Great British Railways

Lord Young of Cookham Excerpts

Thursday 13th March 2025 Grand Committee

Asked by

[Lord Young of Cookham]

To ask His Majesty’s Government what plans they have for open access operators following the creation of Great British Railways.

[The Deputy Chairman of Committees (Baroness Scott of Needham Market) (LD)]

My Lords, I remind noble Lords that, apart from the noble Lord, Lord Young of Cookham, and the Minister, the speaking time limit for the following debate is four minutes. When the screen flashes, your time is up.

[Lord Young of Cookham (Con)]

My Lords, for a debate on open access, many noble Lords have applied for the vacant slots. I am delighted that the Minister is in his place to pronounce on the quality of the bids.

Open access did not exist under British Rail, but privatisation, in which I played a modest role, allowed open access train operators to run passenger services. They identify available capacity and apply to the ORR, which then consults on the proposals and analyses their feasibility and benefits. New services have to pass a rigorous abstraction test to ensure that they will add passengers to the railways and grow total revenue, rather than removing passengers and fares from existing services. Open access operators then pay access charges to reflect the additional cost that their use of the railways incurs. They get no direct subsidy and carry the commercial risk of running the railway.

Applications are considered in accordance with statutory duties, including protecting the interests of users of railway services; promoting the use of the network for passengers and freight; and promoting competition and improvements in railway service performance. The final decision rests with the ORR, and neither the DfT nor Network Rail, nor the franchised operators, has a veto.

In 2000, the first open access operator entered the market: Hull Trains. Since then, there have been real benefits from open access—especially to underserved areas that provide the only direct link to London—for cities such as Sunderland, Hartlepool, Halifax, Rochdale and Pontefract, helping regeneration in those areas. With a cancellation rate of less than 1%, open access rail operators are the most reliable. They have focused on affordable fares, with Lumo’s average £40 fare between London and Newcastle as opposed to the £195 walk-up fare. These lower fares from open access operators have in turn attracted a broader demographic to rail travel.

Importantly, we now have a mature, evidence-based, 25 year-old case study on the east coast main line, where three open access operators compete with the Government-run intercity operator, LNER. Passengers travelling to the north and Scotland from King’s Cross enjoy robust fare competition and a choice of operators. Importantly—the Treasury should take note of this—LNER’s subsidy continues to fall, despite it facing robust on-track competition.

There have been wider benefits, promoting the Government’s growth agenda. FirstGroup has invested £0.5 billion in new rolling stock, securing jobs in the north-east, with a further £0.5 billion awaiting a decision. Open access operators account for around 19% of all new train orders placed in the UK in the past five years, although they provide only 0.9% of passenger services.

Last year’s Office of Rail and Road report said:

“An economic appraisal of the impact of open access operators in 2022 concluded that open access operators had been beneficial to the UK economy, and that this was particularly apparent for flows not already directly served by a franchised operator. Our 2023 report noted the particularly strong post-pandemic recovery for open access operators”.


All of the leading European countries with state-run operators, including Germany, France and Spain, have increasingly used open access as a vital tool in complementing their national service operators.

I turn now to the Government’s proposals, which dramatically change the terms of trade and put at risk the benefits that I have outlined. There should have been no cause for alarm because, in September, the previous Secretary of State said that,

“where there is a case that open access operators can add value and capacity to the network”,

as assessed by the Office of Rail and Road,

“they will be able to”.—[Official Report, Commons, 3/9/24; col. 18WS.]

However, that is not what is proposed.

The consultation document of 18 February says:

“GBR will become the decision maker for key decisions on access terms that are currently led by the ORR: the duration and form of access rights, developing and setting the access charges framework and the design of performance incentive regimes contained in track access regimes”.


Then, we have the historic understatement:

“For GBR to have the space and authority to take access decisions on the best use of its network, the ORR’s current role must change”.


GBR will, in due course, absorb Network Rail and all the franchised train operators. It will have a massive conflict of interest in deciding whether an open access operator should provide a new service. We know this because, in the last 10 years, Network Rail opposed all 10 applications to the ORR for open access, which then approved five of them, with the DfT either opposing or not responding. The letter which the Minister circulated yesterday—to everyone except me—opposed nearly all the applications. These are the organisations which will decide in the future.

The ORR—the final arbiter, at the moment—will have its powers curtailed. Instead of being the referee, the ORR can overturn a decision only if GBR has not followed its own processes or has acted irrationally. But those processes could include a large increase in track access charges, making a proposition unviable. It could change the abstraction rule, again making current services uneconomic. The ORR would be powerless to intervene. Its role has been crucial to the success of open access, and it will be marginalised. This would be self-harm for the railway, the regions and passengers.

Behind all this is the Treasury—the controlling mind of the new regime, if ever there was one. It is the Treasury which insisted on the letter to the ORR in January, with its primary objective of minimising subsidy, setting aside the wider obligations of the ORR to promote competition and better use of the network. The consultation document does not refer to competition law or the CMA, which will remain in place. In the absence of a strong independent regulator, there is a risk that we could see more competition law challenges, which will be inherently unpredictable for operators and GBR.

Investors need certainty and confidence about the terms with which they engage with GBR. If we want to encourage investors in schemes such as Heathrow southern rail, which will be needed if there is a new runway, there will need to be a strong and independent regulatory regime to protect investors’ rights. These new reforms remove existing certainty and could shrink freight, the private rail sector and wider economic growth.

There is a devolution angle to all this. If the mayoral strategic authorities are to be empowered to take control over more railway operations, as Andy Burnham would like, they will need confidence about the terms on which they can access rail infrastructure that they do not own, and a strong independent regulator will be needed, overseeing the prices proposed by GBR that devolved authorities will be charged, and their ability to run trains extending across their own and GBR’s networks.

I noticed with alarm the press release of the RMT—which the Government were so eager to placate last July—headed, Why Open Access Rail is Incompatible with the Government’s Rail Policy. That is, by the way, the very same union that, in 2020, demanded

“urgent Government intervention to support the open-access sector and to protect all jobs at Grand Central and Hull Trains”.

The Minister needs to make it clear he does not share the view of the RMT.

To sum up, do the Government accept the need for a genuinely independent regulator if we are to continue to reap the benefits from open access? Can he confirm that he is genuinely open to persuasion on the proposals in the consultation paper?