Ministers pressed to decide future of state control over railway industry

Pressure is mounting on Government to make a decision over the long-term future of the temporarily-nationalised rail industry.

The government effectively nationalised the railways at the start of the virus crisis, spending more than £3.5 billion to bail out train operators. The subsidy ensured services would continue running during a six-month emergency period which ends in September.

The measures guarantee operators a profit of 2% of operating costs, and reports suggest this could be reduced to 1% from September until March 2022, causing dismay in an industry which is running scores of near-empty trains. Listed rail firm FirstGroup is among those pushing for the current levels of government support, equivalent to a £100 subsidy per journey, to remain.

Labour peer Lord Adonis, the former Transport Secretary and a fierce advocate of the HS2 rail project, told the Standard: “The rail industry has in effect been nationalised during this crisis. Many of the private rail companies are on the verge of bankruptcy so are in no position to continue as before in any event.

"State control should continue until there is a better alternative, which will not be any time soon.”

Alex Veitch, head of global policy at the Freight Transport Association, said: “The logistics sector would be concerned about full renationalisation of passenger rail operations. Rail freight has been a success story for the private sector, bringing investment, innovation and open competition which has delivered efficiency improvements and customer benefits.

“If all passenger services were fully nationalised it could remove contractual safeguards that protect freight access, and make rail planning more political and less practical. Freight must be included in this debate to ensure UK business and consumers benefit from this safe, green, efficient mode of transport.”

Nationalising the railways was a key pillar of Labour’s failed 2019 election campaign.