Labour rail pledge in doubt after £3bn private contract to run London Overground 

London Mayor Said Khan has caused a row within the Labour party after First Group was awarded a £3bn deal to operate the London Overground, a move which seemingly flies in the face of Labour’s manifesto commitment to bring railways back into public ownership. 

On Tuesday the London-listed transport group revealed that it would begin operating the capital’s 104 mile above-ground rail network for a period of up to 10 years from May 2026, a deal which London transport official David Thomas hailed as being able to “deliver a range of benefits” for commuters. 

But the Mayor of London, who is also the chair of Transport for London (TfL), is facing questions over the announcement of the contract – seen as a snub to the Labour government in the same week it unveiled its branding for Great British Railways, the state body which is fronting Labour’s renationalisation of rail services across the country. 

London’s Transport Committee chair Elly Baker, a Labour member of the London Assembly, said Khan should ensure that the capital city “keeps pace with rail reform in the rest of the country”. 

While Baker acknowledged the private concession model, which allows the Elizabeth Line and the Overground to be outsourced to independent operators, had delivered a “significantly better service to Londoners”, she argued Khan should look to review agreements with private companies to allow TfL to take full control over lines. 

In a statement, Baker told CityAM: “We need to ensure that London keeps pace with rail reform in the rest of the country and the creation of Great British Rail by the Labour government, both in terms of the funding provided for services going directly to services, and direct accountability to Londoners. 

“I recognise the constraints TfL are operating under, but I would welcome a future contract review in favour of TfL running these lines directly.”

Read more: Sadiq Khan has derailed Labour’s nationalisation plans

Unions slam ‘outrageous’ decision

The leading transport union RMT slammed the contract as being “beyond belief” in light of the Labour government’s steps to nationalise railways up and down the UK. 

“Despite the Mayor saying he backs public ownership of rail, the London Overground is being re-privatised on a lucrative eight-year deal that puts profit before passengers,” RMT general secretary Eddie Dempsey said.

“This is another outrageous decision, landing on the same day we learn that cleaning staff are to be outsourced again despite previous commitments to bring them in-house.

“We will oppose any attempt by TfL to secure devolved control over publicly owned Great British Railways services while it continues down this path.”

Labour manifesto under question

The Labour Party’s election manifesto last year said that railways would be brought under public ownership as contracts with existing operators expire or are broken. 

It also said mayors would have a role “in designing the services in their areas” as part of commitments to devolution across local authorities.

TfL’s contract with the operator Arriva Rail London was due to expire next year, opening questions over whether the publicly-owned transport body would intervene and take over operations from next May. 

One part of the Overground network, formerly known as the East London line was previously owned and operated by TfL before the service was contracted out in 2007.

FirstGroup has now been named as the preferred operator for the service at the same time as services including South Western Railway and East Coast Main Line have come under public ownership following last year’s election. 

Mayor Khan’s 2024 manifesto did not include commitments to break private concession contracts with train operators. 

Christian Wolmar, a London-based rail historian and commentator, told CityAM: “I think it’s a very strange and odd and probably expensive decision.

“They have failed to learn from experience that these management contracts are not necessarily more efficient than directly running organisations.

 “I’m bemused by it – I don’t see how it will save money,” Wolmar said, adding that TfL might be avoiding taking the contract in-house because “they don’t want to be responsible for all the industrial relations issues over it.” 

A Downing Street source insisted that the new contract was not a breach of the Labour manifesto not to renew private contracts as the Mayor’s devolved powers did not fall within the party’s set of pledges. 

It is also understood that other city authorities in the UK are looking to extend transport agreements with private companies. 

The Department for Transport, the Mayor of London’s office and the Labour Party did not comment.