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Labour Says Its Plan To Nationalise The Railways Will Save Over £2bn A Year In Waste

Shadow Transport Secretary Louise Haigh and Mayor of West Yorkshire Tracy Brabin (Alamy)

4 min read

Louise Haigh, the shadow transport secretary, will claim on Thursday that Labour's plans to nationalise Britain's railways during its first term in office could result in waste being reduced by up to £2.2bn a year.

Haigh is expected to give a speech in central London, where she will set out how a Labour government led by Keir Starmer would bring the railways into a single public organisation when private rail contracts that are currently in place expire.

The opposition party, which polls continue to suggest is very likely to win the next general election, says it expects to complete the process of bringing ten operators into a unified state-owned railway body called Great British Railways within five years of being elected.

Prime Minister Rishi Sunak must call the general election this year, and at the moment it is expected, though not guaranteed, to take place in the autumn. 

In analysis of the policy shared with PoliticsHome ahead of the shadow transport secretary's speech, Labour says a publicly-owned national railway – led by "experts" rather than from Whitehall – could reduce waste by up to £2.2bn a year after five years, by doing away with fragmentation and bureaucracy.

The party reached this figure by combining government analysis contained within the 2021 Williams-Shapps Plan, which estimated that waste in the railways could reach £1.5bn a year after five years without reform, with its own analysis of the impact taking further steps to tackle waste could have. These additional steps, which go beyond the measures that ministers have discussed implementing but have not yet done so, could save an additional £680m a year after five years on top of the £1.5bn, according to Labour.

“The Conservatives admit that their failure to deliver rail reforms have come at a huge cost to taxpayers. That dither and delay will end with Labour," Haigh is set to say.

“Labour’s plans for a publicly owned and passenger driven railway will deliver for taxpayers by cracking down on the fragmentation, waste, and bureaucracy inherent in today’s railways, and by stopping profits leaking out to private operators.”

Labour argues that bringing the railways into public ownership will create a number of opportunities to reduce waste. They include taking back shareholder dividends, removing the costs associated with friction between Network Rail and different train operators, and saving the Department for Transport money that would have been spent on running contract competitions, according to the party.

Haigh first committed to nationalising the railways at Labour Party conference in Liverpool in October, telling party members public ownership is "where they have always belonged". 

"There is no point offering infrastructure announcements of investment unless we radically reform railways as well, because for too long decisions around investment and infrastructure have been made completely divorced from the reality of the way railways are run," she said.

Since then, Starmer's party has been working on fleshing out the details of the policy, and says it has carried out "extensive" consultation with the industry throughout the process. In recent years opinion polls have consistently found public support for nationalising the railways. 

In her speech, Haigh is expected say that a Labour government would create a new indendent watchdog called the Passenger Standards Authority to hold Great British Railways to account, and give mayors and other devolved leaders more say over local railways are run.

In moves that Labour says will improve passenger experience, the party promises to deliver a best-price ticket guarantee so that people automatically pay the lowest amount of money for tickets when using contactless cards, and extend an automatic delay repay across the whole network. 

The party also wants to improve connectivity on the railways and make sure trains are better integrated with other forms of transport like bus and cycling.

Haigh will say: “After years of dysfunction and waste our broken railways are unfit to meet the needs of modern Britain. Passengers and taxpayers alike are being failed, and our economy is being held back. Doing nothing is simply not an option.

“With Labour’s bold reforms, a publicly owned railway will be single-mindedly focused on delivering for passengers and will be held to account on delivering reliable, safe, efficient, accessible, affordable and quality services."

Huw Merriman, the Ministerial for Rail, said Labour's "pointless, unfunded rail nationalisation" will do "nothing to improve train reliability or affordability for passengers".

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