Paddington rail disaster: State-run railways - Why there will be no return

The industry

Nationalisation - a concept that had vanished from the political agenda under New Labour - has resurfaced in the wake of last week's horrific train disaster. As the soul-searching into what can be done to guarantee a safe train network continues, the idea of taking the railways back under state control has gained currency.

Nationalisation - a concept that had vanished from the political agenda under New Labour - has resurfaced in the wake of last week's horrific train disaster. As the soul-searching into what can be done to guarantee a safe train network continues, the idea of taking the railways back under state control has gained currency.

Even before Tuesday's crash, the privatised network had reached a nadir of unpopularity - sharp rises in unreliability and late running combined with a litter of millionaire railway fat-cats and bumper corporate profits provoked the travelling public into a fury.

Now people are asking whether train travel would be safer as well as more efficient under public ownership rather than in the hands of the private sector.

Jonathan Bray, of the campaign group Save Our Railways (SoR), said the UK had the lowest state spending but the highest fatality rate of any of Europe's leading economies. While we spend 0.9 per cent of our economic output on rail and suffer 0.36 deaths every billion passenger miles, the figure in the best country, Spain, is 1.4 per cent and 0.09.

"This [crash] has perhaps hardened people's concerns about the priorities we give public transport and their verdict on the whole privatisation experiment," said Mr Bray.

SoR, which advocates nationalisation, will step up pressure on the Government to honour its pre-election commitment to a "nationally accountable and publicly owned railway".

But there are many hurdles to nationalisation. The rail sell-off was the most complex privatisation ever achieved. One giant monolith was broken up into some 100 different companies to run the track, run the trains, lease out the stock, maintain the trains and track, run the phone system and so on.

The costs of pushing the railways into the private sector ran into hundreds of millions of £and unpicking the myriad contracts and obligations between these companies would undoubtedly cost even more.

On top of that is compensation to investors. Three years ago few thought privatisation would succeed and many parts of the network were sold off cheaply. Since then investors have realised the hidden value in the network. Railtrack alone, which was valued at £2.5bn including debt at privatisation, is now worth around £6.5bn. As one analyst noted: "Gordon Brown may have a £12bn war chest but I am sure he doesn't plan to spend half of it buying out the big investors."

But John Prescott, the Deputy Prime Minister, who has Cabinet responsibility for railways, does have other options. He has warned in the past that bad train operators - the most public face of the network - could lose their franchise and that the Government still has the power to run the trains. The first franchises come up for renewal in just four years' time.

The second line of attack would be against Railtrack. It is well known that Mr Prescott has considered redirecting some of the state subsidy direct to Railtrack rather than to the train companies in order to gain more control. The financial markets are already nervous about intervention to force Railtrack to up its safety spending. The company's shares and bonds - its tradable debt - have fallen since Tuesday.

"People are concerned about changes to the way in which Railtrack is regulated," said a senior analyst.

Railtrack has argued that any move by the Government to control the company would cause investors to take flight, jeopardising Railtrack's ability to raise money for investment.

But in the end, it is down to politics. As much as some backbench MPs detest the privatised railways, New Labour has shown it is determined not to upset the City and the markets unnecessarily.

Nationalisation - by the front or back door - would send out all the wrong signals about this Government.