Research briefing on the Passenger Railway Services (Public Ownership) Bill 2024-25

The Passenger Railway Services (Public Ownership) Bill 2024-25 was introduced in the House of Commons on 18 July 2024. The bill will have its second reading on 29 July 2024.

The government introduced the bill to bring franchised passenger rail services into public ownership. The services would be transferred when existing contracts end, or a contractual break point is reached.

What does the bill do?

The Passenger Railway Services (Public Ownership) Bill would remove the presumption in favour of franchised passenger railway services being provided by the private sector, and instead allows train operations to be provided by a public sector company when existing franchise contracts end.

The bill is a short bill which would amend specific provisions in the Railways Act 1993 and the Public Service Obligations in Transport Regulations 2023 to enable this to happen.

Clause 1

Clause 1 would prohibit the Secretary of State (or Welsh/ Scottish Ministers) from extending existing rail franchises or entering into new franchise agreements, apart from in specific limited circumstances. It would also remove the presumption in favour of franchised railway passenger services being provided by a private operator. Instead these would be provided by a public sector company under a public sector contract.

Clause 2

Clause 2 would place a duty on the relevant franchising authority to provide or secure passenger rail services by giving a direct award to a public sector company.

Clause 2 would also give the Secretary of State the power to extend existing franchises, or to agree new franchises, with the same private sector operator as currently operates the service. This would be a risk mitigation measure, to avoid overwhelming the public sector company in the event of a number of franchises ending at the same time, or at close to the same time. This power would be able to be repealed once it is obsolete (once all franchises are in the public sector).

Clause 3

Clause 3 would give the Secretary of State regulation making powers for consequential amendments, including for primary legislation. This is a Henry VIII power.

Extent and commencement

The Bill extends to England, Wales and Scotland, and would come into force on the day it is passed.

Background to the bill

Following the Railways Act 1993, the private sector became responsible for running franchised passenger railway services with the creation of train operating companies.

The majority of passenger train services in Great Britain are operated by the private sector. In England most train operators have contracts with the Secretary of State, with the exception of some services in London and Merseyside. The Scottish and Welsh Governments are responsible for letting and managing passenger rail services in Scotland and Wales respectively. This Bill does not apply to Northern Ireland, where the railway is managed and operated by the public sector company Translink.

Alongside this bill, the government has also committed to introducing a Railways Bill. This would introduce further legislative changes to comprehensively reform the rail sector.

Reaction to the Bill

Given the short timeframe between the announcement of the bill in the 2024 King's Speech and its publication, reaction has been limited. The transport watchdog, Transport Focus, welcomed the commitment to bring train operators back into the public sector. Trade Unions have said it is the “right decision, at the right time”. However, Rail Partners, who represent the interests of private sector train and freight operators, have argued nationalisation will increase costs.

Currently, there are ten privately-operated rail passenger services with National Rail Contracts. Concerns have been raised that the scale and complexity of nationalising passenger services will put pressure on Department for Transport Operator of Last Resort Holdings Limited, the public company responsible for ensuring continuity of rail services if a passenger franchise terminates.

The Shadow Transport Secretary Helen Whately wrote on X (formerly known as Twitter) that nationalisation will not bring fares down or improve service reliability. Wera Hobhouse MP (Liberal Democrats) also noted it was not clear how nationalisation would reduce the cost of train travel.

It is unclear which would be the first franchise to be nationalised after this bill receives Royal Assent. The Greater Anglia and West Midlands Trains contracts expire in September 2024, but the government has not indicated whether these contracts will be renewed. Chiltern Railway and Thameslink, Southern and Great Northern (TSGN) have core terms ending on 1 April 2025, so may be the first to be nationalised. If the government does not end these contracts at the end of their core term, then the first contracts to be nationalised may be South Western Railway on 25 May 2025 and Essex Thameside (operated by c2c) on 20 July 2025. However, some media reports have indicated that underperforming train operators may be nationalised sooner if they are not meeting performance targets.

The government anticipates that all franchised contracts will have expired by October 2027