Rail Services: Open Access Operators

Simon Lightwood Excerpts

Thursday 6th February 2025 Westminster Hall

[The Parliamentary Under-Secretary of State for Transport (Simon Lightwood)]

It is an absolute pleasure to see a fellow sand dancer in the Chair today, Mrs Lewell-Buck. I congratulate the hon. Member for Brigg and Immingham (Martin Vickers) on securing this debate on open access—a matter of importance to many in this House and their constituents. I also welcome the hon. Member for Farnham and Bordon (Gregory Stafford) to his place on the Opposition Front Bench. I look forward to our sparring in future debates.

Open access can open up new markets. We only need to look at Hull Trains, where the private sector identified opportunities that the Government had missed, to see how open access can benefit passengers and grow the market. However, it is also true that parts of our rail network are growing increasingly congested and, although open access operators can generate new income from the network, they can also abstract revenue from existing operators, including those funded by the taxpayer. We therefore need to ensure that there is a balance when we consider new open access applications. The Secretary of State was clear about that when she wrote to the Office of Rail and Road on 6 January.

Some Members have raised concerns over the Secretary of State’s letter, so let me be clear: the letter did not signal that the door had been closed on open access. Indeed, the letter makes it clear that there remains a role for open access, but new applications will have to demonstrate that their benefits are sufficient to justify any money they abstract from Government-funded services or the negative impact that they could have on publicly funded infrastructure projects. They must also demonstrate that they will not damage performance by increasing the complexity of the running of the network. I am aware also that the Secretary of State’s letter caused some concern with freight operators, so let me again be clear that the letter related only to passenger open access.

The benefits of open access to passengers on the east coast main line have been highlighted by hon. Members. I have already mentioned Hull Trains, but it would be remiss of me not to mention both Grand Central and Lumo, which also run on the east coast main line. Both those operators have increased choice for passengers. For example, Lumo now offers choice between short-haul flights and rail with its fast services between London and Edinburgh.

Open access services will increase choice and provide benefits for passengers on other parts of the network. Services have already been approved to operate from London to Stirling on the west coast main line from later in 2025, and between London and Carmarthen from 2027. We are also aware of, and considering, a range of new applications that have been submitted by open access operators. These include proposals on the east coast main line and also more broadly across the country, including on the west coast main line. Whether these applications are successful is currently a matter for the Office of Rail and Road in its role as an independent regulator. Alongside a range of other stakeholders, the Department will provide views. The Office of Rail and Road will consider them alongside its statutory duties and will make decisions in due course.

Both open access operators and the operators contracted by the Department deliver services to passengers, but there are key differences. Open access operators are not bound by public service obligations. Whereas an operator delivering services for the Department will be required to serve all stations on a particular route, an open access operator can choose which stations to serve. For that reason, it is not possible to simply replace the Department’s operators with open access operators. Were we to try to do so, we would risk depriving certain communities of any rail service at all.

Although constrained to a degree by the availability and capacity on the network, the lack of public service obligations means that open access operators can design their timetables to maximise commercial opportunities. That means that open access operators can choose within wider operational constraints what time they wish to run their trains and at which stations their trains will stop. That freedom means that they can be more challenging for Network Rail in setting the timetable. We have seen delays in agreeing the timetable for the east coast main line precisely because there were so many competing demands, including open access operations.

It is not just timetabling that is more complex. When Network Rail wants to undertake engineering works, it needs to ensure that the views of all operators are factored in. Obviously, where there are multiple operators with different operating models—for example, there are those with a greater focus on weekend and leisure travel rather than commuting—Network Rail will find it harder to keep everybody happy. That can reduce efficiency and increase journey costs, as Network Rail may have to close the network over a number of weekends and nights, rather than for a single block, to ensure that all operators are treated fairly.

I have talked about possible operational challenges. I want to be clear: we expect, as does the regulator, that Network Rail will make all efforts to manage the network in the most efficient manner and in a way that will accommodate the optimum number of Government-funded services. Although open access operators can drive new revenue to Government-funded services, they can also abstract revenue. The Office of Rail and Road recognises this through its “not primarily abstractive” test. The test is not binary and failing it does not mean that open access operators will not get access to the network, but it does highlight the potential impact on the taxpayer.

