That was the case until the 4th Railway Package passed, now
essentially all "public service" railway contracts are to be issued based on competitive tenders.
The definition of public service will cover virtually all GBR services as almost all of them are in receipt of public subsidies.
Correct me if I'm wrong, but GBR in its overall structure could still exist, no? However, it may not be able to directly operate the contracts in-house, unless GBR rail (let's just say, the arm's long publicly owned operator), was awarded the competitively tendered contracts or directly awarded the contracts, in accordance with EU law (see below).
To put it differently, GBR, as proposed by the conservatives (with a few tweaks), would largely comply with the 4th Railway Package, whilst the nationalised GBR model (by Labour) may not directly, I think.
Technically, the EU requires separation of track and train (which is stupid and doesn't really work, see Germany, Denmark or Sweden) - indeed integration, regardless of whether public or private is almost always better (see Switzerland, Austria or Japan). But setting this aside, I think GBR actually offers an interesting model that EU/EFTA states could adopt over time, which is to say, basically get around the separation requirement by keeping GBR operations and GBR rail legally separate, but strengthen their cooperation as part of an integrated publicly owned organisation. This organisation, in terms of its public philosophy, would operate as a single entity and brand in the eyes of the public, politicians and employees. This is a bit like ÖBB or SBB today, arguably Europe's best rail operators, except that they operate their trains in-house. Or like the private regional JR companies in Japan, except that again they operate everything in-house. GBR would in theory have to competitively tender their contracts. Even so, a big improvement over the existing franchising structure.
However, here Andy Burnham coming in is actually quite interesting, because unlike the solid left of the Labour party, he's actually placed great emphasis on "public control", rather than public ownership necessarily. Thus, I predict that even if he were soon to be removed and replaced, we might see the Labour Party and soft left pivot to this, if and when EU accession talks become more tangible again.
There is also the additional nuance that Austria, which as a full EU member state is bound by the 4th railway package, whilst allowing for open access operators on certain routes, has not put out national ÖBB services to competitive tender, instead directly awarding a single nationally integrated rail contract to ÖBB, arguing it is part of an integrated national network (like SBB in Switzerland) and that ÖBB are best equipped to operate it. So this is also a matter of political will and priority, not just following the letter of the law.
Last but not least, whilst generally speaking the UK cannot get any exemptions regarding free movement of goods, services, capital and people, they could perhaps get an exemption regarding the exact implementation of some specific parts of the 4th railway package. This is a bargaining process after all and if the UK can credibly demonstrate that their network is open to private operators on a regional level (in devolved authorities, i.e. in London, Manchester and Birmingham) and national level too in terms of open access operators, then the EU does not really have much grounds upon which to reject that, given the case of Austria or even Denmark.
However, as it stands, I believe the case of Austria demonstrates that GBR legislation could be adapted in such a way that GBR would directly award contracts on a national level to regional GBR operators, whilst metro-area devolved authorities (London, Manchester, Birmingham, Tyne and Wear) would put their local services out for competitive tender and GBR would regulate / approve open access operator requests for long-distance services.
Or something like that, in any case
