South Africa has recently made moves to allow the private sector to participate in the government-owned rail network. After years of poor management, inefficiencies and ineffectiveness, the freight rail system is the country’s failing the export sector and affecting the economy.
Despite failures seen in nationalised rail systems elsewhere in the world, the UK’s Labour government is forging ahead with nationalising the rail system in the UK.
Why? Because of socialist ideology.
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In 2020, Keir Starmer, then leader of the opposition, pledged to bring rail, mail, water and energy back into public ownership. Public ownership means government ownership; it does not mean the citizens of a country own anything.
In July 2022, he U-turned and said the policy of re-nationalisation was no longer compatible with their strategy.
But it did not pass without controversy. As the Daily Mail noted, “Sir Keir Starmer was … accused of fast-tracking his flagship transport policy of re-nationalising the railways to please his union ‘paymasters’.” The Government bypassed the traditional process that such laws go through and used a “fast-track measure [that] is usually reserved for emergency legislation, such as during the covid-19 pandemic when it was used to bring in social distancing rules speedily.”
“It means the law to re-nationalise the railways, a long-held demand of union bosses, can pass weeks and possibly even months quicker,” the Daily Mail said.
The Bill received Royal Assent on 4 November 2024.
Under Labour’s plans, announced in December 2024, the first step involved transferring South Western Railway into public ownership in May 2025, which was done, with two additional operators expected to follow by late 2025. This process will be carried out on a rolling basis as existing private contracts expire, allowing the government to avoid large compensation payments since all current contracts are set to end by 2027.
The re-nationalisation plan will ultimately be implemented through the creation of a new publicly owned entity, Great British Railways, which will oversee the network.
The government argues this move will end the “chaos, delay and disruption” associated with the previous private operator model and save £2.2 billion annually after five years. Transport Secretary Heidi Alexander stated that a complex system of private operators has too often failed its users and the public has suffered from frequent cancellations and high ticket prices.
In guidance published in May 2025, the Government said, “ Publicly owned Great British Railways (GBR) will be created around 12 months after legislation is passed … Instead of having to navigate 14 separate train operators, passengers will once again simply be able to use ‘the railway’. They will travel on GBR trains, running on GBR tracks, and working to a GBR timetable – all run by a single body.”
Did rail passengers really have a problem “navigating” separate train operators? It’s not a complaint that’s been heard from rail passengers before.
“Before the bill becomes law, leaders of Network Rail, DfT Operator Limited (DFTO), and the Department for Transport’s (DfT’s) Rail Services Group are working together, as Shadow Great British Railways (SGBR),” the guidance said. Oh dear …
Government ownership never works. In reality, it translates to nothing more than government control at taxpayers’ expense while a handful of favoured people make a fortune.
Despite the fluffy-sounding words and ideas politicians spout to convince you they are looking after the public’s interests, nationalisation often fails due to a lack of efficiency and expertise. As The Telegraph noted, “it is, I fear, pure fantasy to think that the state possesses either the skills or the money to respond to the complexity of demands that enterprise and public services are today subjected to.”
Economics Online notes the disadvantages of nationalisation as ineffective and inefficient management, the moral hazard – which occurs whenever people or organisations are insured against the negative consequences of their own inefficient behaviour – and limited scope to raise capital for long-term investment and modernisation.
Learn Economics notes the additional disadvantages of nationalisation as the profit incentive is absent when the state takes control of an industry, a loss of efficiency and a rise in inefficiency means costs are higher, state controlled industries tend to be large so they can suffer from diseconomies of scale, such as poor communication and de-motivated employees, nationalised industries may run at a loss/deficit forcing governments to divert funds from key areas, and increased public ownership may deter inward investment.
Reading the advantages from both outlets, it would seem the only time nationalisation really has any benefit is to rebuild collapsed industries and infrastructure after a war or similar devastating event.
So, why does the Labour Party continuously pursue these nation-destroying nationalisation policies? The Telegraph explained:
Labour’s instincts, rooted deep in the party’s Clause IV traditions of “common ownership of the means of production, distribution and exchange,” are to nationalise and be done with it, but it is no longer as simple as that.
The bottom line is that Western governments no longer have the money or indeed the expertise for the high-quality public service demanded by voters, let alone for indulging themselves in state-owned and run enterprise.
“Common ownership of the means of production, distribution and exchange” is, of course, communist ideology. Indeed, Karl Marx and Frederick Engels said as much in their Communist Manifesto:
Some will claim that one success of nationalisation is in the health industry. Looking at the state of the UK’s flagship of socialist policies, the National Health Service, one may begin to doubt whether that is indeed the case.
Meanwhile, other countries with nationalised rail have realised that it was a costly mistake and are seeking more privatisation to correct the failures.
Take the example of South Africa. In South Africa, the rail network is under public ownership, with Transnet Freight Rail (“TFR”), a division of the state-owned company Transnet, responsible for freight operations, and the Passenger Rail Agency of South Africa (“PRASA”) managing commuter services.
However, the rail system has been degraded and in some areas it is completely unusable, which has affected South Africa’s ability to export goods and negatively impacted the country’s overall economy. This is an example of the consequences resulting from state control of the “means of distribution.”
It is said that the degradation of the rail network has been due to looting and a lack of proper maintenance. But it has also suffered from sustained poor management. “Transnet’s operations, mainly its freight rail network and ports, are in the doldrums in almost every regard,” Daily Maverick noted in January 2024. “Operationally, Transnet Freight Rail remained in a mess, with volumes continuing to decline.” The Daily Maverick then goes on to describe Transnet’s failures, which, not coincidentally, are the same as the disadvantages of nationalisation as noted above.
In response to TFR’s failures, in March 2022, the South African Cabinet approved the National Rail Policy, which enables private participation in rail operations while the infrastructure remains state-owned.
Semafor pointed out earlier today that to increase freight volumes, improve efficiency and address the challenges faced by TRF, Transnet has completed the selection of 11 private companies – which TRF refers to as Train Operating Companies (“TOCs”) – to run freight trains on its network, marking a significant step towards private sector involvement:
South Africa will soon allow private firms to run trains on its freight network in a bid to improve services after years of problems with the state-owned ports and rail company Transnet.
The government shortlisted 11 private companies that will now hold further talks about securing routes to transport commodities such as coal, iron ore, manganese and sugar.
Transnet has, in recent years, grappled with a shortage of freight trains and inefficient ports that have cut income from exports, particularly mining. A September 2023 study by South African research consultancy GAIN Group said the firm’s problem cost the country 1 billion rand (US$53 million) a day.
The takeaway is this: Instead of South Africa’s rail network supporting production and so improving the economy, the rail network is costing money while causing the country’s earnings from exports to decline.
The Transnet Rail Infrastructure Manager estimates that the 11 new privately owned TOCs will carry an additional 20 million tonnes of freight per annum from the 2026/27 financial year. Thus, demonstrating how the private sector can make good from governments’ bad, and relatively quickly.
Nationalisation and Big Government are not the way to grow the real economy. Capitalism is the only way. This is something that the Labour Party’s socialist ideology will not allow the UK to realise.
Featured image: Promotion for Great British Railways (left). Source: UK Government (left). Damaged and overgrown rail tracks, South Africa. Source: Benoni City Times
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