Should Britain’s railways be renationalised?

Published on Wednesday, 23 July 2014 10:39
Written by Daniel Mason

Labour plans to allow the public sector to compete for rail franchises risk appearing anti-business while not being radical enough for unions that favour full renationalisation, reaction to the proposals have suggested.

The move, agreed at the party's national policy forum in Milton Keynes at the weekend, would allow a publicly operated company to challenge private firms in the bidding process - following the success of the main line East Coast service that was taken into public hands half a decade ago.

But while business groups have defended the current franchise system and said the change would be costly for taxpayers, some unions have argued for full renationalisation and claimed to have the support of the public.

In a speech to the policy forum, Labour leader Ed Miliband said: "It is two decades since rail privatisation. That decision was all about dogma and nothing to do with passengers. Too often it put the profits into the private sector and put the risk onto government."

He said it was clear the East Coast franchise had worked under public control, adding: "So on the basis of value for money, let's extend that idea. And let the public sector challenge to take on lines. Let's end the situation where you can be a European public rail company and run lines here, but not if you are a public operator from Britain.

"Let's together set a new course for our railways which will be better for the taxpayer and properly serve passengers."

Should Britain's railways be renationalised?
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Critics warned that the policy could prove costly and that the current set-up was working well. Katja Hall, deputy director general of the CBI, which represents British industry, said: "The franchise system has delivered significant investment in our rail network and a more efficient service for passengers.

"It's vital that we have a system that continues to drive down costs and improve performance, underpinned by a fair bidding process based on merit. Every bidder must compete on those terms.

"But let's not forget that the bidding process costs - up to £10m per franchise - and all bidders must foot this bill. When the current system is already delivering well for passengers, there are legitimate questions about the potential cost to taxpayers involved in Labour's proposals."

For others, though, the proposal did not go far enough. The RMT transport union said it had produced "concrete evidence" that outright public ownership of the railways would be a key factor at next year's general election.

A survey conducted in four marginal seats, described as Labour/Conservative battlegrounds, found support for renationalisation across the political spectrum.

According to the research - carried out by the polling company Survation – 70% or more of Labour, Liberal Democrat and Ukip voters support bringing their local railway under public control, as well as 45% of Conservatives. Some 74% of all respondents said railways under public ownership would be better or at least as well run as they are now, and 50% thought fares would be cheaper.

The acting general secretary of the RMT, Mick Cash, said Labour's proposals were a "total cop-out".

"Let's be clear, RMT wants to see the entire rail network taken back into public ownership, closing the door on two decades of greed and exploitation," he said. "That position is supported overwhelmingly by the British people."

The franchise system could not be reformed and "the only workable solution is to take the whole lot back under public control full stop", he claimed.

Unions affiliated to Labour, including Aslef, TSSA and Unite, have agreed to support the Labour plans. Meanwhile the coalition government is committed to returning the East Coast franchise to the private sector later this year.

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