Wednesday 11 January 2017 2:41 pm

Who owns the UK’s railways? Well, not British firms in many cases

By: Oliver Gill

The sale of the C2C rail franchise – labelled by consumer groups as the best network into London – has once again sparked concerns that Britain's railways are being taken over by foreign, often state-owned, firms.

National Express' sale of its final franchise in the UK was part of the FTSE 250 firm's strategy to target higher growth areas of continental Europe and North America. 

Sources close to the firm were at pains to stress the move had nothing to do with the ongoing raft of industrial action that is slamming the brakes on Britain's transport sector.

Read more: Mamma mia! National Express exits UK rail, leaving it to the Italians

Unions have piped up that the sale to a new entrant – this time, state-backed Italian firm Trenitalia – is proof that the government is standing by and letting foreign companies take over Britain's railways instead of grabbing the bull by the horns and bringing the network back under public ownership.

In fact, according to the Rail, Maritime and Transport union, 70 per cent of Britain's railways are now under foreign ownership to some degree.

Devil in the detail

On the face of it, overseas operators do play a major part in running the UK's railways. 

But because many overseas transport firms are involved through joint venture agreements with UK companies, it isn't quite as simple as saying there is a growing dominance by firms outside of the UK.

Read more: DfT will publish rail franchises' performances after Southern chaos

Before today, the main three companies from overseas were German stated-owned Deutsche Bahn, the international arm of the Netherland's nation operator, Abellio, and French firm Keolis.

Keolis has been a rather quiet minority owner of Govia, the firm that owns Southern rail – arguably the network that has been blighted most by industrial action over the last year.

British Rail? Not as we know it

The general secretary of drivers union Aslef, Mick Whelan, responded to National Express' sale of the C2C franchise by asking: "When will the government admit that rail franchising has failed and do the only sensible thing which is to return all UK rail operations to public ownership?"

However, analysts pointed out the rationale for overseas interest in the UK.

"International operators want to buy into the UK to drive growth in passenger volumes as do the privatised UK franchise operators," said Alex Paterson of Investec. 

(Source: Department for Transport)

Paterson adds that although the likes of Deutsche Bahn are state-backed, "they are run commercially and for the benefit of passengers, unlike nationalised UK businesses".

Read more: Southern rail chaos continues: Talks to solve dispute end with no deal

Britain's railways carried passenger volumes of 1.6bn in 2016, this compares with volumes of 735m in 1995, just as the privatisation of the UK's rail network began.

Paterson highlights this was a fall from volumes of just over 1bn in 1948, when British Rail was first brought in to run the network. He said:

Nationalisation has led to falling passenger usage and privatisation has led to rising passenger usage.

Nationalised UK industries have shown unequivocally, that they cannot operate commercially. International arms of European state owned operators have worked commercially.