Labour policy on open access

[snowball]

I've just discovered this two-week-old article from the Observer. I've seen similar stuff in other places.

Why Labour leapt on board with private open access train providers

The party’s move made it look pro-business, but some say the system makes for inefficient use of our rail network

www.theguardian.com

Why Labour leapt on board with private open access train providers

The party’s move made it look pro-business, but some say the system makes for inefficient use of our rail network

A direct train from London to Wrexham? The chance to whiz to Scotland for less than £50? Trains run by a firm specialising in a single route, competing to lure customers away from the expensive big operators? What’s not to like?

Given the promise of cheaper fares to under-served UK destinations, it is perhaps little wonder that Labour’s plan for a “pragmatic” renationalisation of the railways matches the Conservatives’ policy on “open access” train providers. It also signals that the party remains open for business.

That means likes of Lumo, which in 2021 joined Hull Trains and Grand Central on the east coast mainline, can rest easy after the local elections, even while parent companies FirstGroup and Arriva face ejection from main national rail routes under a Labour government.

Privately owned open access operators are a curiosity. Rightwing thinktanks would love to see a multitude of them competing on the railways. But their scope is limited by physical constraints such as depots, track space, timetables, stations and connections.

So far, only the east coast trio have stayed (as well as, technically, Heathrow Express and Eurostar), accounting for 3.8m journeys in 2022-23 (the nationalised London North Eastern Railway accounts for 23.4m).

As well as demonstrating that the party is not wedded to ideology, retaining open access suits Labour because it primarily benefits northern regions and “red wall” constituencies, bringing local jobs and cheaper direct trains. But the industry has long been divided, with some maintaining that the taxpayer would be better off without them. One senior railway source argued that, given capacity constraints, open access operators undermined the wider public good. That limited capacity was the reason for massive outlay on building HS2 and expensive upgrades on the conventional railway. In their view, open access operators were “gaming the system”, and rules meant to protect the main contracted train company were exacerbating the problem.

To win a contract with the Office of Rail and Road, an open access operator has to show that its trains would not be “abstracting” revenue (taking fare income from the incumbent). But that required a particular pattern of station stops, the source said. “You get people stopping randomly to meet the regulatory threshold for abstraction – it just further restricts efficient utilisation of the railway.”

Proponents argue that it allows different stations and routes to get a decent showing. Ian Yeowart, founder of Grand Central, has now started Grand Union to run open access services from London to Stirling and Carmarthen from next year. He said: “It has opened up the market. We were amazed by how many people couldn’t afford to travel by train when we started. Ask the leaders of councils in Hartlepool, Bradford or Halifax if they’d be without us. There is a huge amount of support at grassroots level.”

That was underlined when, on the day Labour announced its rail nationalisation plan, state-run LNER confirmed the end of its daily direct London-Sunderland service, citing low passenger numbers.

Yeowart said: “When things become difficult it is the extremities that lose out. I think people on the east coast would be horrified if they lost their alternatives.”

But critics doubt how much those destinations contribute to profits, with the Carmarthen service, say, perhaps taking fares from passengers travelling to already well-connected Swansea.

Yeowart insisted open access operators brought more people from road and air to rail. While total UK passenger numbers are below 2019 levels, mainly as commuting has fallen, usage across all the east coast operators was up on pre-Covid levels, he said. “What’s it got that’s different? Competition. And a little competition keeps everyone honest.”

Others have been encouraged to join: France’s Alstom is looking to set up a direct London-Wrexham service, which it hopes can better an ill-fated predecessor by using the jealously guarded west coast main line to offer shorter journey times.

Andrew Haines, Network Rail’s chief executive, said: “Some open access has proven to be valuable. If you’re going to do more, you have to be honest about the true costs of running it. In some places the benefits will outweigh the costs; in others it needs quite close scrutiny.

“As an ex-chair of Hull Trains, I’m a massive advocate where it works well… but we should be transparent about the downsides if it ends up eating up capacity inefficiently.”

