Can Corbyn renationalise the railways?

The EU flag: like a ref flag to a bull


New Labour leader Jeremy Corbyn has suggested he would consider re-nationalising the railways.  In response, UKIP leader Nigel Farage stated that this was impossible due to EU Directive 2012/34/EU, which he says requires railways in member states to be in private ownership.

EU law is not my area of expertise; however, I have done my best to research this topic and from what I have found I must disagree with Mr Farage.

First, Directive 2012/34/EU does say in the preamble:
"In order to render railway transport efficient and competitive with other modes of transport, Member States should ensure that railway undertakings have the status of independent operators behaving in a commercial manner and adapting to market needs."

However, when you read through the directive (which is very long and very tediously drafted) it does not actually appear to require the railway to be in private ownership.  At most, the directive requires the track to be owned independently of the trains and for the trains to be operated in a commercial manner.  That is not the same as saying that the train operators cannot be a publicly owned body... as they are in France.  Provided the train operating company is operated on a commercial footing then they can be in public ownership is my reading.  The reason for this requirement is that EU law appears to impose limits on state-aid that can be given to businesses, presumably to avoid prejudicing competitors in other member states that do not benefit from state funding.

Further, Article 345 of the Treaty on the Functioning of the European Union (TFEU) specifically states, "The Treaties shall in no way prejudice the rules in Member States governing the system of property ownership."  When the question of nationalisation was put before the Court of Justice of the European Free Trade Association States (more commonly known as the EFTA Court), the Court held that a member state "...may legitimately pursue the objective of establishing a system of public ownership over these properties, provided that the objective is pursued in a non-discriminatory and proportionate manner".  In that case, the property in question was Norwegian waterfalls but the same questions of proportionality and non-discrimination apply to railways in the same way.

So, does EU law prevent the UK (or any other member state) re-nationalising the railway, or any other privately owned business?  The answer appears to be "no".
Location: Europe

Comments

  1. Anonymous24 September 2015 at 12:33

    SNCF, the French state owned (mainly) train operating company, does indeed run the TGV, intercity and regional trains plus manage the stations. However, other train operating companies and national railways can operate trains over French metals. Marseille St Charles is a good example of this with RENF, Trenitalia; Eurostar, ICE plus others. Also goods carrying companies also operate their own trains over French metals.
    Branson might have to take a heart pill if he forced to compete with SNCF on UK metals. I bought two 1st class return tickets Toulouse to Marseille (c500km) a couple of weeks back at 120€ return for both of us. I checked at the same time for two 1st London to Preston tickets to travel on the same date and it was £600.

    Paysan

    ReplyDelete

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