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.
For those of us who campaign for better services from the rail industry the announcement from the Competition and Markets Authority late last month was very welcome: “The CMA is to undertake a project to examine the scope for increasing competition in passenger rail services in Great Britain, and to see whether this could lead to better value for money and improve service quality”
This investigation follows the disappointing but perhaps unsurprising decision by the Office of Rail Regulation (ORR) to block new competitive high speed services on Britain’s biggest rail network. I describe the block as unsurprising because the ORR has turned down the opportunity to approve more high speed long distance ‘open access’ rail competition at every turn in recent years, irrespective of Ministers telling Parliament they would like to see more rail choice for passengers. I covered this latest setback for passengers on Conservative Home late last year.
The CMA is truly independent and is responsible for strengthening business competition and preventing and reducing anti-competitive activities. So at last it looks like there will now be a chance for all interested parties to make their case and provide valuable input and counter the draconian and outdated approach from the supposedly independent ORR and others in Whitehall.
These new high speed, non-franchised ‘open access’ services were to have run between London Euston, the Midlands, the North West and Yorkshire, in direct competition with Virgin and other franchised services. They would have become a staple benefit of the Government’s so called ‘Northern Powerhouse’ ambitions.
In December, Patrick McLoughlin, the Transport Secretary, told the Commons 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.”
Last week in the Commons, Paul Maynard, Conservative MP for Blackpool North and Cleveleys, whose constituency was hoping to get the new fast trains also raised the issue, “I stress the importance to the resort…….of open access, which is one of my hobby horses. The Government have not done enough on open access. I am glad that the Competition and Markets Authority will try to put a bomb under the Office of Rail Regulation to allow for more open access, which can only be a good thing.
He went on, “The Minister might have noted last week’s Centre for Cities report comparing different city regions. Blackpool did not come out well. I think a few statistical quirks lay behind that, but the sum total was that some 14,000 jobs have been lost since 2004. It is easy to link that to other areas of the north such as Halifax, Hartlepool and Sunderland, which have all seen private sector growth and general job growth over that decade. What connects those three towns? They all have good, competitive open-access arrangements alongside the franchise alternatives, which is driving the market to the benefit of passengers. It is also good for the local economy and for jobs growth. I would like the Government to be more ambitious for open access in the north because it can deliver on economic growth.”
More rail competition allows the Government to distance itself from arguments it is creating new rail monopolies – super monopolies now in some cases. Last month, it 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 monopolisitic grip on long distance high speed rail travel north of London will be complete. At least the East Coast Main Line enjoys some very popular open access services; they have again topped the latest Passenger Focus survey.
The ORR’s decision, announced in the dying embers of 2014, to reject long distance high speed competition on the West Coast Main Line is a blow for those rail travellers in the North West and the Midlands who were anticipating enjoying the same choice in long distance high speed travel as their neighbours across the Pennines. Why can’t people in Manchester or Blackpool enjoy the same levels of high speed rail choice as those in Hull or York? Why have they been left with no choice in their long distance rail provider and thus no fare competition?
The response of Claire Perry, the Rail Minister, to Maynard was particularly illuminating. She agreed that open access had much to contribute to the railways but alluded to the dead-hand of Sir Humphrey in the decision: “My hon. Friend (Maynard) also asked about open access. I share his view on that, and we have many conversations about it in the Department, because I, too, see the benefits that it can bring…I will not go any further than that, for fear of upsetting my officials.”
This has been an unsatisfactory chapter at the Department for Transport which is reflected in the CMA announcing its study. Hopefully the outcome will bode well for passengers, lower fares and better trains and finally empower politicians to make sure that the ORR fulfils its statutory duty in the future to promote competition on the railways. Failing this, then its powers should be reviewed as a matter of urgency.