The Passenger Railway Services (Public Ownership) Act 2024 (the Act) is set to renationalise passenger rail services operated under the current franchising model in Britain and represents a significant step in reshaping the UK's rail industry. The Act, which received Royal Assent on 28 November 2024 and is effective from that date, is designed to reintroduce public sector control over the delivery of the majority of passenger railway services, a move that supporters argue could enhance service quality, streamline operations and provide cost-efficiencies that benefit taxpayers and passengers alike.

Overview of the Act

The Act's primary aim is to nationalise those passenger rail services which have, since the 1990s, been operated by private franchise companies. To an extent, this process began before the commencement of the Act with the operation of services previously delivered by franchises such as LNER and Southeastern having been assumed by the Department for Transport's Operator of Last Resort in recent years following migration to a new contract model introduced during the COVID-19 pandemic. Under the proposed legislation, the current franchising model would be phased out and rail services would instead be managed by publicly owned entities, primarily the future Great British Railways. This transition is to take place as existing operator agreements expire – they will be absorbed by these public entities, rather than retendered to private companies. This is intended to ensure a gradual and managed transition to public ownership without unnecessary disruption to ongoing services.

Rationale behind the Act

The Act highlights several perceived benefits of public sector control for passenger rail services. One of the perceived benefits is that it could create a more unified, coordinated railway system, leading to improved service reliability and customer satisfaction. One of the key benefits earmarked is the ability to more uniformly control fare structures to provide a fairer and more predictable approach to fare pricing.

Additionally, proponents contend that reinvesting profits into the system could help modernise infrastructure, upgrade facilities, and maintain safety standards. This contention has gained support following the perceived challenges and disruptions during the COVID-19 pandemic, where government intervention was necessary to maintain services amid reduced passenger numbers and revenue.

Potential impact on the rail sector

The Act may significantly alter the dynamics of the rail sector in Britain. Primarily, private companies currently operating franchises will need to adapt to the end of franchise agreements and the phasing out of their participation in aspects of the rail industry. Realistically for many, this may mean an exit from the British rail market, at least in the short term.

The Act could also impact investment and innovation in the rail sector. Under a public ownership model, the government would arguably bear more responsibility (either directly or through public sector bodies) for financing the innovation and development of technology in the rail industry. Some critics argue that the loss of private investment could stall innovation and efficiencies traditionally driven by a competitive market. However, supporters of the Act posit that, with appropriate government funding and planning, public ownership could foster consistent, long-term investments focused on delivering favourable outcomes for passengers without the disruption of fluctuating franchise agreements.

In conclusion, the Act is aiming to alter the passenger rail landscape in Britain for years to come.