Posted 11th May 2017 | 6 Comments

Labour manifesto includes slow fade-out for franchises

LABOUR would start a rolling programme of bringing private sector rail franchises back into public hands, according to a leaked version of the party's general election manifesto which has been circulating today.

Assuming that the leak is accurate, if Labour gained power next month it would gradually renationalise passenger operations by simply not renewing franchises when they expire. The process would take a long time to complete, because the recently renewed c2c contract is due to run until November 2029, while Greater Anglia and Northern are both set to continue until 2025.

Other measures would include a fares freeze, universal WiFi and an end to driver-only operation.

The document continues: “A publicly owned railway system can be the backbone of our plans for integrated transport. It will be built on the platform of Network Rail, already in public ownership, and consider establishing a new public rolling stock company.”

The party is also undertaking to complete HS2 and boost regional economies by investing in related transport schemes, such as ‘Crossrail of the North‘.

Shadow chancellor John McDonnel said the leak was ‘disappointing,’ and that the document has yet to be signed off by 80 or so Labour figures. He added: “Every policy will have a costing and a funding source identified."

The industry has been considering the implications.

Rail Delivery Group chief executive Paul Plummer said: “Together our industry is investing, competing and innovating to improve as one team. Our promise is to deliver 6,400 extra services a day and 5,500 new carriages by 2021, part of a £50 billion-plus upgrade plan to give better journeys for passengers and make local economies stronger and fairer, now and for the future. 

“These improvements are underwritten by a £2 billion turnaround in the railway’s finances as our railway has become one of the safest and fastest growing in Europe since franchising was introduced.” 

Some industry observers remain uncertain. Dr John Disney, who is a transport researcher at Nottingham Business School, said: “Previous Labour administrations looked at renationalising the railways and decided that it was neither practical, affordable or desirable. Directly Operated Railways have indeed taken on franchises when the private sector has defaulted and this option should remain as a last resort. However DOR has not invested in its operations and has merely been a holding company pending appointment of a new franchise. 

“While some franchises have underperformed others have received high customer satisfaction scores and have good levels of punctuality, others have inevitably underperformed. This is in line with all sectors of business. It is disappointing that many rail franchises have ended up in the hands of other state operators and it would be interesting to see what effect a policy of requiring all franchisees to be dominantly privately owned would have.

“As regards freezing rail fares does this also mean that all rail employee salaries will be frozen? It would be better to regulate all fares with capped increases each year in line with inflation. At present, occasional peak time travellers are heavily subsidising commuters with season tickets.”

Meanwhile, the RMT has been campaigning for a ‘maximum vote¹ in support of Labour.

Speaking before today's leak, the union's general secretary Mick Cash said: “Jeremy Corbyn is the genuine article who has a vision of Britain based on hope not fear that delivers for working people. He has pledged to put transport, and the renationalisation of our railways, right at the top of the agenda. That’s a policy that is backed by 70 per cent of the British people and stands in stark contrast to the privatised racketeering on our tracks under the Tories.”

Reader Comments:

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

  • david c smith, Bletchley

    I have lived ,as a consumer, through the era of nationalised industries, with their innefficiencies and customer unfriendliness and through the subsequent piratical, exploititive " supercharged" capitalist times. Just going back from the latter of these to the former isn't going to solve anything.

    It seems high time the political class thought up a better alternative, not least as applied to our railway.

  • MikeB, Liverpool

    If you think about it, the railway signalling and infrastructure is still owned by the taxpayer and managed by Network Rail - a public sector company. Passenger services are indeed operated by "private-sector" companies (albeit some are commercially owned by foreign governments) but the Department for Transport chooses the operating companies and specifies the level of services to be run throughout the duration of the franchise. Surely therefore, apart from, say, the freight operators, the railways are still nationalised.
    [You could add the ROSCOs and open-access passenger operators to the private sector list, but otherwise there is not much else to nationalise, indeed. Presumably train builders -- which include a former BR workshop in the case of Derby -- are not on Labour's list.--Editor]

  • James Dawkins, Sheffield

    As a passenger, it's often hard enough to find the cheapest fare within a single company, given all the different types available with equally opaque names and strange rules like which station you're allowed to pass through en route to your destination. If we had to choose between fares from a variety of companies on the same route, it would be even more chaotic, especially for regular passengers with season tickets or a particular company's smart card.

    When the same bus routes are operated by multiple companies, they often charge different fares. Remembering which company charges what is a pain, and it's a double pain when you have a ticket valid on one company and another company's bus turns up. This kind of competition free-for-all doesn't work, and it's totally passenger unfriendly.

    How other commenters can characterise a publicly-owned and operated railway as a "monopoly" I don't understand.

  • Tony Pearce, Reading

    Rail Freight has been a perfect Privatisation because there is Competition and Customers often switch the company they use. The Passenger side has not been as good because the only competition occurs during the re-franchising period and then the winners behave as Monopolies. Creating a Single Monopoly of the other current Monopolies seems utterly stupid. We need the Big Franchises divided up into much smaller competing Franchises. The reasonable successful Chiltern Trains competes with others from Birmingham and Oxford. Competition is the answer.

  • Douglas, Edinburgh

    While franchising hasn't been a total success it also hasn't been a total failure either

    Public ownership isn't going to be the answer as there is no incentive to compete so therefore no incentive to innovate. Freezing ticket prices while ramping up wages and halting efficiency initiatives doesn't add up to me unless we end up paying for the excess via taxation

    At least competition encourages investment albeit with the end objective being profit

    Inter-operable routes do provide choice and competition for consumers however the majority of franchises do not. Open access has proven to be a good idea (in my view) and is probably the best way to force incumbent franchise holders to keep on their toes

    The bottom line is that the paying public are price and comfort sensitive for longer leisure/business journeys and for commuters reliability and journey times are key (and seats are nice). The DfT has gone some way to ensuring improvement with franchise CO's however I'm sure that more could be done

    Re-nationalisation and more power to the unions just feels like a massive step back with new rolling stock being delivered and being on the brink of changing the way we buy and consume rail travel

    Surely the RMT's Corbyn supported campaign of industrial action demonstrates that completely? If the agenda here is preserving the status quo, keeping jobs as they are and empowering Union activists then yes it would be an expensive way of doing this.

  • Melvyn Windebank, Canvey Island, Essex

    Right wing press reaction to this announcement has been to describe it as " back to the 1970s!" Which is rather ironic given they are the most avid supporters of Brexit which is doing just that !

    Of course just like Humpty Dumpty I doubt if it's possible to put British Rail together again given how long it has been since it existed and it's not necessarily the model fit for the 21st Century vas it was in 1948 .

    Of course Network Rail is already in the public sector but only covers a fraction of the responsibility that BR had .

    That's not to say the present franchise system is working given how the recent SWT franchise only attracted a single bidder to compete with present franchisee despite the franchise being a franchise that returns a surplus and has an almost guaranteed market of captive commuters.

    In fact while Brexit has had no affect to date it's still not guaranteed that state owned railways in EU countries will still bid for franchises once we are outside the EU and even more importantly The Single Market and European rail regulations.