Will Labour’s plan make train tickets cheaper?

The newly-elected Labour government has recently unveiled its plans to renationalise the railways during the King's Speech on Wednesday. This announcement has raised many questions among passengers about what it means for their train journeys and whether it will lead to cheaper tickets. While the government has not made any promises regarding lower fares, they have introduced a 'best fare guarantee' to ensure that passengers always pay the lowest price for their travel. Additionally, they aim to simplify the process of purchasing cheaper tickets. However, railway expert Tony Miles, who has been involved in the industry for over 40 years, expressed skepticism about the potential savings. He indicated that the profit margins for private operators are already quite slim, which may limit the extent of any discounts that Labour could offer. To understand the implications of nationalisation, it is essential to look back at the history of the UK rail system. From the end of World War II until the 1990s, the railways were fully nationalised, meaning the government owned and operated all train services. However, in the 1990s, the railways were privatised, leading to a variety of train operating companies managing services. Currently, the infrastructure is overseen by Network Rail, while individual operators run passenger train services. In Scotland and Wales, the situation is different, as the devolved governments already manage passenger services, while Northern Ireland has a fully nationalised system. Labour's plans involve moving towards further nationalisation by establishing Great British Railways (GBR), a publicly-owned entity that would oversee the rail system across England, Wales, and Scotland. GBR would take over service contracts from private firms as they expire in the future. However, the government has not clarified whether GBR would purchase 'rolling stock,' which refers to the train carriages, from private companies, suggesting that leasing may continue. Furthermore, there is no indication that rail freight companies will be nationalised, as the government intends for GBR to support and promote freight operators instead. An independent watchdog called the Passenger Standards Authority is also set to be established, with the goal of improving service quality across various measures. Experts like Mark Simmons, deputy editor at International Railway Journal, have raised concerns about the funding of these initiatives and whether GBR will have the necessary expertise to operate effectively. Simmons warned of a potential 'skills deficit' at GBR, which could impact the rail systems across Europe. In comparison to the UK, other countries have different approaches to train management. For instance, Luxembourg operates a fully state-run system where all train journeys are free. In other European nations with more government control, train tickets tend to be significantly cheaper. However, these systems often rely on substantial government investment, which can lead to higher taxes. Tony Miles believes that the UK's franchising system, where the government owns the network through National Rail and awards contracts to private companies, was once the envy of Europe before the pandemic. He noted that passenger numbers increased due to this system, but the contracts established during the pandemic were rushed and overly generous. He pointed to successful examples like Transport for London and the Manchester bus service, where a state-run franchising system has worked well. Mark Simmons added that the perception of UK trains being inferior is misleading, as other countries are advancing with long-term planning for major projects. Regarding the financial implications of Labour's plan, if the government waits for the current franchise contracts to expire and takes over the services, it may not cost taxpayers anything. However, this approach would involve assuming the debts, leases, and liabilities of the current railway operators, including their pension funds and lease contracts for rolling stock. Labour claims that their plans could save taxpayers £2. 2 billion annually, but they have not guaranteed that all of this money will be reinvested into the railways. The timeline for these changes could be relatively quick, as many train operators' contracts are set to expire soon. Some train services are already under public control after being taken over by the government’s Operator of Last Resort. The contracts for various railway operators will expire by October 2027, with some having earlier 'core term' expiry dates that would allow the government to take control sooner. The expiry dates for private operators' contracts include South Western - May 2025, Essex Thameside (c2c) - July 2025, East Anglia - September 2026, West Midlands - September 2026, Chiltern - December 2027, Thameslink, Southern and Great Northern - April 2028, Great Western - June 2028, East Midlands - October 2030, Cross Country (Arriva) - October 2031, and West Coast - October 2032. The core term expiry dates for some operators are East Anglia - September 2024, Chiltern - April 2025, Thameslink, Southern and Great Northern - April 2025, Great Western - June 2025, West Midlands - September 2024, East Midlands - October 2026, West Coast - October 2026, and Cross Country (Arriva) - October 2027. The public operators include Caledonian Sleeper, East Coast (LNER), NI Railways, Northern, ScotRail, South Eastern, TransPennine Express, and Transport for Wales.