Good morning from the New Economy Brief.
On 1st February, services run by West Midlands Trains officially transferred into public ownership. More than half of the UK's train operating companies are now back in public hands, with the rest due to follow by the end of 2027. It's enough to have even the most hard hearted policy wonk feeling like Francis Bourgeois at the sight of a Pendolino.
But how's it actually going? Is Labour making a success of rail renationalisation? Will this electrify the role of public ownership in our economic model, or is the government stuck at the barriers?
A brief history of rail in Britain
Public ownership and decline. From 1948 until the 1990s, the UK rail system was fully nationalised. It was run by British Rail, the state body that owned and operated both rail networks and trains. However, a policy focus on investing in roads, not tracks, meant rail declined during that period: the annual number of rail journeys fell from 1bn in 1950 to 600m in 1982.
Privatisation. In 1993, John Major's government passed the Railways Act, transferring the trains, their operation and even the tracks into private hands. After privatisation, rail travel’s popularity bounced back, peaking in 2017 with 1.7bn journeys made. This recovery is often pointed to as an iron-clad defence of privatisation; however there's evidence it began long before and stems from wider trends such as urbanisation and lifestyle choices.
Trouble in free market paradise. While passenger numbers climbed, customer satisfaction crumbled. This came to a head in May 2018, when new timetables triggered widespread disruption and cancellations, as anyone travelling on Southern or Northern Rail probably remembers. Then, during Covid, passenger numbers plummeted by 94%. The government stepped in to underwrite losses and the Conservative government turned to nationalisation, notably taking over TransPennine Express after passengers regularly saw a quarter of services cancelled with little notice.
Labour's Renationalisation
Low-cost rail (contracts). In 2024, Labour ran on a manifesto commitment to bring rail back into public ownership. Reliability had hit record lows, with around 4% of services being cancelled, double their 2015 rate. In November 2025, legislation was passed to bring rail firms into public ownership as their contracts expire, rather than mid-contract, meaning the government wouldn’t have to compensate private operators.
A simpler system. The Railways Bill, currently making its way through Parliament, will allow the government to set up Great British Railways. GBR will not own the trains themselves (more on that in a moment), but it will be a single "guiding mind" for the network, which the government hopes will be more efficient and improve accountability.
Can renationalisation work?
It works for the Swiss. Advocates for renationalisation point to how well public rail systems work abroad. Switzerland is routinely cited as having Europe’s best rail system. Its publicly owned, fully integrated network connects even small villages efficiently. Unsurprisingly, the Swiss use trains more per capita than any other European nation.
Publicly owned (just not by us). Also, as Common Wealth pointed out in 2020, foreign governments, including the Netherlands, France, Germany, Italy and Hong Kong, have outright control of or significant stakes in more rail franchises than the UK government does.
Popular support. Public opinion is firmly on the side of change. Polling shows roughly two thirds of the country is regularly in favour of nationalising train operators. However research for YouGov shows this support is is contingent on taxes and fares not increasing as a result
Rail (report) card So far, the data on nationalised operators is mixed. Some operators have increased punctuality and reduced cancellations, but others have struggled. As We Own It argue, public ownership alone is not enough. To succeed, it also needs increased investment.
Will my train ticket get cheaper?
How much for a peak train?! The first thing the public wants to see from nationalisation is lower ticket prices. The UK has the highest rail fares in Europe, and TUC research found that fares for commuters rose 46% from 2009 to 2019, twice as fast as wages.
Don't get your hopes up. Current renationalisation plans will not cut ticket prices. Instead, the government has promised a “best fare guarantee”, designed to simplify the ridiculously complex ticketing system which forces the British public to navigate 55 million different fares. However, there are concerns that simplifying tickets could cost passengers more, with a pilot by LNER making many journeys more expensive by removing some current super off-peak and advance fares. There is one concrete shift though, with regulated fares being frozen for the first time since the mid-1990s. So while prices aren’t coming down, at least for now the vast majority aren't going up.
What next?
Labour's plans are an important victory for anyone arguing that public ownership is a viable economic model. However, to really make a difference, owning the operating companies is not enough.
Investment If we want Swiss-level services, we need to be willing to pay for them. In 2024, Switzerland invested €477 per capita in its rail system; Britain just €116. The economic case is strong. Every £1 invested in rail is estimated to generate £2.50 in economic activity. London’s Elizabeth line demonstrates what strategic investment can achieve, accounting for 1 in 6 UK rail journeys.
Profiteering. While Great British Railways is a good start, major parts of the system will remain in private hands, including the trains themselves. The current plans would leave the Rolling Stock Companies (ROSCOs) that own the trains untouched, likely because of the significant upfront cost of procuring trains. RMT research found ROSCOs paid out almost £1bn in dividends in 2020-21, half the fares passengers paid over the same period. Ticket purchasing, cleaning, catering and engineering will also still be run by private companies. Without reform here, public ownership of operators may still leave profits flowing out of the system. Bringing all parts of the rail system into public ownership may cost more upfront, but could ultimately save money.
Regional inequality Finally, as IPPR recently highlighted, rail investment has long been skewed towards London and the South East. If rail in the North had received similar levels of investment to London, this would have meant £140bn extra over the last 15 years. Instead, countless schemes (from Northern Way and the Northern Hub to HS2's northern leg (a topic for another NEB) and the Integrated Rail Plan), and the Integrated Rail Plan) have all been floated and ultimately scrapped. Meanwhile, as we’ve seen, investment in the Elizabeth Line has paid dividends. IPPR calculate that correcting this imbalance could add £118bn to the North's economy by 2050.
Labour’s renationalisation plans are on the right track, but they don’t go far enough. They still leave too much of the system in private hands, vulnerable to the profiteering and inefficiency that have blighted passengers’ lives. And while renationalisation is a necessary condition for better rail, it’s essential the government makes ambitious, sustained investment. Otherwise public ownership will never get the chance to prove what it can deliver.
Trickle down fails again. The latest from Shelter calls for a paradigm shift in how we think about providing housing. Their research points out the failure of a “trickle-down”, market-led approach, as private developers will never build houses that lower the cost of housing. They call for a “needs-led” housebuilding strategy, which prioritises social housing and ultimately improves affordability.
Some like it hot. New research from IPPR’s Joseph Evans and Carsten Jung argues for a fundamental shift in how we design macro-economic policy. They find that countries which ran their economies slightly ‘hotter’ (where economic output is high and unemployment is low) saw higher growth, better labour market participation, faster wage growth for lower earners and more productive job switching.
What goes up… Analysis by Positive Money’s Hannah Dewhirst reinforces the harsh truth that politicians often hope we forget. While inflation is down, food prices have still risen 38% over the last five years and probably won’t come back down. Hannah argues for faster interest rate cuts, government action to tackle bills, and a windfall tax on bank profits.
Time to stock up. A group of dozens of the UK’s top food experts have warned of food riots in our future. They argue the UK’s food system is vulnerable to shocks like cyberattacks and climate extremes after years of prioritising efficiency over resilience. Instead we need a systemic shift towards domestic production, diversified supply chains and stronger safety nets.
The vultures are circling. New analysis by Debt Justice finds that debt payments for lower-income countries have hit their highest level for 35 years, more than trebling since 2010. 56 lower-income countries now spend nearly a fifth of government revenue on debt repayments. Meanwhile, hedge funds (known sometimes as vulture funds) are suing overindebted countries in the UK courts, seeking big profits on debts they bought cheaply on the secondary market.