While high fares, rigid central control and strike disruption persist, open access operators appear to offer an attractive alternative to both government and opposition. However, Labour’s policy document suggests some scepticism: open access “will remain where it adds value and capacity to the rail network”, and future applications will be decided “on the basis of an updated framework and guidance issued by the secretary of state”.

Until the whole of the Great British Railways vision becomes reality – with a “guiding mind” running a fully integrated, functioning system – it may remain unclear whether open access trains are a cure for, or a symptom of, Britain’s fragmented railway.

 

[Sorcerer]

Open access operations can be good for competition which in turn can be good for the passenger, but for the majority of the time it will only be running over the most profitable routes. London to Edinburgh will be much more attractive to a private company seeking to make money from rail fares than somewhere like Thurso to Wick. This is actually a policy I can get behind though because I do think open access operators can be good as long as they pay track access charges regardless of whether they use them and accept all risks involved. Labour meanwhile are no doubt doing this for a business friendly image.

 

[mike57]

What is interestesting is that both Hull trains and Grand Central serve towns and cities which tend to be regarded as Labour heartlands (ignoring 2019 election results). So if Labour did block further OA applications, and allow the existing ones to lapse as the became due for renewal the impact would be negative. The idea that LNER would pick these services up and run them would be all well and good, but then no doubt after a few years the resources would be diverted back to the main destinations, and the towns and cities once served would be back to relying on connecting services to the main ECML, and with fares increased. Not a good move if Labour wish to regain and then retain seats lost in 2019.

OA companies which offer services to the secondary destinations are able to make money, smaller slicker operation and lower overheads probably.

Hopefully Labour realise this, I think internally there are those who are opposed to OA, but those voices do not appear to be setting current policy. Political dogma needs to be buried, there are plenty of broken bits of the rail network to work on, put the effort and money into them. Leave the bits that are working alone.

 

[yorksrob]

OA is certainly one of the more beneficial aspects of privatisation, rejuvenating potential routes where a state operator might struggle.

I wonder how far a new government might go in ironing out some of the inefficient use of the network e.g. requiring longer trains etc.

 

[Dr Hoo]

OA is certainly one of the more beneficial aspects of privatisation, rejuvenating potential routes where a state operator might struggle.

I wonder how far a new government might go in ironing out some of the inefficient use of the network e.g. requiring longer trains etc.

(Photo taken at Grantham last Saturday through the window of an EMR 2-car diesel Class 158 that has just travelled on the East Coast Main Line at a maximum speed of 90mph, of a 10-car Hull Trains working with 125mph bi-modes. A picture is worth 1,000 words.)

 

[yorksrob]

(Photo taken at Grantham last Saturday through the window of an EMR 2-car Class diesel 158 that has just travelled on the East Coast Main Line at a maximum speed of 90mph, of a 10-car Hull Trains working with 125mph bi-modes. A picture is worth 1,000 words.)
View attachment 158418

I imagine Lumo services might end up being longer as well.

 

[mike57]

10-car Hull Trains working

Yes Hull trains have managed to get 10 car units on their busiest services. We travelled down to Kings last October at the start of our holiday on a 10 car. Both bits were full, I spoke to train manager and he said there well over 600 people on it. 10 car does create some interesting situations at the smaller stops like Howden, but they seem to cope OK. 10 car cannot run to Beverley, but they can split in Hull and just run the London end 5 to Beverley. Even the Hull platforms struggle with 10 car, with a bit of the front car just past the end of platform, but because thats the 1st Class with no public access doesnt cause a problem.

In an ideal world Hull trains would strengthen their units to maybe 7 or 9 car, but given the negative vibes on here about Hitachi's response for small top up orders maybe not much hope

 

[cle]

A nationalized network shouldn't preclude competition or OAs. Or innovation.

