First published in Rail Magazine

Almost immediately after her appointment, the new Secretary of State for Transport gave a mantra to her department: “move fast and fix things” and there is no doubt that the new government intends to move quickly regarding rail reform.

The King’s Speech laid out proposals for a Passenger Railway Services (Public Ownership) Bill, to prohibit the use of private sector contractors to run trains. It was published the following day, as the new government’s very first piece of legislation, sending a clear signal that it is set on a state monopoly railway. A second Railways Bill will be a much more involved piece of legislation, likely to take 18 months, to create that monopoly – Great British Railways – overseeing both tracks and trains.

So, the Transport Secretary is certainly moving fast. But will the policy achieve the second half of the mantra – will it fix things?

It is certainly disappointing to see Government banning train companies without first setting out the detail of how wider reforms will deliver benefits for passengers and freight customers. The public want some very basic things from the railway – a train that turns up and then runs on time, at a value for money ticket price, and preferably with a comfortable seat. No one in industry thinks the railway is currently firing on all cylinders to deliver this. Train companies have been consistently calling for radical reform since the Williams Review was launched in 2018. This included advocating for greater public sector involvement through the creation of Great British Railways to bring track and train together in a more unified system, alongside a reformed contractual model to exploit the best of the private sector.

To decide which solution – state monopoly or a partnership of public and private sectors – is more likely to meet those customer needs, we must correctly diagnose the underlying causes of the problems. And exclusively blaming the private sector for all the challenges the railway is facing doesn’t stand up to scrutiny.

First, reliable performance. The infrastructure manager, Network Rail – publicly owned since 2002 – is responsible for around 60% of delay minutes rather than operators. About four in ten of the miles travelled by passengers in Britain are on trains already run directly by public operators who face exactly the same reliability and industrial relations challenges as private operators, with no evidence that they are performing better. Of the seven worst performing operators for cancellations last year, four are public and three are private. The seven most punctual operators last year were all private.

Industrial action will affect a state monopoly railway just as much as private operators, disrupting services for passengers. Northern trains has been in the public sector for over four years but is yet to resolve the issue of incorporating Sundays into the working week which would mean fewer cancellations on weekends where services are dependent on voluntary overtime. Scotrail was brought into the public sector in 2022, but unions have just rejected a pay deal worth 9% over three years. The loss of industrial goodwill with staff not volunteering for extra shifts, has seen Scotrail introduce an emergency timetable that slashes services by about a quarter.

This is not to disparage these operators or Network Rail or, indeed, the unions – it is to make the point that these issues will not be resolved by changing who runs the trains. In fact, the management distraction of demobilising private operators and mobilising the Operator of Last Resort to take over the running of trains will make it harder to improve performance in the next few years.

If a state monopoly running track and trains is to fix some of these issues, it will need a considerable uplift in investment at time when the public finances are very constrained and there are multiple competing priorities for taxpayer cash, from the NHS to defence. So the railway will need to find its own way to free up money to settle wage claims and invest in improvements.

Financially, the sums of money released by saving the fees paid to the train companies are far too small to make a meaningful difference, being less than 1% of the railway’s overall annual budget. Moreover, the government will lose what it gets in return for the money it currently pays to train companies – the incentive to maintain cost discipline and grow revenue to reduce subsidy. Using conservative assumptions based on the track record of train companies, we calculate this as leading to £1bn a year additional subsidy by the end of the parliament in a monopoly model relative to a partnership model, rather than the savings that are needed.

Secondly, ticket prices. If money will be too tight to fix performance issues, there will be even less scope for a state monopoly railway to address the issue of ticket prices. Labour has studiously avoided promising a reduction in fares for good reason. Starting in 2004 with the last Labour administration, successive governments made a deliberate policy choice to shift the balance of funding from the taxpayer to the farepayer, partly to free up taxpayer resources for other priorities. Given the state of public finances and the new Government’s commitment to its fiscal rules, it seems unlikely that additional public money will be allocated to keep fares down.

Lastly, a state monopoly railway will also have balance sheet implications for the government. In future any investment in new trains will need to be accounted for in the transport department’s capital budgets – even when the private sector rolling stock companies are providing the up-front finance, as this will effectively be direct government borrowing.  That means new trains will be competing for capital funding with new schools or new hospitals. Whenever British Rail faced this fight, it tended to lose out. So less chance of a comfy new seat.

There is no doubt that nationalisation is a popular policy because people believe it will deliver more reliable trains and cheaper tickets – and the train has already left the legislative station in terms of government enacting the policy. But simply removing train companies will not fix performance issues and costs will drift up over time.

It is not too late for an alternative approach that would avoid a prolonged transition and can already be shown to work. Labour mayors are using models of transport provision that capture the best of both worlds. Transport for London, Merseytravel and Manchester’s Bee Network all offer firm public control under a single brand. But, behind the scenes, private operators act as delivery agents for buses, trams and trains, to grow usage and reduce subsidy. Adopting this model for rail nationally would bring all parts of the sector together from day one, and over time reduce the level of taxpayer support making it easier to hold fares down or invest in improving services. It would give the best chance of fixing things.