gunnercooke partner shares insights into the plans to re-nationalise the railway system within England and Wales 

During yesterday’s State Opening of Parliament, we heard the King’s Speech, which introduced 39 bills that will impact a variety of industries and outline the new government’s key areas of focus. The speech reaffirmed the government’s plan to re-nationalise the railway system within the UK as private sector contracts end. This is set to happen over the next five years. 

Whilst the speech mentioned that this will be going ahead, there wasn’t enough time to go into the detail on how to bring this policy into fruition, so one of our experts, Clive Smith, has explained what this ‘detail’ needs to include.  

Clive Smith, Rail; Asset Finance Partner 

“Labour’s plans to bring franchised passenger rail operations back into public hands have been well-trailed, and it’s now time to start getting into the detail that needs to be fleshed out and debated, in terms of how Great British Railways (GBR) will ultimately be structured, funded and organised, and as to how Labour plans to manage the transition. 

“We are, for instance, approaching the end of the track for several current National Rail Contracts (NRCs) in place with existing private operators. A number of these are going to reach their terminus before legislation can realistically be passed to establish GBR as an entity and have the necessary frameworks around it.  

“However, given Labour’s stated aim to take franchises back into public hands, as and when each NRC expires, we can assume that this will initially be achieved via the Government’s existing ‘Operator of Last Resort’ (OLR). OLR already has 4 franchises on its books from prior terminations, and it was never conceived or resourced with the intention for it to end up running half the network. It will therefore need to either buy in (or more likely contract out) resources to meet these challenges, which only exist in the private sector. 

“At some point there will be an almighty series of employment transfers and, as those proceed, it seems likely to result in a growing duplication of personnel at GBR in terms of e.g. back-office functions which have previously been separately resourced by the various private operators who each maintain their own teams. It will be interesting to see how/when Labour then begins to rationalise those roles, in pursuit of some of the cost-savings they believe re-nationalisation can deliver. This may lead to a visible early showcase for how the new Labour Government deals with potentially disaffected Unions. 

“Railway pensions arrangements are also hugely complex, and we’re yet to receive clear signalling from Labour as to how these will be handled during the transition from multiple operators to a single operator, indeed the word “pensions” didn’t even appear once in Labour’s “Getting Britain Moving” rail policy document. 

“Given the complexity and scale of what is involved here, I think we can safely regard the establishment of, and transition to, Great British Railways as being something of a medium-term destination.”