Just reduce waste, duplication - eliminate stupid change, and simplify the franchises' operations.

 

[The Planner]

A nationalized network shouldn't preclude competition or OAs. Or innovation.

Just reduce waste, duplication - eliminate stupid change, and simplify the franchises' operations.

Surely a nationalised network wouldn't have competition anyway, unless it wants to compete with itself?

 

[Bletchleyite]

Surely a nationalised network wouldn't have competition anyway, unless it wants to compete with itself?

Sometimes competing with itself will make sense, as it broadens the market - see things like Ouigo and Avlo for examples - or indeed the likes of Stagecoach Magic Bus.

 

[Noddy]

Open access operations can be good for competition which in turn can be good for the passenger, but for the majority of the time it will only be running over the most profitable routes. London to Edinburgh will be much more attractive to a private company seeking to make money from rail fares than somewhere like Thurso to Wick. This is actually a policy I can get behind though because I do think open access operators can be good as long as they pay track access charges regardless of whether they use them and accept all risks involved. Labour meanwhile are no doubt doing this for a business friendly image.

With the exception of Lumo have any of the OA operators run on the most profitable routes? Hull, Sunderland, West Yorks and Wrexham (via Shropshire and the Black Country) are hardly such I would have thought, hence the latter folding. The OA have done a great job running services on intercity routes that were largely abandoned due to BR rationalisation.

 

[The Planner]

Sometimes competing with itself will make sense, as it broadens the market - see things like Ouigo and Avlo for examples - or indeed the likes of Stagecoach Magic Bus.

Surely that is just a different product of the same offering though, so GBR Value instead of GBR.

 

[Sorcerer]

With the exception of Lumo have any of the OA operators run on the most profitable routes? Hull, Sunderland, West Yorks and Wrexham (via Shropshire and the Black Country) are hardly such I would have thought, hence the latter folding. The OA have done a great job running services on intercity routes that were largely abandoned due to BR rationalisation.

I think if any of those said routes proved unprofitable in some way or another then they wouldn't have continued receiving an open access operator. Unlike formerly franchised operators, open access take all the revenue risk, and notice how the current ones (Grand Central, Hull Trains, Lumo etc.) are all intercity services which, as far as I'm aware, are more profitable than local trains. Even in Italy and Spain with similar levels of open access operations it's mostly on the high speed lines between major cities (Madrid to Barcelona for example) and not rural areas that would never turn a profit.

 

[Bletchleyite]

Surely that is just a different product of the same offering though, so GBR Value instead of GBR.

That's another way of looking at it - it's comparable to having Standard and First Class, it's just across different trains instead of on one.

 

[HullRailMan]

The calculation for Labour would be the cost v’s benefit of getting rid of them. In the grand scheme of things, OA is a tiny fraction of the market and so a relatively minuscule potential revenue loss to GBR - in reality no loss as OA have successfully stimulated and grown the market.

Getting rid for purely ideological reasons would, as already noted, play badly locally. In Hull for example, the three Labour MPs were very vocal in seeking taxpayer support for Hull Trains during covid when the company suspended services three times. That support never materialised of course but, now the company is stronger than ever and continuing to recruit locally, the optics of Labour killing it off would be terrible.

 

[mike57]

the optics of Labour killing it off would be terrible.

But when has this stopped politicians? Both main parties have made bad decisions based on dogma rather than common sense.

If Hull trains were 'absorbed' into LNER/GBR then I would predict that the through services to London from Hull would be back to the 1 each way per day as they were prior to Hull Trains within a few years as I dont trust politicians or their promises.

Assuming the next government is Labour, which seems likely, hopefully they will try and fix what is broken, rather than breaking what works, if they drop back into the 'old Labour' ways then they will only get one term.

The incoming government have a real opportunity to make a difference to the railways, but I dont see anyone championing the railways from within the parties. The last railway positive transport minister was John Prescott.

 

[snowball]

Everything I've seen recently suggests that the Labour national leadership are in favour of open access.

