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The Labour party has pledged to fully renationalise the passenger rail network within a first term if it wins the UK general election, as it promised sweeping reforms of fares to draw people back on to trains.
The ambitious opposition plan to complete the process within five years would shut private companies out of running passenger trains by folding each operator into state control as their contracts to run trains expire over the course of the next parliament.
Where needed, Labour plans to exercise break clauses to end early a handful of rail contracts that continue into the 2030s.
The decision would mostly reverse the privatisation of the railways by the Conservative government of the 1990s. But the plan has prompted warnings from the private sector of higher costs and reduced services.
Louise Haigh, Labour’s shadow transport secretary, said renationalisation of train operating companies would deliver “the biggest overhaul . . . in a generation”.
“After years of dysfunction and waste, our broken railways are unfit to meet the needs of modern Britain . . . Doing nothing is simply not an option,” she said.
Labour’s plan, which will be formally unveiled on Thursday, includes a new simplified ticketing system to replace the current byzantine fare system that uses multiple ticket types and discounts, according to proposals seen by the Financial Times.
The party would also roll out pay-as-you-go ticketing, automatic refunds for delays and cancellations across the network and a “best price guarantee” to help users find the cheapest fare.
The railway would be overseen by a public body set up at arm’s length from the government.
Private companies currently running trains on the UK rail network, including First Group, Abellio and Go-Ahead, would be forced to largely exit the rail industry.
However, Labour said it was committed to continuing the small-scale “open access” model under which companies — such as Heathrow Express and the London-Edinburgh service Lumo — pay a fee to access the rail network and have no government involvement in their operations or finances.
Rolling-stock leasing companies, or Roscos — which are owned by financial investors and were set up to supply new trains to the UK railway following privatisation in the 1990s — will remain. These have proved highly profitable and are widely considered too expensive to renationalise.
The privately operated train companies have spent months lobbying Labour to let them maintain some role in the running of passenger services should the party win the election expected this year.
But they have lost the argument to even operate as contractors under strict oversight from Whitehall.
Andy Bagnall, chief executive of Rail Partners, which represents the rail industry, said “nationalisation is a political rather than a practical solution which will increase costs over time”.
“The increased costs to the taxpayer of nationalisation due to the loss of commercial focus from private train companies will lead to either reduced train services or increased subsidy,” he added.
Separately, private operators warned nationalising train companies could lead to up to billions of pounds of new liabilities from long-term rolling stock lease contracts being added to the public sector.
Large parts of the rail network have been taken back into the control of the state because of poor performance or financial problems.
Almost 40 per cent of passenger mainline rail travel in Britain is now on trains directly controlled by the state, including LNER, Northern and TransPennineExpress.
The government contracts private companies to run the rest of the network, but has assumed all commercial risk after the old franchising model was swept away at the start of the Covid-19 pandemic.
The Conservatives have pledged to introduce rail reforms if they win the next election, including introducing a new state body to oversee the sector and give private train companies operating underneath it greater commercial freedoms.
The rail industry has expressed support for the plan and has pointed to passenger numbers doubling between the mid-1990s and 2019 as evidence of the private sector’s successful role in the railway.
Huw Merriman, rail minister, said Labour’s plan was “unfunded” and “will do nothing to improve train reliability or affordability for passengers”.