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TOCs threaten to quit rail industry if Labour reforms go ahead

The Labour Party is expected to outline its plans for rail reform in the next few days, allowing state-owned companies to join the bidding process for franchises.

The plan seems to have displeased both sides of the debate – unions and renationalisation campaigners say they don’t go far enough, while the existing train operators say they will not bid for rail franchises if they feel they are up against unfair taxpayer-funded competition.

Martin Griffiths, chief executive of Stagecoach and chair of the Rail Delivery Group, told the FT that companies would invest in other markets if Ed Miliband carried out a shake-up of the franchise system. “Operators will say: ‘there are other opportunities we should be looking at in other markets or in other sectors,” he said.

Party leader Ed Miliband was expected to layout his ambitions for the country’s rail system this week, but delayed the announcement until the party’s National Policy Forum in Milton Keynes next week.

It had been expected that Miliband planned to renationalise the “entire system”, whereby each franchise would return automatically to public hands as it ended. Polls suggest there is widespread public support for rail renationalisation.

But briefings suggest Labour is pulling back from that idea, and will instead allow a state-owned operator to bid in most future franchise contests. At present there is one state-owned rail company, Directly Operated Railways, which has been running services on East Coast.

This is in line with the business approach Ed Balls outlined on the BBC’s Andrew Marr Show, when he said the public sector should be free to compete with private companies “on a level playing field” but ruled out a commitment to state ownership in all cases.

It is likely the party’s stance will disappoint many unionists and parliamentary candidates who have been pushing for Labour to commit to bringing expired franchises back into the public sector in a process of incremental renationalisation.

(Image: c. Stefan Rousseau)

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Lesf   11/07/2014 at 15:06

Milliband is right. The TOCs don't want to lose their gravy trains, but nor should we go back to the dark days of British Rail. It's competition that's brought us the level of customer service that BR could only dream about, and that convinced governments that the railway was not a lost cause and was worthy of major investment. Survival of the fittest will show which is best. Expect a lot of dogma-driven squabbles along the way.

Nonsuchmike   12/07/2014 at 14:29

Go on, quit then; cut your nose to spite your face, TOCs! Whereas DOR ( a not for profit company) on the East Coast Main Line is a good model, it is not the finished product. Not least because of lack of trains and perhaps lack of sufficiently trained personnel. And the reduction to two lines on the Welwyn North Viaduct!! Currently TOCs have their cake and eat it if they half efficient. And most are only half efficient. They then pay back their profits in over inflated wages and expenses to Directors, senior Managers and shareholders, whereas the sardined public who huff & puff at cancellations and up to THREE hours between regular services (whoever heard of such an insulting service?) between major Cities have to put up with these shenanigans in relative silence. Can you wonder that the passenger increase is not what it could have been if handled properly these last 6 - 7 years? There is a germ of truth in both camps. It is up to all sides to LISTEN to the others' points of view and then come up with a workable and agreed compromise. Whatever that final agreement may be is going to require investment in rollingstock, track AND station improvements as well as training across the board.

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