Meanwhile, Alan Williams's column in the June Modern Railways is headed "Mayors want more and better local services, not more long-distance open access operators". In it he indicates that his own views are in line with the views that the headline ascribes to the mayors.

 

[yorksrob]

A labour Government would need to be generating positive headlines about rail, and there would be little positive to write about abolishing open access services.

 

[GrandCentral]

It seems as if Labour are happy for OAOs to exist but the big test will be if they grant any new routes to OAOs. Track access will also be interesting as I would assume that GB Rail assets will get priority when disruption occurs etc. It could be very very difficult for OAOs to compete.

 

[zwk500]

That's another way of looking at it - it's comparable to having Standard and First Class, it's just across different trains instead of on one.

Isn't it market segmentation not competition?

 

[Bletchleyite]

Isn't it market segmentation not competition?

Yes, both are, whether they're in the same physical train or not. You have a really good but expensive thing, and you have a less good but cheaper thing, and each of those appeals to different markets.

I should probably have put "competing" in quotes. They might have a sort-of competitive effect anyway, though - e.g. Lumo has a downward (ha!) impact on LNER fares and still would even if it were painted red and called LNER Value.

 

[The Planner]

It seems as if Labour are happy for OAOs to exist but the big test will be if they grant any new routes to OAOs. Track access will also be interesting as I would assume that GB Rail assets will get priority when disruption occurs etc. It could be very very difficult for OAOs to compete.

Don't see why, contingency plans now are about moving people, they don't favour particular TOCs by cancelling all of someone elses services.

 

[Meerkat]

Isn't it market segmentation not competition?

However it is competition if the targeted market segment are currently forced to use the competitor/soon to be different segment.

 

[Ghostbus]

Magicbus was an in house low cost operation used on popular routes already dominated by Stagecoach. Near worthless assets and staff on worse terms and conditions. Basic services, cheap fares, single operator ticketing. Sharing Stagecoach depots and support staff, and all importantly, marketing resources. Created to attract price conscious custom, whether they were using a different mode, or more importantly, using someone else's cheaper buses (typically a smaller operator trying to compete with "Stagecoach" on price. Easily shut down when deemed surplus to requirements.

I very much hope and expect Labour is not using them as an inspiration for open access rail.

 

[YorkRailFan]

Transport SoS Heidi Alexander has written a letter to the ORR raising concerns about Open Access:

Transport Secretary Heidi Alexander has raised concerns about the impact of open access operators on contracted train services.

In a letter to Declan Collier, Chair of the Office of Rail and Road (ORR), Alexander has said she wants the regulator to “ensure appropriate balance” between the benefits they provide and “impacts they have on taxpayers and the ability to operate the network efficiently”.

She wrote: “We need to be mindful of the impacts of Open Access such as the level of revenue they can abstract from contracted services and the associated implications for passengers and taxpayers. I am also 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 towards long-term maintenance of the network and central support costs.”

Alexander went on to say she wanted “appropriate balance between these elements” as part of her “expectations for how the Government’s vision for Open Access operates alongside a publicly owned railway”.Alexander told Collier she wants to see the rail network “move to a financially sustainable model which maximises benefits and value for passengers and taxpayers while delivering improved performance as we move towards public ownership”.

“As such I would like to make clear my expectation that you give due consideration to the priorities I set out in this letter whilst respecting your statutory duties,” she continued.

“I wish to see the impacts on the taxpayer and on overall performance for passengers – such as potential congestion on the network – given primacy when considering open access applications.”

First doesn't seem concerned about this:

Martijn Gilbert, Managing Director for Open Access at First Rail, said the operator welcomed that Alexander "recognises the benefits that open access brings in opening up new markets, driving innovation and providing customer choice".

