Labour draws up plan to renationalise railways

LABOUR is drawing up detailed plans to renationalise the bulk of the railway network in a move expected to swing key left-wing support for Tony Blair's proposed changes to Clause IV of the party's constitution.

A working party under Mr Blair's deputy, John Prescott, has examined how each privatisation step could be reversed by a future Labour government.

In a significant shift in tone, Mr Blair's close supporters are stressing his "explicit commitment to publicly owned railways''. Earlier Mr Blair said only that the party's policy would be determined by the extent of the privatisation it inherits.

Mr Prescott, one of the key links between the leadership and the union movement, is expected to spell out in more detail the party's determination to return the rail network to the public sector in a speech today.

The move comes as Mr Blair faces a left-wing backlash against his plans to reform Clause IV, which in theory commits the party to public ownership. The Labour leader is likely to need support from the trade unions to secure the planned changes.

Mr Prescott's working group, which includes Michael Meacher, shadow Secretary of State for Transport, Henry McLeish, the rail spokesman, and Brian Wilson, the trade and industry spokesman, has agreed on some early proposals.

These include: Franchised services, expected to number no more than 10, to be returned to public control.

A national body - possibly British Rail - to control signalling, track and safety issues.

A controlling stake in Railtrack, which controls land, track and stations, to be bought back, if the Government sells off only 51 per cent.

However, Mr Blair will not commit himself to renationalising Railtrack if all 100 per cent is sold. The resources necessary to buy it back - around £4bn - would simply not be available, Labour leaders say.

The party's refusal to state its policy had become a growing embarrassment to the opposition. Last week Brian Mawhinney, Secretary of State for Transport, argued that the public did not trust Mr Blair because he would not say whether he would renationalise the railways.

Senior Labour figures also believe the new policy proposals are likely to be welcomed by the rail union, RMT, whose executive is due to hold a crucial meeting this week to determine its position on Clause IV. However, Mr Blair's backers argue that the timing of the party's shift over rail renationalisation has nothing to do with the RMT meeting, and say that the working group has existed since well before Christmas.

With their support likely to prove crucial to Mr Blair, the trade unions have put forward a list of demands, though they are not seeking far-ranging changes in areas such as industrial law.

Ahead of Labour's special conference to consider the replacement of Clause IV on 29 April, Mr Blair has begun a programme to try and win over the support of party activists. The Labour leader plans a series of regional visits, including speeches and private meetings with party members. Mr Blair and Mr Prescott are also featured on a 10-minute video arguing the case for reform.

The Labour leader will also shortly make public a draft of his proposed revision of Clause IV, which his supporters believe will reassure many on the left.

Meanwhile it has emerged that Railtrack is reviewing its system of zones which cover the country. Labour believes this move will result in rationalisation and cost-cutting in preparation for the sell-off.

Sources at British Rail yesterday confirmed reports in the Independent that services will be cut if a £400m reduction in Treasury funding, announced in November's Budget, is allowed to stand.

One said: "We've made as many efficiency savings as we can and there's just no more room to manoeuvre."

In the past BR was able partly to off-set the cost of running services with income from property rental and the sale of land.

Profitable lines were also able to subsidise unprofitable ones. But now property and land assets on the network belong to Railtrack, and each of the 25 train operating units into which BR has been divided must pay its own way.