The Rebuilding Rail research sets out a strategy for a future Labour government to re-integrate rail operations and infrastructure, phase out franchising and give a democratic role to passengers, the rail workforce, and elected local and regional authorities…  It is conservatively estimated that £1.2 billion of public money is lost each year as a direct result of privatisation and fragmentation – enough to fund an 18 per cent cut in fares if those sources of wastage were removed by reunifying the railway under public control.

The private sector has failed to deliver the promised innovation, investment, or efficiency. For example, the costs of backroom staff have increased 56 per cent per train kilometre, even after adjusting for inflation. But the privatised railway could be progressively reformed at little or no short-term cost while realising substantial savings in the medium term.

The Labour Party could make a number of popular commitments before the next general election, including:

* Money saved from re-integrating Britain’s railways will be used to lower fares.

* No new franchises will be let under a Labour government.

* All existing franchises will be reviewed to assess whether taxpayers and farepayers would receive better value for money by buying them out

*  A Labour government will reduce dividend leakage, including a 50 per cent tax on dividends from train operating and rolling stock companies.

*  Labour will campaign against the European Commission’s intention to force member states to open domestic passenger services to competition.

* There will be a planned programme of investment in publicly-owned rolling stock that would help to rebuild domestic train-making capacity.

There is a clear need for the different parts of the railway to be managed as a coherent whole, to ensure that infrastructure, services and rolling stock are managed and developed in an integrated way. This would provide a single railway entity for national government to deal with; achieve greater efficiencies; and remove many of the costs of the fragmentation between train companies and Network Rail….

The gradual acquisition of national rail passenger franchises would not require significant expenditure…. For those franchises already let, reacquisition could be done as contracts end, or at contract break points, or by tighter enforcement of franchise conditions. The phased accretion of passenger franchises into GB Rail Network and Operations would provide a comparator against which remaining private operators could be benchmarked and the benefits of the new approach could be proved….

The revenues from these profitable routes would be captured by the rail industry instead of leaking out in dividend payments to shareholders (in many cases, the state railways of other EU countries), and used to invest in the network, to keep down fares and to cross-subsidise the less profitable socially valuable parts of the network.

When several billions of pounds of public money are flowing into the railway each year, and when tens of billions of pounds of public money are underwriting the railway’s debts, proper public control of the railway is called for.

Other countries in Europe still regard it as quite normal that a public service as important as the railway should be appropriately managed through public ownership in order to realise the broad economic, social and environmental gains which rail can deliver.

This report documents in detail a route to achieve that and, moreover, shows how it could be done at a saving to the public purse of more than £1 billion a year.

Ian Taylor is director of Transport for Quality of Life. The Rebuilding Rail report is available for download at www.transportforqualityoflife.com

‘ Privatisation has done untold damage to the rail industry, undermined safety and handed guaranteed, risk-free profits to operators for whom dividends are the only priority.’ – Bob Crow, General Secretary, RMT

‘… we now have the dearest fares in Europe and yet…. We are shelling out £4 billion a year in subsidy (compared with £900,000 a year for BR), while also picking up the annual bill for Network Rail’s debt mountain of £27 billion.’ – Manuel Cortes, General Secretary, Transport Staff’s Association

‘[The report] demonstrates how the franchise system benefits accountants, lawyers and consultants – to the detriment of passengers and taxpayers.’ – Mick Whelan, General Secretary, ASLEF

‘Public ownership would bring a political commitment to ensure rail plays a part in advancing broader public policies, such as environment, social mobility, poverty and housing.  This report rightly shows that a publicly-owned rail industry serving the needs of communities, businesses, manufacturing and the economy is achievable.’ – Diana Holland, Assistant General Secretary, Unite

‘Privatisation of rail is a privatisation too far’ – Margaret Thatcher

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