We have a responsibility to the taxpayer to move the railways on to a financially sustainable footing. Therefore, if we see applications that will abstract a significant amount from the Government’s operators, we need to carefully consider whether, when providing the Government’s view, we can support the application. Where there are wider socioeconomic benefits that arise from open access applications, we will, when we provide our views to the Office of Rail and Road, balance these against the abstraction, but we have to be honest about the financial pressures the railways face and factor them into our considerations.

I appreciate that I have just talked at length about the challenges that open access can create as well as the benefits it can bring. I highlight the challenges not to say that open access is bad—there can be real benefits—but as a Government, we need to be mindful of the full implications of each new open access application.

People have said that the move to public ownership means that the Government will seek to take open access off the network. I can categorically say that we have no intention to remove open access operators from the network. We were clear during the passage of the Passenger Railway Services (Public Ownership) Act 2024 that it only applied to operators contracted by the Government. I know that there has been speculation that we would look to bring open access operators into public ownership when their existing rights expire. Again, I reiterate that that is not our intention. Regarding our future plans for access to the network, we intend to bring forward a consultation on our proposed railways Bill shortly. That will provide Members with the opportunity to review, consider and respond to our proposals. I cannot pre-empt the consultation, and ask for Members’ understanding in this matter.

I will now address some of the specific issues raised by Members today. We have talked about the complexity of timetable challenges. Obviously, open access can and does make that a little bit more complex and challenging at times. Regarding passenger growth on the east coast main line, although open access operators have opened up markets on that line, they are by no means the sole reason for passenger growth. The Department has invested heavily in infrastructure, leading to improvements in resilience and reliability, and has taken the lead on fare trials on LNER to simplify the passenger offer. Underpinning all that is the fact that demand was already present on the east coast main line, even before the intervention of either Government or open access operators. On charges, open access operators pay variable access charges, but do not fully cover the costs of fixed- track access charges towards long-term maintenance of the network.

International comparisons were raised by my hon. Friend the Member for Great Grimsby and Cleethorpes (Melanie Onn). Although there are examples of open access competing with state-backed operators to offer choice to passengers in Europe, it needs to be noted that there are many differences between the British network and the rail networks in other countries. That makes it really difficult to make direct comparisons. For example, some countries operate completely separate rail networks for inner city and local services, creating a totally different environment for comparison than that here in Britain.

In terms of additional services in her constituency, my hon. Friend the Member for Scarborough and Whitby (Alison Hume) talked about the potential for open access to step in. We are clear that where there are gaps and it can be accommodated, we will consider that positively. GBR will look at the entire network to ensure it is used as fully as possible.

I am sure the Rail Minister will have heard the message from my hon. Friend the Member for Newcastle upon Tyne East and Wallsend (Mary Glindon) on the Leamside line. If not, I will make sure that I mention it to him. I thank her for her enthusiasm for public ownership and GBR. GBR will ensure the highest level of customer standards and operational performance as a directing mind for our railways. It will have a relentless focus on delivering for our passengers and, crucially, for freight as well.

Some Members raised, quite rightly, the speed at which the ORR is making decisions. We recognise that it can take too long for decisions to be made by the ORR, and we are working with operators, including open access and Network Rail, and the regulator to improve that. I believe it was the Father of the House, the right hon. Member for Gainsborough (Sir Edward Leigh), who raised new services for Cleethorpes and Grimsby. We are working with industry to understand the timetabling, financial, operational and infrastructure issues that need to be resolved. I recognise the frustration, but we are actively considering what can be done.

Open access plays an important role on the network and it will continue to play an important role on the network. We look forward to considering and providing our views on new applications and to our continued work with open access operators. However, we must and will balance the benefits of new applications with the impacts that they have on both the taxpayer and the operational efficiency of the network, in line with the letter that the Secretary of State sent to the regulator. I am incredibly grateful to all hon. Members here for their contributions. They have given us further food for thought and a useful insight into the benefits of open access to their constituents.