Labour’s ‘unfunded’ plans for UK railways will hit taxpayers in the pocket, warns top Tory

Labour’s plans to renationalise Britain’s rail network if leader Sir Keir Starmer ousts Rishi Sunak in this year’s general election will end up costing taxpayers, a Conservative minister has claimed.

Labour will today pledge to renationalise the railways if elected, in what the party will call the “biggest overhaul to our railways in a generation.”

However, Defence minister James Cartlidge claimed the proposals were “unfunded” and left unanswered questions about how much rail re-nationalisation would actually cost.

A Labour government would look to transfer rail networks to public ownership within its first term by folding existing private passenger rail contracts into a new body, shadow transport secretary Louise Haigh will say at a launch event today.

The network will be nationalised “without the taxpayer paying a penny in compensation costs”, the party is to insist.

However, defence minister Mr Cartlidge told Sky News: “Privatisation led to a doubling of the number of people using our railways. It has been a significant success story, huge investment from the private sector.

“But as I said, if that investment hadn’t come from the private sector it has to come from somewhere, and it would have to come ultimately from taxpayers.

“I think that is the key question for about this policy: How much is it going to cost taxpayers? At the moment it is unfunded.”

The Government’s own proposals for rail reform, published in a draft Bill in February, include the creation of a new public sector body named Great British Railways (GBR) to hold responsibility for rail infrastructure and awarding contracts to operate trains.

But a Labour government would seek to go further, creating a “unified, publicly owned, accountable and arm’s length” version of GBR led by rail experts rather than Whitehall, Ms Haigh will announce.

Labour also plans to establish a watchdog, the Passenger Standards Authority, to hold GBR to account.

Ms Haigh will say: “With Labour’s bold reforms, a publicly owned railway will be single-mindedly focused on delivering for passengers and will be held to account on delivering reliable, safe, efficient, accessible, affordable and quality services.

“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.”

Rail minister Huw Merriman was also sceptical, arguing that only the Tories had “a plan to continue investing record amounts in our rail network”.

He added: “Labour have confirmed they would push forward with their pointless, unfunded rail nationalisation that will do nothing to improve train reliability or affordability for passengers.

“Just like their unfunded £28 billion a year decarbonisation promise, they don’t have a plan to pay for the bill attached to their rail nationalisation. Without a plan to pay for this, it means one thing: taxes will rise on hard working people.”

The Government’s 2021 reform plan estimated that it could save £1.5 billion annually after five years by ending inefficiency and fragmentation.

Labour citing its own analysis, claims transitioning to public ownership could save money by cutting out franchise bidding costs, reducing the duplication of resources and lessening friction between operators.

The party also wants to introduce automatic delay and cancellation refunds, make digital season tickets available on all networks, and fully integrate timetables, tickets and fares. It is also planning to move mobile service on trains towards 5G and improve the integration of rail travel with bus and cycle hire services.

The Government’s original reform plans were based on recommendations from a review carried out by ex-British Airways chief executive Keith Williams.

Mr Williams said of Labour’s plans: “I welcome Labour’s intention, if they are elected, to take forward the substance of my recommendations to deliver a better railway for passengers and freight by creating a rail body with an integrated profit and loss account, at arm’s length from government.”

Mick Whelan, general secretary of Aslef, said: “We have seen more positivity in this stunning Labour Party vision for rail than anything at any time from the Tories during their failed privatisation and subsequent incoherent rail reform programme.

“The Labour commitment delivers for the economy, for the taxpayer, for passengers, and for staff.”

Mick Lynch, general secretary of the Rail, Maritime and Transport union said: “Labour’s commitment to bring the train operating companies into a new unified and publicly owned rail network is in the best interests of railway workers, passengers and the taxpayer.”

He added: “This announcement however should be a first step to completely integrating all of our railway into public ownership.”

Andy Bagnall, chief executive at Rail Partners, an industry group of train operators and freight groups, said: “Train companies agree that change is needed for the railways, but nationalisation is a political rather than a practical solution which will increase costs over time.”

Labour’s plans would still leave a role for the private sector on Britain’s railways.

Open access operators such Hull Trains and Lumo, will be able to continue to compete to improve the offer to passengers, the party said.

Labour also hopes to “crowd in” private investment to stimulate innovation in the rail sector.

SNP transport spokesman Gavin Newlands said: “This is just the latest in a long list of U-turns from Sir Keir Starmer, this time on his commitment to nationalise the railways.

“Instead of putting the national railway service in the hands of the people, as the SNP Scottish Government have done, Sir Keir Starmer’s Labour Party will instead increase private investment into another public service, just like their plans for the NHS.”