Labour’s plan to nationalise railways would drive up running costs by billions, Sir Keir Starmer was warned last night.
Industry bosses said taxpayers would be liable for ballooning subsidies or face services being slashed to pay for the programme.
They warned that transferring the cost of leasing rolling stock from private to public balance sheets would cost up to £10billion over the next Parliament if Labour wins the next election.
Labour’s transport spokesman Louise Haigh will today set out her party’s plan in a speech in central London.
It would see the creation of Great British Railways with private train firms, such as Southern and Avanti West Coast, being brought back into public ownership.
Labour’s transport spokesman Louise Haigh will today set out her party’s plan in a speech in central London
It would see the creation of Great British Railways with private train firms, such as Southern and Avanti West Coast, being brought back into public ownership
Labour claims this will cost nothing because the firms would not receive compensation when their contracts end.
But industry bosses and the Government accused Labour of pursuing an ideological crusade towards nationalisation to please trade union paymasters, who welcomed the proposals.
The party is also struggling to explain how it would pay for wider costs linked to the overhaul.
Andy Bagnall, boss of industry group Rail Partners, said: ‘Over time, the increased costs to the taxpayer of nationalisation due to the loss of commercial focus from private train companies will lead to either reduced train services or increased subsidy.
‘That means rail competing for funding with other public services like the NHS. Historically, British Rail (prior to privatisation in the 1990s) often lost this battle.
‘Private train companies have a track record of re-growing the railway in the two decades prior to the pandemic, having doubled passenger numbers, increased the number of train services by a third and turning a large cost to the taxpayer into an operational surplus for the Treasury.
‘Labour’s proposals are also moving in the exact opposite direction to what we’re seeing across Europe where other governments are seeking to copy the previous successes of the British model using competition amongst train companies to reduce subsidies for taxpayers and provide a better service for passengers.’
But industry bosses and the Government accused Labour of pursuing an ideological crusade towards nationalisation to please trade union paymasters, who welcomed the proposals
Under the Government’s model, drawn up by ex-Transport Secretary Grant Shapps (above) and former British Airways boss Keith Williams, private companies would still run services under the GBR umbrella
A Government source added: ‘Labour’s pointless pursuit of nationalisation won’t improve things for passengers and does not address how the significant expansion of the state will be paid for.
‘They can’t say how their plan will be paid for, which means taxes will go up – taking us back to square one.’
Labour’s plans mirror the Government’s, which would also see GBR created as an arms-length body to run the network.
But under the Government’s model, drawn up by ex-Transport Secretary Grant Shapps and former British Airways boss Keith Williams, private companies would still run services under the GBR umbrella.
Labour cited the Shapps-Williams plan as proof that its own proposal would help save £1.5billion a year.
However, critics said that the majority of this came from workforce reforms, such as closing ticket offices, which Labour opposed.
Labour says it will also bring in automatic refunds for delayed and cancelled trains and roll-out digital season tickets.
Ms Haigh said: ‘Whilst the Conservatives are content to let Britain’s broken railways fail passengers, Labour will deliver root and branch reform.
‘Passengers and taxpayers alike are being failed, and our economy is being held back. Doing nothing is simply not an option.
‘Labour’s detailed plans will get our railways back on track; driving up standards for passengers, bringing down costs for taxpayers, driving growth and getting Britain moving.’