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Labour steps up rail re-nationalisation campaign with new bill in Parliament

from: http://www.telegraph.co.uk/finance/newsbysector/transport/11193776/Labour-steps-up-rail-re-nationalisation-campaign.html

Labour steps up rail re-nationalisation campaign

Labour Party to introduce a bill in Parliament on Wednesday that would allow a state-owned train operator to bid for lucrative rail franchises


Andy Sawford, MP for Corby and East Northamptonshire, will propose a bill that would allow a train operator owned by the British taxpayer to compete against private companies for lucrative contracts to run rail lines.

The bill, which will be proposed immediately after Prime Minister’s questions, will mark a significant step-up in Labour’s campaign to partially re-nationalise the railways, after party leader, Ed Miliband, signalled this summer that he would intervene in the industry, two decades after it was privatised by John Major’s Conservative Government.

Private transport companies are expecting the railways to become a major political battle ground in the run up to the General Election, as Labour argues that taxpayers in this country should be able to profit from Britain’s railways.

Mr Miliband said in August that train operators controlled by other European Governments, such as Arriva, Keolis and Abellio, are allowed to run rail lines in this country but a company owned by the UK taxpayer is not able to bid for lucrative rail franchises.

However, his plans to allow a taxpayer-owned company to bid for franchises has been dismissed as “nonsense” by private transport groups such as National Express, which argue that they would no longer be competing on a level playing field, if the Government is setting the rules of franchise competitions, refereeing them and bidding in them at the same time.

Mr Sawford’s intervention is timed ahead of a crucial decision over the future of the East Coast Main Line, the key rail artery which connects London with Scotland.

The Department for Transport will next month name which private company has won a competition for a long-term contract to operate the East Coast line. The line has been operated since 2009 by the UK Government-owned Directly Operated Railways, which stepped in to keep services going after National Express handed back the keys to the franchise.

Under the 1993 Railways Act, Directly Operated Railways can only step in to run services in emergency circumstances.

Mr Sawford said: “East Coast shows that a public option can work on our railways. Every penny of profit that they make has been reinvested back in the service, including a £3.3 million upgrade to Peterborough Station in 2012, to which East Coast contributed £1.3 million.”

However, the Government argues that Britain’s railways have expanded since the 1993 Railways Act paved the way for privatisation. Baroness Kramer, Minister of State for Transport, on Tuesday pointed out the risks involved with bidding for rail franchises, which would have to be borne by the taxpayer under Labour’s proposals.

She said: “It costs something like £7-10 million to put in a bid with no assurance of winning. It is certainly a high-risk industry and the margins, even for a successful and profitable company are quite fine.”

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