Shadow chancellor Rachel Reeves has rushed to reassure business over Labour’s rail plan (Picture: Flickr/ Keir Starmer)
Labour’s plan to “renationalise the railways” is an illusion. Of course, any interference with the gravy train of profits and shareholder dividends is enough to enrage the Tories and the transport bosses. And anything that blunts the rail robbers is welcome.
But it’s only a small shift from the direction of travel already established under the Tories. Labour would take some rail companies into state control as their contracts expire—but not before. That will take at least five years.
Already 40 percent of passenger mainline rail travel in Britain is now on trains directly controlled by the government, including LNER, Northern and TransPennineExpress. The rail fat cats didn’t think they could make enough money on these routes, or the service was so appalling that the state had to move in.
The government contracts private companies to run the rest of the network. But it has assumed all the commercial risk after the old franchising model was swept away at the start of the Covid-19 pandemic.
Labour also said it was committed to continuing the “open access” model. This sees private companies—such as Heathrow Express and the London-Edinburgh service Lumo—access the rail network without government involvement in their operations or finances.
Rolling-stock leasing companies, or Roscos, owned by financial investors and set up to supply new trains following privatisation in the 1990s, will remain. There is big money siphoned off here. Roscos have paid out at least £1.5 billion in dividends to their owners since 2016.
Labour is also not planning to nationalise rail freight companies. The word “nationalisation” doesn’t appear in Labour’s plan. Shadow transport secretary Louise Haigh said her party were not “ideologues” and that it was right to use private companies where they “add value”. And there are no plans to renationalise water, gas and electricity, Royal Mail or other key sectors.
Unions cheered Labour’s plan, but couldn’t completely ignore its limitations. The RMT union said, “We strongly welcome these bold steps to fix 14 years of Tory mismanagement of our privatised railways and Labour’s promise to complete a transition to public ownership within its first term in office.
“For too long private companies have made millions in profit from taxpayer subsidies. This announcement however should be a first step to completely integrating all of our railway into public ownership.
“It is time for a railway fit for the 21st century that serves the public, not the privateers and shareholders.”
Rail bosses say they will launch a “fightback” against the Labour strategy. But to reassure the ruling class, shadow chancellor Rachel Reeves said in The Times newspaper this week, “The next Labour government is going to be the most pro-business government this country has ever seen.”
She said a Starmer government will be “More pro-business than Tony Blair’s administration, because I genuinely believe the way to improve living standards and to achieve our potential is by unlocking private business investment.
“I recognise that is different from the Labour parties that went into the last few general elections.”
The rail plan is not a shift of the route for the next government. The whole industry should be renationalised immediately, without any compensation for the bosses and the shareholders.
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