Future of TfL’s private rail concessions

Sadiq Khan

Mayor of London

City Hall

Kamal Chunchie Way

London

E16 1ZE

 

cc Louise Haigh MP, Shadow Secretary of State for Transport

All Labour London Assembly members

Mick Whelan, General Secretary, ASLEF

Paul Nowak, General Secretary, TUC

Sam Gurney, Secretary, LESE TUC

 

20th September 2024

 

Dear Sadiq,

 

Future of TfL’s private rail concessions

Thank you for your letter of 16th September and your commitment to continue engaging with the RMT on this issue. I wholeheartedly agree with you that both passengers and taxpayers have been ripped off by a fragmented network that works for shareholders but not for the British people.

Our concern is that London’s rail network, which is of major strategic importance both to the capital city and to the rail network as a whole, should form a coherent part of an integrated, publicly owned system. Clearly that is a process that will take time and must include building the maximum and optimum level of devolution into the new structure. However, my fear is that unless action is taken rapidly, London’s rail network will form an island of privatisation at the heart of our rail network offering a lifeline to the very companies who are being removed from the rest of the network.

Since I first wrote to you, the Government has been working at pace to get legislation on the Statute Books to create an integrated publicly owned rail network. The Passenger Rail Services (Public Ownership) Bill has passed all its Commons stages and is now at Second Reading in the Lords. When it receives Royal Assent, possibly as early as November, the Bill will make public ownership the default option for passenger rail operations in England, Scotland and Wales.

In this context, with the government moving fast to create Great British Railways, any decision to continue with the procurement processes for the Elizabeth Line and London Overground would cut right across the government’s policy agenda and be a source of delight for the private TOC lobbying Group Rail Partners, who are actively working against the new government’s public ownership agenda.

To be clear, the Concession model that TfL currently operates is in all fundamental aspects the same one that the government is legislating to end. The only substantial difference between TfL’s Concessions and the DfT’s current National Rail Contracts is that the line of accountability runs to yourself rather than Whitehall.

The private train operating companies understand this point very well. Their lobbying organisation Rail Partners described the Bill as ‘disappointing’ and they consistently argue for an alternative model of private contracts describing it as ‘a model used by Transport for London’ and ‘successfully used by the Labour Mayor in London”.

It’s easy to understand why they would be keen to promote this model. ORR data shows that TfL’s two concessions have paid out an average of £17 million each year in dividends, totalling more than 100% of their profits. Last year, Arriva Rail London paid a dividend of £9.6 million, equivalent to a 4.4% cut on Overground fares.

The fact that both the Elizabeth line (currently operated in part as a subsidiary of Chinese State Railways) and the Overground (until recently a subsidiary of German state rail) could well again be operated by an overseas company would not sit well with the wider creation of great British railways. Not only would London’s rail network be an outlier supporting rail privatising, it would also risk these services functioning to support overseas rail networks rather than our own.

There is a broad consensus in favour of greater devolution of control over rail, reflected in Labour’s plans for GBR, which promise devolved transport authorities a statutory role in the structure, giving you and other devolved authorities the ability to agree national and regional rail services with the unified body. I believe that this would give you far greater strategic and day to day operational control of the span of services operating in London than can be achieved through a contract with a private operator.

Furthermore, the privatised nature of London’s rail network is likely to act as a barrier to any further devolution of metro services into the capital, for example, as it would effectively entail reprivatising services that are in the process of being integrated into public ownership. Such developments would be little short of disastrous and would certainly lead to a fracturing of the consensus around devolution.

For these reasons believe it’s imperative to bring the Elizabeth Line and London Overground into public ownership.

Our clear view is that the future of these concessions is a political decision for you and this appears also to be the understanding of the Government. The Secretary of State said recently that ‘how to secure the delivery of services [in London and Liverpool] will remain a matter for local leaders’.

Our understanding is that the Crossrail Act gives you the power to appoint a public sector operator for the Elizabeth Line. Therefore, I’m urging you to pause this tendering process and mobilise for a publicly owned operator. As the government’s impact assessment on rail nationalisation has shown, any mobilisation costs will be more than offset by the savings from fee payments and dividend extraction.

If there are genuine operational reasons why it would be difficult for TfL to take control of the Elizabeth Line at this time, you have the option of a short-term Direct Award of 2 years, which could be combined with a clear policy statement committing to bringing the concession into public ownership when it expires.

With reference to London Overground, as noted above, the Secretary of State has said the decision lies with you, so can you confirm for the avoidance of doubt that you can take over the London Overground Concession?

I would urge you to use whatever powers you have to appoint a public sector operator to London’s rail networks and, given the industrial and policy implications of this decision, I would be grateful if we could meet as soon as possible to discuss this matter.

As you know, we first wrote to you formally in May on this matter and since that time we have sought to put forward positive solutions, consistent with our wider constructive relationship, so I am again copying this to the Secretary of State but also other labour movement colleagues who have a shared interest in ensuring that all London’s passenger rail services are publicly owned and operated. I have also attached a briefing sent to all Labour London Assembly members.

Yours sincerely,

Michael Lynch,

RMT General Secretary