Rail rhetoric overshadows new Labour partnerships

Much of the Opposition's industrial policy could fit into a Heseltine white paper - but suspicions remain, writes Peter Rodgers

The Labour Party appeared this week to be facing two ways at once in its relationship with business. Tony Blair made what at first sight appeared to be a promise to renationalise the railways and in almost the same breath announced a deal with BT that was billed as a new initiative in public and private sector partnership.

The former sounded like a return to the old Labour ways, and was made under pressure from unions; the latter was a classic piece of modern Blairism, discarding anti-business rhetoric to do a deal with a private company that would not be out of place among the Conservatives.

In fact neither announcement was quite as dramatic a departure as it appeared. Labour spokesmen have spent much of the last year ducking direct questions about whether they would buy back Railtrack - worth at least pounds 2.5bn - after the Tories privatise it. After Mr Blair's speech, they have still to give a straight answer.

Mr Blair's statement that "there will be a publicly owned and publicly accountable railway system under a Labour government" was qualified by a promise not to write blank cheques, which in itself left considerable doubt over whether Labour would attempt to buy it back in its first term of office.

Given the scale of spending that would be involved, the remark was more likely to have been aimed at wrecking the sale, to ensure the problem would not arise in the first place, which has been a consistent tactic of Labour's front bench. City advisers believe it could just as easily result in Railtrack going for a knockdown price.

And what exactly does Mr Blair mean by a railway system? Railtrack owns the rails, but from the point of view of the passengers, the most visible part of the railways will be the train operating companies, which are in the process of being franchised out to the private sector.

Since those franchises are generally of seven years, a Labour government thinking in terms of two full terms could renationalise the system without cost by simply allowing the franchises to expire. In any case, half the franchises may still be in the public sector by the election. In contrast, the rolling stock leasing companies - the roscos - may be sold by Christmas, for up to pounds 1.8bn. New Labour would be unlikely to want to take them back into public ownership. The Roscos fit nicely with another strand of Labour thinking, which is to develop financial partnerships with the private sector.

After all, Labour has claimed credit for the ideas that form the basis of Kenneth Clarke's private finance initiative. Gordon Brown, shadow chancellor, has been fiercely critical of the PFI, not because of the principle but because the Treasury has strangled it in red tape and failed to fulfill the original purpose - which was to introduce private finance as an addition to government spending, rather than a replacement. Indeed, Mr Brown has floated the idea of beefing up the PFI by offering government insurance against some of the potential risks, such as changes in regulation.

Against that background, industrialists following Labour thinking over the last year will find little to astonish them in the deal with BT announced by Tony Blair. It is the Tory government that has just extracted pounds 300m towards the cost of the Jubilee Line from the new owners of London's Canary Wharf. The thinking is not dissimilar. Mr Blair's plan is to free BT to sell entertainment down its wires in return for investing in communications links to hospitals, schools, colleges and libraries. With the cost to BT likely to be modest, Mr Blair may end up being criticised for giving away rather a lot for the money.

Partnerships with industry have become the key theme of Labour's policy, as it finally buries direct intervention. Gone are last year's ideas such as a state-owned small business bank. A surprising amount of what is left of Labour industrial policy could fit easily into Michael Heseltine's competitiveness white papers.

Employers dislike the minimum wage intensely and are fiercely critical of windfall taxes on the utilities - though the sting has been drawn from that by the way Tory backbenchers have promoted the idea as well. The CBI's opposition to Labour's promises to abandon the opt out from the European social chapter are based not so much on the setting up of works councils but on what Adair Turner, the CBI director general, calls the "blank cheque" the chapter gives for future regulation of the labour market.

As for Labour's wide-ranging plans to reform utility regulation and introduce a new competition authority, little of this is radical in the sense of being outside the debate among experts about how to manage such things. And at the macro-economic level, business has been been reassured by Mr Blair's commitment to continuing with a tough inflation target.

As Mr Turner said recently, nobody is disputing the value to business of the basic shift in Labour policy. The real issue for some business people remains a suspicion about whether Mr Blair can deliver it in power - a suspicion which the return to rhetoric about renationalisation could reinforce.

Start your day with The Independent, sign up for daily news emails
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40k: SThree: SThree are a global FTSE 250 busi...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: SThree are a global FTSE 250 ...

Reach Volunteering: Trustees with Finance, Fundraising and IT skills

Voluntary and unpaid, reasonable expenses reimbursable: Reach Volunteering: St...

Day In a Page

Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones
Theme parks continue to draw in thrill-seekers despite the risks - so why are we so addicted?

Why are we addicted to theme parks?

Now that Banksy has unveiled his own dystopian version, Christopher Beanland considers the ups and downs of our endless quest for amusement
Tourism in Iran: The country will soon be opening up again after years of isolation

Iran is opening up again to tourists

After years of isolation, Iran is reopening its embassies abroad. Soon, there'll be the chance for the adventurous to holiday there
10 best PS4 games

10 best PS4 games

Can’t wait for the new round of blockbusters due out this autumn? We played through last year’s offering
Transfer window: Ten things we learnt

Ten things we learnt from the transfer window

Record-breaking spending shows FFP restraint no longer applies
Migrant crisis: UN official Philippe Douste-Blazy reveals the harrowing sights he encountered among refugees arriving on Lampedusa

‘Can we really just turn away?’

Dead bodies, men drowning, women miscarrying – a senior UN figure on the horrors he has witnessed among migrants arriving on Lampedusa, and urges politicians not to underestimate our caring nature
Nine of Syria and Iraq's 10 world heritage sites are in danger as Isis ravages centuries of history

Nine of Syria and Iraq's 10 world heritage sites are in danger...

... and not just because of Isis vandalism
Girl on a Plane: An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack

Girl on a Plane

An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack
Why Frederick Forsyth's spying days could spell disaster for today's journalists

Why Frederick Forsyth's spying days could spell disaster for today's journalists

The author of 'The Day of the Jackal' has revealed he spied for MI6 while a foreign correspondent