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Heidi Alexander, UK transport secretary, offered a beguiling vision this week as she unveiled Labour’s proposals to unify the country’s creaking rail services under public ownership. The government will now “sweep away decades of failure, creating a Great British Railways passengers can rely on”.
Can long-suffering passengers rely on Alexander and GBR, the new public rail monopoly, to maintain a modicum of private-sector competition? Despite Labour’s avowed support of open access to the network for operators that add services to Whitehall’s model railway, the sad answer is no.
Watch what politicians and their civil servants do, not what they say. The dead hand of the Department for Transport is already reaching out to discourage entrepreneurial challenges to GBR. This is despite the success of open-access operators such as Lumo and Hull Trains, which have demonstrably raised standards on the east coast line from London to Edinburgh.
Although Labour’s manifesto promised a continued role for private operators that provide new services, the government this month opposed eight out of nine applications by companies including Virgin Trains and FirstGroup, owner of Lumo. Alexander proclaims that she believes in the benefits of competition, but her department usually disapproves of it in practice.
This is not new. The transport department has not liked open access in the 25 years since Hull Trains started to run independent services from East Yorkshire to King’s Cross. Its civil servants or government-owned Network Rail have opposed nearly all access applications over the past decade on the grounds that they would worsen congestion and siphon off money from franchise operators and taxpayers.
The government has stuck to this position despite Labour’s promises and clear evidence that it is wrong. The east coast line, on which Grand Central, Hull Trains and Lumo operate with state-owned London North Eastern Railway, has demonstrated many benefits. Lumo, for example, runs a fast service from London to Edinburgh that competes with airlines.
Services such as Lumo would be unlikely to exist had it been left to the department or incumbent train operators. The decisions have instead been made by the independent Office of Rail and Road, which approved half the applications. The ORR was right: a study it commissioned found last year that Lumo far exceeded its benchmark of expanding services, not just rivalling LNER.
The rewards of competition run wider than a narrow calculus of the effect on the rail network. Operators such as Hull Trains have shown that direct trains to London from underserved cities and towns boost regeneration and economic investment. That is why Labour MPs have supported it, despite union opposition, while the government has gone along rhetorically.
But the prospects are dim. The government now plans to take decisions on open access away from the ORR and give them to the “guiding mind” of GBR. The latter would run the rail network, operate most trains and decide whether to let anyone else compete with it. It may go through the motions of taking applications, but access would be crushed.
Aspiring operators could appeal to the ORR once their plans were rejected, under the consultation launched this week, but it would take them a long time to get to that stage. Having told other regulators to boost growth and risk-taking, it is perverse for Labour to undermine a rail regulator that stood up for private-sector innovation.
Alexander is not simply being protectionist. Public subsidies to train operators have grown since the pandemic, reaching £4bn last year: the government does not want those it supports to lose any more. There are also concerns that open access services do not pay the full cost of using the network, although this could be fixed.
Nor is every attempt to get on the rail network justified. The point of open access is to fill service gaps in innovative ways, such as a planned London to Stirling service that was approved by the ORR last year. By contrast, Virgin Trains’ applications to run trains from London to big cities such as Manchester and Glasgow feels like a cheeky effort to mimic the rail franchise it lost in 2019.
But open access has shown its value and shamed the long campaign of foot-dragging by successive governments and transport officials. While paying lip service to competition, Alexander now wants to push out of the way the regulator that allowed it to flourish. She should think again.