As the private sector is pushed to the sidelines, rail nationalisation gains momentum

Last week, the nationalisation of TransPennine Express, a failing railway company, prompted rail industry representatives to call for a speedier process of awarding new contracts to the private sector.

Mark Harper, the Transport Secretary, insisted that regaining control of TransPennine after a period of massive cancellations and passengers’ misery from FirstGroup was only a “temporary measure” and that “the full intention” of the government was to hand it back to the private sector. Rail industry groups questioned the government’s commitment to reprivatisation.

First £415 millions in revenue was generated by the TransPennine contract last year. In the hall of shame, the network is now in company with LNER Northern and Southeastern as privately operated rail services that were taken over by government-backed operators of last resort. If Scotland and Wales are taken into account, around half of UK train services are now run by the public sector.

According to industry sources, the Department for Transport has not made any contact with private operators in a formal way since November 2021 when it attempted to lure them with the promise of passenger service contracts. They are meant to replace the current contracts where train operators are employed as contractors, earning low margins and low risk. These contracts have not yet been launched.

A source in the industry said: “People say, ‘You told me this nationalisation was temporary, but where is the pipeline of contract?’ What will the new contracts be like?

While the government is establishing a new controlling entity, Great British Railways, the tendering process for contracts on the nationalised lines have stalled. Sources close to the project have warned that the time for passing legislation by the next election is rapidly closing.

The DfT has insisted that legislation will be introduced “when the time permits”. Labour reiterated its intention last week to renationalise railway contracts when they expire.

Rail Partners, a rail industry lobbying group, stated: “The market is watching for clear signals and rapid action such as an announcement of legislation creating GBR or more details on the shape and timetable for the new contracts including those with operator of last recourse.”

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