Tony Lodge is a Research Fellow at the Centre for Policy Studies and author of Rail’s Second Chance – putting competition back on track published by the CPS.
The government quango in charge of deciding whether to allow more rail competition and choice has decided to refuse new competitive high speed services on Britain’s biggest rail network. This bizarre decision, by the Office for Rail Regulation (ORR), flies in the face of the Government’s stated desire to see more track competition and contradicts Network Rail, the company which owns and manages Britain’s railways, as it said it could accommodate such new services.
These new high speed non-franchised ‘open access’ services were to have run between London Euston and the North West and Yorkshire, in direct competition with Virgin and other franchised services. They would have become a staple benefit to the Government’s so called ‘Northern Powerhouse’ ambitions.
Earlier this month, Patrick McLoughlin, the Transport Secretary, told the Transport Select Committee: “Open access, where there is a viable proposal put forward, is something that I am always willing to support and encourage. At the end of the day, it is not specifically for me to say that open access will take place at A and B. That is a matter for the Office of Rail Regulation. Open access is certainly something that we do need to listen to whenever proposals come forward.”
So why has the ORR, an agency of government, gone against the Government and Network Rail’s thinking in its refusal to allow more railway competition? Why is the ORR and its responsible Ministry, the Department for Transport, apparently at odds with Ministers and the evidence-based successes which show that more track competition against the incumbent rail franchise is in the interests of the passenger, the railway, the Government and the regions? I covered these issues in greater depth earlier this month on this site.
Last month, the Government awarded the prestigious East Coast Main Line franchise, the main rail artery between London King’s Cross, Yorkshire and Scotland, to Virgin Trains and Stagecoach. Stagecoach already runs the Midland Main Line into and out of St Pancras, while trains on the UK’s biggest rail network, the West Coast Main Line, between Euston and Glasgow, are run by a 51/49 per cent joint venture between Virgin and Stagecoach. The new East Coast ‘Virgin’ franchise will start in March, when the consortium’s grip on long distance high speed rail travel north of London will be complete.
But importantly, on the East Coast – the line Virgin will soon be running – there is already some private non-franchised rail competition in place and their new franchise will face strong competitive forces. These open access services are popular with passengers, who see lower fares and more routes served as a direct result of this competition.
Open access services have delivered lower fares, more routes, happier passengers, better trains and pose no threat to the viability of the railway. Importantly, on the East Coast Main Line, Rail’s Second Chance research shows that, where the franchise competes directly with the rival, fares are lower, stations are busier and overall revenue is higher with more routes served. Alongside this has been a rising premium paid by the franchise (which is facing competition) to the Department for Transport.
The ORR’s decision, announced in the dying embers of 2014, to reject long distance high speed competition on Britain’s most important railway is a blow for those key Conservative principles of supporting competition and innovation in essential public services. Ironically, all of the existing (and very successful) open access services on Britain’s railways were approved by the last Labour Government. If you are a Conservative and you are confused by all of this, you should be.