Yahoo Finance The UK is letting an Italian state-owned firm run part of the rail network — but is still against nationalisation
A UK government minister has said public ownership of the railways is “not the answer” just as an arm of the Italian government was handed joint control of Britain’s West Coast trains.
A new operator called First Trenitalia West Coast Rail - formed as a joint venture by Scottish FirstGroup and Italian state-owned rail operator Trenitalia - will replace Virgin on the line between London and Glasgow.
The department for transport said the contract award from December will mean new and refurbished trains and stations as well as 263 extra services a week by 2022. First Trenitalia will also eventually run Britain’s HS2 high-speed line.
But the government’s willingness to embrace another operator owned by a foreign government was dubbed “absurd” by Labour, given the Conservative administration’s frequent dismissal of calls for more UK government-run railways.
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Several other UK lines are run by operators part-owned by other governments, with Cross Country linked to the German state and Greater Anglia linked to the Dutch state.
Gatwick Express is also linked to the French government through its operator SNCF, while Grand Central is an arm of Arriva, ultimately owned by Deutsche Bahn AG - whose biggest shareholder is the German government.
Labour shadow transport secretary Andy McDonald, said: “It is absurd that the government bans Britain from running its own rail services but allows foreign state-owned companies to do so.
“Passengers are paying over-the-odds in order to subsidise rail travel in France, Germany, the Netherlands, Italy and elsewhere. This money should instead be used to improve services and hold down fares in Britain.”
New Transport Minister Grant Shapps told BBC Radio 4’s Today programme on Wednesday morning: “Why would you put politicians in control?
“I don’t think going back to nationalisation is the answer at all. Privatisation has enabled the railways to expand massively, twice as many people, twice as many journeys and record numbers of people travelling now.”
But Shapps said he accepted “the system is at fault” for problems on the UK’s rail network including delayed trains, and said the latest contract ensured the new provider was “paid for running trains on time.”
The minister also said that Keith Williams, chair of an ongoing independent review of the railways, had supported the new partnership.
The announcement comes only a few months after the department for transport was told Stagecoach would sue after it was disqualified from bidding for the franchise.
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First Trenitalia is owned 70% by FirstGroup and 30% by Trenitalia UK, and will pay £1.6bn to the government over the first phase of the contract from December this year until March 2026.
UK officials are keen to seek the expertise in high-speed rail of firms from around the world at operators such as Trenitalia, and state involvement in the rail industry is common across the globe.
Operators in Britain also have to run their franchises through UK-registered firms, so their profits are taxed in the UK rather than flowing solely to foreign government's exchequers.
