Home finance ONS says UK rail has effectively been renationalised during pandemic

ONS says UK rail has effectively been renationalised during pandemic

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Train companies have been effectively renationalised on a temporary basis, the UK statistics body said on Friday, prompting a dispute between trade unions and private operators over rail ownership.

The coronavirus pandemic and lockdown forced the government to take emergency steps to prop up train companies by assuming the financial risk of rail franchises, after passenger numbers dwindled almost to nothing.

The Office for National Statistics has now written to the Treasury and the Scottish government to inform them of its decision to reclassify train companies as public non-financial corporations in the light of the measures.

The change, backdated to 1 April, means rail companies’ borrowing will be factored into ONS figures on public-sector borrowing and the number of state employees.

At the same time, train companies are not allowed to make timetable changes or change staffing numbers without specific government approval.

State support for rail firms means almost all revenue and cost risk from the companies are “borne by the government”, the ONS said.

The Rail Delivery Group, which represents train operators, insisted the reclassification should only be seen as cosmetic, rather than a fundamental and lasting change in how rail ownership is structured.

“This is a temporary accounting change that reflects the extent of government involvement in running trains during a national emergency,” said the RDG chief executive, Paul Plummer.

“The Covid crisis presents a chance to move towards a new way of running the railway, where contracts put customers at the centre and the private sector’s track record of attracting people to travel by train in safety is harnessed to boost the economy, the environment and the public finances.”

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However, the transport union TSSA, which has consistently called for rail nationalisation, urged the transport secretary, Grant Shapps, to seize the opportunity to do so.

“The Office for National Statistics has candidly exposed the truth about our railways – they are now in public ownership,” said the TSSA general secretary, Manuel Cortes.

“I know that telling the truth isn’t this Tory government’s forte. However, the transport secretary, Grant Shapps, must come clean and acknowledge that our railways are now in public ownership and take direct control of running them rather than continue to line the pockets of fleecing privateers with taxpayers’ money.”

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While the emergency measures are temporary, they come at a crucial juncture for the future of England’s complex rail franchising system.

The government commissioned a review of the future of railways, following a string of failures of franchises that ended up being effectively nationalised, including the Northern network earlier this year.

The former British Airways boss Keith Williams, who is leading the ongoing review, said last year that the government should take a “step back” from the UK railway, which could potentially be run by a new body.



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