Andy Burnham has insisted his plan to renationalise the railways would “finance itself”.
The shadow health secretary has promised to bring lines back into public ownership as franchises expire, pointing to the £1 billion handed to the Treasury while the East Coast line was under Department for Transport control following the collapse of its previous franchise.
His comments come after the Government performed a Uturn on plans to electrify the TransPennine service between Leeds and Manchester.
Mr Burnham also said it was vital to “have a plan” for the public finances and the deficit but insisted Labour had to have a fundamentally different economic policy to the Tories if it wanted to cut through to voters.
The bookies favourite to succeed Ed Miliband said left winger Jeremy Corbyn had “lifted the debate” in the Labour leadership contest by surging to the front of the race.
Mr Burnham made his remarks in an interview with the BBC Radio 4 Today programme ahead of the publication of his leadership manifesto, which he has promised will offer “something for people in every postcode”.
Challenged on how much his plan to renationalise the railways and cut fares would cost, Mr Burnham said: “I am not saying you at a stroke of a pen try and renationalise the whole lot. I am saying as franchises expire, we should bring them back under public control.
“We saw that with the East Coast where the public sector ran the line for a period of time. What that did is it produced a billion pounds that went back to the Exchequer, that was then used to keep fares lower.”
Pressed on how much he would spend to achieve the goal, Mr Burnham said: “I believe it can finance itself because the money that can be generated can come back into supporting it.”
He added: “Our railway system costs 40% more to run than comparable systems across Europe.
“The money we are putting in (now), those public subsidies, are not going to the benefit of the travelling public. Everyone listening who gets fleeced at the ticket machine every morning knows the truth of that.”
Mr Burnham’s plan comes as research showed anti-austerity policies are a vote loser and Labour’s defeat at the general election was caused by a failure to persuade the public it could be trusted to tackle the deficit.