On 28 November 2024, the Passenger Railway Services (Public Ownership) Act 2024 (“the 2024 act”) received Royal Assent, allowing passenger train operators with contracts with the Department for Transport (DfT) to be brought into public ownership.
Why is the government nationalising train operators?
Nationalising train operators was a Labour manifesto commitment. It is also part of Labour’s wider plans for rail reform, which will be taken forward through a separate Railways Bill (PDF). The DfT said that it will consult on that bill “around the turn of the year”, with the bill expected to be introduced in summer 2025.
In its 2024 pre-election railway plan (PDF), Labour argued that consolidating the 14 train operating companies that currently have a contract with the DfT (10 private sector operators and four that are already in the public sector) would save £680 million a year by removing shareholder dividend payments, reducing duplication of some roles and eliminating the costs of running contract competitions.
However, Rail Partners, which represents private sector train operators, said that bringing trains operators into the public sector would increase costs:
nationalisation is a political rather than a practical solution which will increase costs over time. […]
Over time, the increased costs to the taxpayer of nationalisation due to the loss of commercial focus from private train companies will lead to either reduced train services or increased subsidy.
Which train operators will be nationalised?
All train operators with contracts with the DfT will be nationalised using powers in the 2024 act. The 2024 act does not affect:
- open access operators such as Lumo, Grand Central and Hull Trains
- operators with contracts with the Scottish or Welsh governments: ScotRail, Caledonian Sleeper and Transport for Wales (which are all already in the public sector)
- operators with contracts with devolved administrations in England: London Overground, Elizabeth Line and Merseyrail
In addition, four operators are already in the public sector:
- London North Eastern Railway
- Northern
- Southeastern
- TransPennine Express
Rolling stock leasing companies (which own the trains) and freight operators (which run services carrying goods rather than passengers) will also not be nationalised.
Which train operator will be nationalised first?
On 4 December 2024, Heidi Alexander, Secretary of State for Transport, announced that South Western Railway (SWR) would be the first train operator to be nationalised using powers in the 2024 act. SWR will be nationalised when its existing contract with the DfT expires on 25 May 2025.
Following this, the next train operators to be nationalised will be:
- c2c (which operates between London and Essex) on 20 July 2025
- Greater Anglia (which operates in the East of England) in “autumn 2025”
SWR and c2c will be nationalised when their existing contracts expire. Greater Anglia’s contractual expiry date is 20 September 2026. However, because Greater Anglia’s core term expiry date (see below) has already passed, its contract can be ended by the government issuing an expiry notice. An expiry notice provides a train operating company with three months’ notice that it will be nationalised.
When will the other train operators be nationalised?
Following the nationalisation of the first three operators’ services, the government expects to nationalise one operator’s services approximately every three months. By October 2027 it expects all DfT-contracted train operators to be in the public sector.
Most contracts have two dates: an earlier “core term expiry date” and a later “expiry date”. Contracts can be ended on or after the core term expiry date if the Secretary of State gives at least three reporting periods’ notice to the operator (each reporting period is 28 days ([PDF)). Otherwise, in most circumstances they will end on the expiry date.
The government said that the reason for nationalising train operators as contracts expire or reach a contractual break point is to avoid paying compensation to train operators for terminating contracts early.
The core term expiry dates and expiry dates are set out in the table below.
Franchised train operator contract expiry dates
| Operator | Core term expiry date | Expiry date |
|---|---|---|
| South Western Railway | N/A | 25 May 2025 |
| c2c | N/A | 20 July 2025 |
| Greater Anglia | 15 September 2024 | 20 September 2026 |
| West Midlands Trains | 15 September 2024 | 20 September 2026 |
| Chiltern Railways | 1 April 2025 | 12 December 2027 |
| Govia Thameslink Railway | 1 April 2025 | 1 April 2028 |
| Great Western Railway | 22 June 2025 | 25 June 2028 |
| East Midlands Railway | 18 October 2026 | 13 October 2030 |
| Avanti West Coast | 18 October 2026 | 17 October 2032 |
| CrossCountry | 17 October 2027 | 12 October 2031 |
Under section 2(3) of the 2024 act, the government can extend contracts temporarily if necessary for a smoother transition to a public sector operator. The government also has existing powers to strip an operator of their contract due to poor performance, financial irregularities or otherwise breaching their contract.
Who will take over the operation of nationalised services?
A publicly owned company, DfT Operator Limited, will assume ownership of train operators in England.
The forthcoming Railways Bill will create Great British Railways, which will be responsible for running train services as well as managing railway infrastructure. The government says Great British Railways will “bring track and train together”.
The government expects that existing contractual terms and conditions for the staff working for the train operators will be preserved as they transfer from private operators to subsidiaries of DfT Operator Limited. However, the upcoming consultation on the Railways Bill will determine future employment policy.
Why is the government not nationalising the worst-performing train operators first?
When the 2024 act was introduced, there was speculation that train operators with poor records of performance, such as Avanti West Coast, might be nationalised first. However, the Rail Minister, Lord Hendy, said in December 2024, that “what are generally accepted to be the two worst performers in private ownership” (Avanti West Coast and Cross Country) are last in the sequence of operators to be nationalised.
Dominic Booth, CEO of Greater Anglia’s parent company, Transport UK, expressed surprise that Greater Anglia would be among the first train operators to be nationalised:
We are surprised to see Greater Anglia, the best train operator for both the passenger and the taxpayer, on the list of those first to be nationalised.
A House of Lords amendment to the 2024 bill proposed that the government should nationalise the worst performing operators first. In response, the government said this would result in additional cost to the taxpayer. When the amendment returned to the Lords, it was defeated without a division.
In December 2024, Alex Hynes, Director General for Rail Services at the DfT, said that the scheduled order of nationalisation accounted for the capacity and capability of the DfT Operator limited company.
Further reading
Commons Library, Passenger Railway Services (Public Ownership) Bill 2024-25
Commons Library, Passenger Railway Services (Public Ownership) Bill 2024-25: Lords stages and amendments