Great British Railways

Earl of Effingham Excerpts

Thursday 13th March 2025 Grand Committee

[The Earl of Effingham (Con)]

My Lords, I thank the noble Lord, Lord Young of Cookham, for securing this important discussion.

His Majesty’s Government’s approach to railway reform has raised concerns, in particular around the potential risks of phasing out existing open access operators and rejecting new ones. Open access operators such as Lumo, which has a 96% customer satisfaction rating, have consistently delivered some of the highest levels of passenger service. On the basis that His Majesty’s Government’s stated commitment is to place passengers at the heart of the railway reforms, we naturally assume that they would wish to encourage and support open access operators, rather than restrict their role.

A fundamental aspect of the open access system is its ability to introduce new direct routes and foster competition, ultimately enhancing the passenger experience. Of course, this must be weighed up against the potential impact on taxpayer-funded operators. To ensure a fair balance, the Office of Rail and Road applies the “not primarily abstractive” test, requiring new services to generate at least 30p of new revenue for every £1 abstracted from existing operators. This test ensures that open access services contribute genuine growth to the industry, rather than merely diverting passengers from other operators.

Let us take as an example Lumo, which launched in 2021 between London and Edinburgh. Since its inception, Lumo has generated more than 6 million new rail journeys, which noble Lords will agree is a remarkable achievement. It has driven a significant modal shift from air travel to rail travel. Nearly half of all journeys on this route are now made by rail, up from one-third in 2019.

Crucially, Lumo’s success has not come at the expense of existing operators. Revenue on the London to Edinburgh corridor increased by 55% between 2019 and 2024. Moreover, LNER’s own revenue has grown, demonstrating that Lumo has expanded the overall rail market, rather than siphoning off passengers. Similarly, Hull Trains, which has operated between London and Hull since 2000, has been a resounding success. By 2010, revenue on its route had increased by nearly 300%, and, for every £1 of revenue abstracted from other operators, Hull Trains generated an additional 51p to 67p of industry revenue—far exceeding the ORR’s minimum threshold. Since 2019, Hull Trains has seen a 42% growth in passenger journeys, significantly outpacing other operators. This success has been supported by investment in new rolling stock, enhancing capacity and service quality.

Although some may view the abstraction of revenue from taxpayer-funded operators negatively, it is vital to consider the broader benefits that open access services provide. Free markets and increased competition lead to lower fares, faster journey times and substantial value-of-time benefits for passengers. Open access operators consistently achieve higher passenger satisfaction, thanks to their agility and customer-focused approach. Even when accounting for lower fares, open access operators on all three routes examined have generated revenue well above the 0.3 NPA threshold set by the ORR. His Majesty’s Official Opposition suggest that the evidence speaks for itself.

His Majesty’s Government are vocal on the subject of growth, investment, passengers and the environment, so I must ask the Minister this: will they please put passengers first? The ORR has praised open access because of the black-and-white data.

Finally, can the Minister please advise the Committee on when we will have sight of the passenger standards authority? What will those standards be, and how will they be enforced? The appetite of the new authority to hold GBR to account is what will matter. How, in tandem, will Great British Railways hold nationalised operators to the same high standards of service that passengers expect and deserve?