Open Access Rail Services

Debate between Luke Graham and Martin Vickers

Tuesday 10th July 2018 Westminster Hall

[Martin Vickers]

I am perfectly happy to have diversity of ownership—that is what the free market would most likely deliver. Sadly, the history of British Rail did nothing to encourage my enthusiasm for a nationalised system. Indeed, British Rail ended the direct service to Cleethorpes in 1992.

There has been record investment and record numbers of journeys in recent years. Passenger numbers fell under British Rail but, since privatisation in 1994, the numbers swelled to 1.65 billion in 2015—almost triple the low point of 1982. Although there have been clear failings by Virgin Trains, it is vital to look beyond the headlines. Thanks to the Transport Secretary’s efforts, rail efficiency has been improved, ensuring that passengers and taxpayers get maximum value. On average, 97% of every pound of passengers’ fares goes back into the railway, which is very welcome.

Since Virgin took over its franchise in 2015, it has contributed more to the taxpayer than when the service was publicly run. Refurbished trains, additional services and improved ticketed access are just a few of the benefits that passengers have experienced. Of course, Virgin is not blameless in the debacle, but it is not alone. Network Rail, the publicly owned element of the railways, failed to deliver the promised improvements on which Virgin based its final projections.

I have been reassured by the Transport Secretary’s commitment to a new approach from 2020, with the first regional public-private partnership on the route. The partnership will have one brand, one management team and one leader, which will ensure that it is transparent and accountable to both Parliament and passengers.

A privatised franchise system on the east coast is preferable to the publicly owned system that preceded it. It has also been improved dramatically by the advent of open access operators, which provide constant competition to drive up standards and outcomes for passengers. The main problem is that the rail industry has been reformed to an unsatisfactory halfway house between nationalisation and privatisation. The solution, contrary to what many in the Opposition would argue, is not to nationalise the whole system—the experience of British Rail shows where that will take us—but to push ahead with privatisation and extend the market by allowing open access on other lines which could benefit so greatly from it. The hard left so often tell us that true communism has not been tried, but in actual fact true competition has not been tried on our rail network.

Open access could be a logical component of the Prime Minister’s mission, which she set out at the party conference last year, saying of free markets that she was

“prepared to reform them when they don’t work.”

The rail service is a prime example of a market underperforming. The solution, rather than to take the market out of the picture altogether and reverse all the progress made over the past few decades, is to reform the market, taking on the monopolies so as to expand it and allow it to flourish.

Competition must extend beyond the bidding stage to avoid the winner being granted a complete monopoly. The message to existing franchise operators and bidders should be clear: expect competition in future.

[Luke Graham (Ochil and South Perthshire) (Con)]

My hon. Friend is making strong points about competition and bidding. Is it not also incumbent on the Government to refine their bidding process, ensuring better information for potential rail service providers so that contracts may be structured to work for the long term?

[Martin Vickers]

That is an important point. It is essential that we move in that direction.

What has been the impact of competition to date? As I said, passenger journeys have increased by 42% on competitive lines, compared with 27% on those that have no competition; revenue has increased by 57%, compared with 48%; and average fares have increased by only 11%, compared with 17%. The east coast main line has open access operators such as Grand Central Trains and Hull Trains. Other rail lines around the country would do well to replicate that model.

Open access operators take no support from the taxpayer. The open access model creates competition on the line, which has led to fantastic results. In fact, since that has been the case on the east coast, the main line has had the highest satisfaction ratings in the country. The east coast open access operators deliver the very highest rates: in 2015 First Hull Trains and Grand Central each had a 94% passenger satisfaction rate, which was the joint highest score of all operators. That was confirmed in 2016 and 2017 in the passenger satisfaction surveys conducted by the Competition and Markets Authority.

In 2016, the CMA recommended more on-track competition generally, either with much more open access to compete with franchises on the same lines or with multiple operators to provide services in a fully commercial environment. Unlike the CMA, however, the Government are yet formally to declare their support for the principle of extended open access. Perhaps the Minister will take up the offer to do so this afternoon.

Open access competition has led to new routes being opened or reopened. Without open access on the east coast main line, would places such as Sunderland, Hartlepool, Halifax and Bradford have the frequent, direct and high-speed long-distance services from which they now benefit? Something similar desperately needs to be replicated in northern Lincolnshire.

The business community has made its support for open access clear. On services to northern Lincolnshire, the Hull and Humber chamber of commerce stated:

“Hull Trains have done an outstanding job for the city in improving our rail service from a one a day return with the main franchise holder (GNER) some years ago to seven a day now.”

In the north-east, the chambers of commerce have been equally supportive.

Some argue that more open access will reduce the franchise premium. I acknowledge that protection should be offered to the franchise holders given that they pay such a large amount for the privilege of operating services, but I ask the Minister what is more important: the Treasury getting additional resources or the passenger getting better services? Without doubt, we should focus on the passenger.

To conclude, I restate the importance of services into northern Lincolnshire, which have the support of business and of the local community who want the services for leisure travel. As I said, the Government gave northern Lincolnshire the title “energy estuary”. It is an important part of the northern powerhouse, which has focused too much on the north-west and the Leeds-Manchester-Liverpool triangle. An opportunity now exists to provide a boost to the local economy in many of our regions and provincial towns, and coastal communities in particular. I urge the Minister to do all he can to support the requirement for services into northern Lincolnshire. I very much hope that the application to the regulator in the not-too-distant future will be successful.