they will try to roll us back to the turmoil of the 70s.

  • Tony Pearce, Reading

    Will Nationalisation address any of the big problems facing the Railway ? We all know that over-crowding in London and the South-East, and ticket prices, are the big moans from Travellers. Can a Nationalised Operator squeeze any more, longer or double-decker trains into the Network. No. Can a Nationalised Operator lower the fares ? No. If Nationalised, every time a train is over-crowded or late, or if a fare increase is announced the passengers will blame the Government. So Nationalisation won't happen whoever wins the next Election.

  • Chris Neville-Smith, Durham

    I actually quite like this compromise. My problems with franchising was never that the trains were sometimes late, or overcrowded, or expensive - those problems are mostly down to how much money the government is prepared to invest. Rather, my concern was lack of benefits. I don't mind someone taking a small margin as profit provided we get something to show for it through upfront private investment. I'm not convinced we're getting that.

    So, this seems a good solution: if you want to be a private operator, you've got to prove yourself. By competing against a state operator, you'll have to show what you can offer than a state-run company can't. So may the best bid win.