Unlock Digest Editor for free
FT Editor Roula Khalaf picks her favourite stories in this weekly newsletter.
The Labour government is set to introduce legislation to nationalise the railways as a matter of priority, with takeovers of some of the UK’s busiest operators expected to take place within months.
Nearly three-quarters of train journeys in Britain are expected to be made on state-owned rail services within a year under Labour’s plans, according to analysis of official data by the Financial Times.
Transport secretary Louise Haigh has secured priority status for a bill on public ownership of passenger rail services, which is due to be introduced into the House of Commons on Thursday.
This law aims to renationalize the rest of the railway after about 40 per cent of the service was taken over by the previous Conservative government because of operator failures over the past decade.
“We are looking to implement this law very quickly, it is a law that can be enacted quite quickly,” said a Transport Ministry official.
However, officials are uncertain when the bill could receive royal assent as there is a long recess in August and next week will be devoted to general debates on the broader policy agenda set out in the King’s Speech.
Under the bill, train operating contracts leased to private companies would be returned permanently to the government upon expiration.
But industry bosses are preparing for ministers to implement break clauses in these contracts to get operators up and running sooner, to fulfil the government’s promise to get the job done in this parliament.
The franchises with termination clauses due to expire in the near future are Greater Anglia and the West Midlands on September 15, but such legislation is unlikely to be passed at this point.
However, five franchisees have break clauses that will come into effect in the first half of 2025, by which time the bill could already be law. These are Chiltern and Thameslink, Southern and Great Northern on 1 April next year, South Western Railway on 28 May, Great Western on 22 June and c2c’s Essex Thameside on 20 July.
If all this were handed over to the public, 72 per cent of passenger miles travelled on the UK’s mainline rail would be on state-run trains by the end of July 2025, according to FT analysis.
The FT identified which rail companies had contracts that were due to expire in July 2025 or had been taken over directly by the state, then calculated what percentage of total miles travelled by these lines.
Industry executives said they expected the operators to be merged into a transport department unit known as the Operator of Last Resort (OLR), which runs several lines forced to be nationalised by the previous Conservative government, including LNER and Northern.
Industry bosses have warned that the scale and complexity of a rapid nationalisation could put pressure on OLR, which employs around a dozen people.
Andy Bagnall, chief executive of Rail Partners, which represents private train companies, agreed the industry needed “radical reform”, but said cutting out the private sector entirely could increase costs over time.
Haigh has also promised to nationalise struggling operators more quickly if they breach contracts because of poor performance. She has been particularly critical of Avanti, which runs trains on the West Coast mainline linking London with Birmingham, Manchester, Liverpool and Glasgow.
“We are seeking legal advice and considering our options at this time,” a government official said.
Avanti’s termination clause does not come into effect until 2026 and industry executives have privately warned that unless the company clearly breaches performance targets, ministers will struggle to nationalise the company sooner.
In the longer term, the government plans to set up a new non-governmental organisation called Great British Railways to run the rail system, including trains and infrastructure owned and operated by Network Rail.
However, the law establishing the GBR, which is also contained in the King’s Speech, will take at least 18 months to pass through parliament, according to government officials.
In the interim, ministers will appoint a chair for the new “shadow GBR” comprising Network Rail, the Department for Transport and the Final Operator working closely together.
