The first three of 10 privately-run rail networks to be renationalised provide key services for London commuters – South Western Railway, c2c and Greater Anglia.
But what will the changes mean for passengers? Will their trains be any more reliable – and will it mean an end to annual fare rises?
Here’s what you need to know as rail services come back under direct Government control.
Will renationalisation mean cheaper fares?
Almost certainly not – but it could mean that fares don’t rise by quite as much as they would have done.
The Government used the day of Rachel Reeves’ first Budget in October to sneak out an announcement that “regulated” fares – typically those paid by commuters – will increase by 4.6 per cent from next March.
Heidi Alexander, the new Transport Secretary, was asked about fares on Wednesday as she announced the start of the renationalisation plans.
She said that she didn’t want to cut fares if this resulted in a “death spiral” of cuts to services, making the railways less attractive for passengers.
The underlying problem for the Government is the amount of taxpayer subsidy that is needed each year to run the railways – currently £12.5 billion a year, including contributions from the Scottish and Welsh governments.
Of the £25bn annual revenue received by the railways in 2023/24, only £10.4bn came from fares.
Fares revenue was up 14 per cent year on year – but grew at a slower rate than passenger journeys, which were up 16 per cent. This is partly because passengers are making shorter journeys overall, according to the Office of Rail and Road.
Will renationalisation mean that trains run on time?
This is perhaps one of the biggest challenges the new system faces: improving punctuality.
Not all delays are the fault of train companies. Some are the fault of Network Rail, which is responsible for the track and signalling systems. Others may be due to train faults or a lack of drivers.
Suicides on the railway often cause huge practical problems in addition to the personal tragedies and distress to the families of those involved. Trespassers also cause delays.
Critics point out that some of the worst performers on punctuality, such as Avanti West Coast, will remain in private hands the longest, while “success stories” such as Greater Anglia will be brought in-house in the first tranche – which may enable the Government to portray nationalisation as a success if its trains maintain their high standards of reliability.
Executives at Transport UK, the group that owns Greater Anglia, are understandably dismayed that their achievements have not allowed a “stay of execution”.
Dominic Booth, chief executive of Transport UK, said: “We are surprised to see Greater Anglia, the best train operator for both the passenger and the taxpayer, on the list of those first to be nationalised.
“That said, we look forward to constructive dialogue with Government at the appropriate time. We are proud that during our stewardship, Greater Anglia has become the best rail operator in the country and the only operator to consistently deliver a premium for the Government.”
South Western Railway, which only last week unveiled a £1bn fleet of 90 new Arterio trains, expressed similar emotions.
What about the other train firms?
Four of the 14 former franchises – franchises were effectively scrapped during the pandemic – are already in Government control. This happened during the previous Tory government and followed issues with each of the franchises.
These firms include Southeastern, Northern (which has no services in London) and London North Eastern Railway. Ms Alexander praised Southeastern’s improved performance and LNER for tackling issues with train cancellations linked to a shortage of staff.
The renationalisation will not include the Elizabeth line, the country’s busiest railway, which will remain under Transport for London control, though its day-to-day operator will change next year.
Nor will it include the London Overground – currently operated for TfL by Arriva – nor the “open access” operators such as Lumo and the Heathrow Express.
Controversially, the “Roscos”, the rolling stock leasing firms, will also be excluded from the renationalisation.
What the Government will hope is that nationalisation will enable it to improve services while reducing the cost of running the railway.
According to latest figures, Northern’s subsidy for 2024 was £648m, up from £597m the previous year. Southeastern’s subsidy rose from £308m to £315m. LNER’s reduced from £96m to £36m.
Johnbosco Nwogbo, lead campaigner at the pro-renationalisation group We Own It, said 30 years of rail privatisation had “left us paying more and getting less”.
He said the trains as well as the train companies should be taken into public ownership, enabling the Government to claw back “£250 million a year lost to private shareholder dividends”.
What’s the argument against renationalisation?
The first is efficiency: will Great British Railways, the new organisation that will take overall control for the renationalised services, be able to keep track of everything?
Concerns have also been expressed about the lack of staff at the DfT’s “operator of last resort”, which will be renamed DfT Operator Ltd.
Thirdly, while the Government hopes to save £150m a year, it does not know exactly how much the renationalisation process will cost.
Contracts will only be brought to an end when they expire or a break clause is reached, to avoid the need for compensation.
But Ms Alexander, though in the job for less than a week, had to endure something of a “car crash” interview with LBC’s Nick Ferrari on Wednesday morning when she was unable to provide a figure for the cost of renationalisation.
Keeping on top of the detail will be essential if more passengers are to be lured back to the railways and the cost to the taxpayer is to be reduced.
