by Phil Marsh

Call to renationalise the Railways

Published: 6th May 2014

Labour’s call to revert the railways to state ownership – we look at the implications

Sunday Newspaper The Observer carried a letter from Labour Party candidates on May 4 calling for a renationalisation of our railways in 12 months time after the election. examines the reality of this and what would need to be done and how it might affect passengers.

Previous Political Rail History

There have been four major reports radically changing the railways in the last 60 years and these are:

1955 Modernisation Plan

1963 Beeching Report

1982 Serpell Report

1993 Railways Act

All these reports were Government instigated and their respective implementation was seriously hampered by politicians in all corners as they argued to score political points. This meant that the thrust of them was lost as the grand plans were scaled back by a change of Government combined with a change of policy.

And in fact, in the case of Serpell, it was rejected by the Thatcher Government as a set of proposed rail closures too far!

Privatisation is 20 years old

After the 1992 Election, the Railways Act was enacted and from April 1994 British Rail (BR) was split into over 100 companies who each had to make a profit including Railtrack.

Successive Governments set up various departments to oversee rail policy;

OPRAF – Office of Passenger Rail Franchising which was taken over by The

SRA, The Strategic Rail Authority which in turn became subsumed by The DfT, The Department for Transport.

Each organisation brought a railway reorganisation and in such times, staff are understandably more concerned about their jobs so actual train and network performance has been proved to decline.

History is not on their side

Successive Governments have also reneged on their election promises. For example, in the 1997 election campaign, Labour boasted that they would renationalise all franchises and Railtrack.

What actually happened was the previous Government rushed to let all the franchises before the election, many were pretty much given away so they could boast of a successful rail privatisation. Labours position radically changed when they left the fragmented railway as it was reversing their election pledge.

But as time went on, the Conservatives admitted that they had got rail privatisation wrong and apologised for the complex system they introduced at a cost of Billions of pounds to taxpayers.

Privatisation = Politicians off our backs

And Railtrack Chairman Sir Bob Horton told senior managers at Christmas 1995, six months before Railtrack was floated on the Stock Exchange, that once they were private, the politicians would be off our backs and that we could get on with running the railway.

The political posturing drastically reduced the price of selling railway assets such as the Rolling Stock Companies (ROSCOS) and the first franchises were pretty much given away to enable the politicians to boast that they had bidders. For example, the Special Trains Unit was sold for little over £100,000 but it was announced as a million pound deal.

So in May 1997 when Labour came to power, they carried on with the system and so reneged on their election campaign. But they did write a ten year plan, which was never delivered. Then at the next few elections, the Conservatives admitted they botched rail privatisation and reorganised the political side of the railways.

Franchise financial meltdown

The Department for Transport has carried on with the franchise system and cost taxpayers hundreds of millions of pounds in the last two years. This was after the West Coast Franchise award to First Group was challenged by incumbents Virgin who won. Most of the franchises have now been extended to after the next election.

Real Competition and who pays for delays?

Politicians insist that there should be more competition on the railways as it is a monopoly but the real competition is the road network.

There is a performance regime, a monitoring system which employs around 300 staff in the rail industry. Take the example at Birmingham New Street on Thursday May 1 at 1215hrs. The 1320hrs Cross-Country service to Plymouth had been delayed by an incident at Darlington while a northbound train had been delayed by a late running FGW service outside Penzance.

What’s the relevance? There will have been dozens of staff arguing which train or who was to blame for the delay and this is a product of the private railway which should be modified. And the overwhelming majority of the delay payments will not have reached passengers as refunds do not kick in until a delay of over 30 minutes is made.

Fare’s Fair – Just the ticket?

The policy announcement calls for regulating fares which will artificially skew demand for seats and lead to more overcrowding, not less. This in turn will cause delays at stations as passengers fight for a seat and to get on or off services.

This will bring more complaints wand a call for more trains from passengers and as presumably the Government will continue to micro-manage the train building orders so who will benefit?

Capping fares will also reduce the amount of money available for investment as income will fall as more passengers does not equate to increased net revenue.

In BR days, funding was agreed on an annual financial year basis between the Government and the British Railway Board. Railways need a long term planning spectrum and associated funding. The benefit of the current system is the five year funding arrangement known as a Control Period. This allows Network Rail to plan investment such as the electrification programme.

East Coast wires crossed

Under BR, the East Coast main line was electrified in the late 1980s and despite the Government insisting it was done as cheaply as possible, it worked well until a decade ago. The increase in the amount of trains operating has worn out the electrical equipment and now it needs hundreds of millions of pounds spending on it to increase resilience and thus, reliability. Today, the Government calls this investment when much of it is catch-up maintenance.

And on January 29 ago at the unveiling of the Thameslink train, rail minister Stephen Hammond clearly said that East Coast Trains (ECT) management team had been prevented from bidding for that franchise because of their poor performance.

This was spoken into a microphone held by colleague Tony Miles of Modern Railways and the Minister was reminded that network Rail was to blame for 70% of the delays and not ECT, he denied this was the truth.

Previous West Coast Main Line fiasco

On the other hand, the West Coast Main Line 140mph upgrade project went terribly wrong 15 years ago and Virgin received hundreds of millions of pounds compensation when the line was only upgraded to 125mph.

The Government instructed Network Rail to start a 125mph timetable by 2003 or there would be no more rail investment. And this is why the engineering works have carried on at Watford, Bletchley, Milton Keynes, Rugby and Nuneaton subsequently. This was after NR announced that the work had been completed.

The reality looming is that in September when NR comes under Government control, NR will be renationalised so taking the franchises into government ownership will create a monopoly that is answerable to nobody.

Property development

Stations would only be modernised if a property deal could be found in BR days. Liverpool Street for example was only made possible by the Broadgate development that saw Broad Street closed and the land developed.

The Thameslink project was considerably helped when Holborn Viaduct was closed allowing City Thameslink to be built following another property deal. Under todays ‘private’ railway, stations are being modernised in what can only be called a success. Kings Cross, St. Pancras, Paddington, Edinburgh, Brighton, Manchester Victoria stations have seen massive improvements and the list goes on.

Many new services and routes have been operated, and although a few did under BR, Bathgate and The Robin Hood Line for example, it was always a funding struggle. Far more are being reopened now.

Set up to fail?

And how about Railtrack? Although Rail Minister Stephen Buyers effectively bankrupted them in October 2001 after the Hatfield crash. Its financial structure within the rail industry it can be argued, made it a matter of time before it failed financially given the star-model of payments associated with performance regime.

Network Rail a Government department from September

So it seems that whichever political persuasion the Government is made up of, politicians have a track record of interfering with the railway and increase costs. There have been very good Transport Ministers, but equally, many have been poor and not seemingly interested in their brief.

Network Rail will become a Government Department from September, so in essence the rail network is already to be nationalised because of EU legislation, which is where it all started in 1994!

Railway staff have learnt that a politicians promise is not something to rely on! Passengers would be well advised to take the same stance.

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