"Open access operators have led the way in increasing passenger numbers following the pandemic, helping grow passenger journeys for all train operators on the routes they serve. The ORR plays an important role in assessing open access applications to ensure that these do not affect taxpayer revenue nor network capacity, and we are confident that our First Rail applications will have beneficial effects on the routes where they will be introduced.”

Transport Secretary raises open access concerns in letter to ORR

Heidi Alexander writes to rail regulator which is currently assessing a number of track access requests from open access operators

www.railmagazine.com

Considering some of the proposals submitted to the ORR, I think some extra scrutiny from the ORR when it comes to Open Access would be good.

 

[Clarence Yard]

She is subtly signalling that there will be changes in access charging policy as part of the future and inviting the ORR to consider the implications of allowing any more OA applications pending the new arrangements coming in.

The revised SoS guidance to the ORR looks as if it is finally coming and the ORR will be legally obliged to take notice of it.

Despite the public statements, OAO are now getting very concerned about the future of their businesses, both existing and future because paying a punitive path charge will (very quickly) end their operations. Paying a proportion of the FTA will be ok but paying a proportion of Network Grant will finish them.

 

[weeklycommuter]

She is subtly signalling that there will be changes in access charging policy as part of the future and inviting the ORR to consider the implications of allowing any more OA applications pending the new arrangements coming in.
The revised SoS guidance to the ORR looks as if it is finally coming and the ORR will be legally obliged to take notice of it.
Despite the public statements, OAO are now getting very concerned about the future of their businesses, both existing and future because paying a punitive path charge will (very quickly) end their operations. Paying a proportion of the FTA will be ok but paying a proportion of Network Grant will finish them.

The Prime Minister visited the Hitachi factory late last year to claim credit for the orders for new trains from open access operators. The Government's only contribution is to have allowed the Office of Rail and Road to approve the applications for open access passenger train services. The train orders did not come from Government controlled train operators. Some of the orders depend on the Office of Rail and Road approving new applications for open access services. The Government cannot have it both ways. If they want the orders for new trains to go ahead they cannot change the guidance to the ORR to stop the ORR approving new applications for open access train services. The application from open access operator Alliance Rail (Southern) to run an hourly train service on the Waterside Line from Marchwood to Southampton extending to London Waterloo every two hours offers the prospect or more orders for new trains from British factories and privately funded investment in rail infrastructure. This will only happen if the ORR is allowed to approve the application. The Government has failed to fund either the Restoring Your Railway application for train services on the Waterside Line or the restoration of the semi fast hourly SWR train service from Southampton to London Waterloo that ran before the pandemic. If the open access train operators were to stop running their services I do not see the Government stepping in by funding trains and staff so Great British Railways can run these services instead.

 

[Clarence Yard]

The Government didn’t “allow” the ORR to approve any OA applications - they don’t presently have any legal powers to allow or disallow applications. The ORR is currently the only body that can determine applications.

There is a view amongst some at the DfT that if OA can’t pay increased access charges, then they could be transferred (by “agreement”) to GBR rather than just cease. How much political support there is for that, we will see.

 

[Dr Hoo]

The Government didn’t “allow” the ORR to approve any OA applications - they don’t presently have any legal powers to allow or disallow applications. The ORR is currently the only body that can determine applications.

There is a view amongst some at the DfT that if OA can’t pay increased access charges, then they could be transferred (by “agreement”) to GBR rather than just cease. How much political support there is for that, we will see.

This sort of thing does suggest that GBR, when it is finally formed, won’t be allowed to have any policies or ideas of their own because (for England) the DfT will have taken all the decisions for them and hemmed them in. Let alone the ‘Passenger Champion’ organisation being allowed to have and express a view on what passengers would like, e.g. choice.

 

[Bletchleyite]

There is a view amongst some at the DfT that if OA can’t pay increased access charges, then they could be transferred (by “agreement”) to GBR rather than just cease. How much political support there is for that, we will see.

Well, I suppose SNCF do have an open access budget operation competing with themselves, so DaFT could too!