Navigating Rail Reform: The path to renationalisation

With a new government now in power, elected on promises including the renationalisation of the railways within five years, significant changes are on the horizon. Unlike the swift cancellation of the Rwanda Bill, rail reform presents a more complex challenge.

The railway industry is already largely under public ownership. Network Rail has been publicly owned since 2014, and nearly half of the network is managed by the Operator of Last Resort or devolved administrations. The Labour Government plans to build on the groundwork laid by the previous Conservative administration, which initiated reforms based on the Williams Review.

The Williams Review highlighted issues such as fragmentation, waste, and bureaucracy among private operators, and the disputes over responsibility for delays and cancellations between track and train operators. This led to the creation of Great British Railways (GBR), an arm’s length body to oversee the entire railway system. The new government intends to continue with this concept and further renationalise existing franchises as their contracts expire, aiming to save an additional £700 million on top of the £1.5 billion savings projected from the creation of GBR, according to the new Secretary of State, Louise Haigh. By waiting for franchises to end naturally, the government avoids paying taxpayer-funded compensation for early contract terminations, although poor performance by operators might necessitate such actions.

Haigh also aims to prioritise customers by simplifying the ticketing process, eliminating multiple ticketing options, and empowering the Office for Rail and Road to hold the industry accountable. These plans have garnered public support, with a recent YouGov poll showing 76% approval for renationalisation.

What does this mean for the industry? The reforms promise to reduce ticket prices by 18% and introduce benefits like automatic delay compensation, cancellation refunds, and a best price guarantee, which is good news for passengers. However, unions have quickly secured significant pay raises and continue to demand more, potentially leading to a talent drain from the sector. The current uncertainty is making the railway industry a target for employers in more stable and attractive sectors like energy and renewables. If the railway sector cannot compete financially or offer clear career pathways, it may face challenges ahead. Technological advancements such as driverless trains could help, but union resistance is likely.

In the future, we might see the end of individually operated Train Operating Companies (TOCs), with all services under the GBR banner and uniform terms and conditions, reminiscent of the old British Rail days. While some may recall British Rail with nostalgia, noting more comfortable seats and fewer delays compared to recent times, let’s hope the reforms avoid a return to the less desirable aspects, like the infamous curled-up sandwiches.