Posted 6th January 2025 | 5 Comments
Transport secretary gives open access a yellow light
Updated 7 January 08.40
Transport secretary Heidi Alexander has sounded a note of caution over future open access services, and has issued new advice to the Office of Rail and Road, which decides whether to grant licences.
She emphasised in her letter that the formal guidance had not changed, but added that ‘I hope it will be helpful to the ORR by setting out my expectations’.
Since the early days of privatisation, the main test for open access has been that a new service will not ‘abstract’ revenue from operators with government contracts, which were known as franchises until 2020.
Such a loss of revenue could have cost taxpayers money, because franchise holders enjoyed a degree of commercial protection.
Since Labour announced that it intended to renationalise the remaining former franchises, which now operate under National Rail Contracts, private sector owning groups have been paying much greater attention to open access opportunities, particularly as Labour had said before the July election that ‘wherever there is a case that open access adds value and capacity to the network, they will be able to continue to compete’.
But Ms Alexander has now qualified this general statement of policy, saying in her letter to the ORR that: ‘I am … aware of the additional pressures new services can create on already constrained network capacity and their impact on the value secured from public investment in infrastructure. While Open Access operators pay variable access charges to Network Rail to cover the direct costs incurred running their trains on the network, unlike government contracted operators they do not fully cover the costs of fixed track access charges.’
The ORR has already granted licences to several new open access operators, but more are being considered.
Naomi Horton, rail partner at law firm Ashurst, said: ‘Today’s letter from Heidi Alexander signals the requirement for ORR to apply a more stringent test for future privately run passenger rail open access services which takes into account rail network congestion, contribution to the upkeep of the infrastructure and an implied focus on bringing innovation and new markets, in addition to the current prohibition on such open access services “primarily abstracting” revenue from the franchised/public sector run services.
‘This will be viewed with interest and possible dismay by private sector transport operators keen to continue running rail services, since, following the passing of the Passenger Railway Services (Public Ownership) Act, this is the only way they can continue their passenger rail businesses.’
One open access operator, FirstGroup, has already lost Transpennine Express and is due to see its remaining contracts for South Western Railway, Great Western Railway and Avanti West Coast renationalised soon, but like other owning groups it has yet to comment.
Shares in FirstGroup were down by 0.73 per cent this morning.
Reader Comments:
Views expressed in submitted comments are that of the author, and not necessarily shared by Railnews.
david C smith, Bletchley
No, I wouldn't see myself as right wing. What I'm in favour of is not a complete "free for all", nor a rigid monolith, but an attempt at providing environments that give "horses for courses", different ones for different activities.
No other transport media try and put all their operators and infrastructure together in a giant national organisation . After WW2, there was an attempt to nationalise road haulage, which was a bit of a disaster at the time. Similarly, in aviation, the national carrier, BEA never was able to develop service for "ordinary people", and remained exclusive.
As far as those rail operations that need to be within a coordinated , public organisation are concerned, then "yes !". Things such as, for example , the former water boards should never have been privatised. I can't see how having either complete privatision or complete nationalisation is "the answer".
John B, London
Open access is a strange beast. It's a recurrent theme for those on the right who want a multitude of operators competing on the railways, without of course taking account of the physical constraints on our stretched network.
There's a case to be made that open access undermines the wider public good by running competing services on crowded infrastructure, often gaming the system, and abstracting passengers from existing services. If anything, open access is a symptom of Britain's dysfunctional, broken railway.
david C smith, Bletchley
Yes, capacity limits are a factor in all this. Living on the WCML, I see this at times . Under such a scheme as outlined in previous letter, there would be a need for a licence given to each operator , and a form of "dutch auction" for paths , at least on stretches of infrastructure such as the WCML south of Rugby. We will still need ORR ,etc. to administer this.
I also fondly hope we can see infrastructure improvements in the future, commensurate with growing demand patterns. The HS2 problem seems largely to arise due to being well overspecified in the first instance , and could have made better sense if speed ( and hence costs) had been of secondary importance , below capacity relief.
Andrew Thomson, Leeds
In response to David Smith's comment, the difficulty with a competitive open access system is, as the SoS states, constrained network capacity. Competition can only work if there is capacity available. France and Italy can do this because they have built new high speed lines with capacity for private operators like Ouigo to use them. The contrast with the UK network is instructive, where open access has only been possible where we've been able to eek out 1 or 2 additional slots in the timetable. This is why we don't have fully competitive open access now, and is the same reason it wasn't implemented back in the 1990s when the network was privatised.
david C smith, Bletchley
Personally, I don't object to the Labour government's policy of ending the regime of franchising , with its own internal contradictions. However, the replacements should not be a "blanket" nationalisation of everything in sight ; the railway is a diverse collection of activities, which will only "give their best" under regimes that recognise this.
By all means , like the Mayor of Manchester is doing, when dealing with natural monopolies, such as local public transport, put it all into a unified , publically owned and democratically controlled entity for each "City Region".
The parts of the railway that would thrive , though, in an Open Access , free enterprise , competitive regime, such as intercity and longer distance passenger service and general freight ,too , should be given a "green light".
Infrastructure would, of course, need to be in the public domain.
The nearest transport system to the above that presently operates is in Sweden., which is worth a look at on the appropriate pages on the web.