British Rail in Need of Boosted Competition and Reform, Says Report

A CrossCountry train in an undated file photo. Andrew Milligan/PA

UK rail’s recovery from the pandemic will be stalled if reforms are not carried out and effective competition among train companies is not introduced, a rail transportation body has suggested.

Britain’s rail routes need to be “revitalised” and more competition is the way to do it, said Rail Partners in its new report (pdf).

This can be achieved by allowing operators to run services on the same lines, Rail Partners added.

There are two types of train operators running passenger services in the country: franchised operators and open-access operators. Franchised operators, such as Chiltern Railways and Greater Anglia, hold contracts with the government to run services.

Open-access operators, such as Eurostar and Hull Trains, are independent and often compete with franchises.

The Rail Partners report suggested that public-private ownership of the railway would deliver better outcomes for passengers and taxpayers.

During the pandemic, when people were asked to stay at home, the government suspended franchising and placed operators on emergency contracts. The Department for Transport took charge of most commercial decisions.

As the country emerged from the pandemic, the cost of the recovery for train companies has reached around 85-90 percent of pre-pandemic levels. However, the post-COVID-19 contracts don’t oblige train companies to close the financial shortfall, thereby increasing fiscal pressure.

The report suggested that “at a time of tight fiscal constraints,” open access operators can offer services at no direct cost to the taxpayer.

“Whether it is quicker, more comfortable journeys or faster wi-fi, demand would shape the market meaning rail companies would have to adapt to the needs of passengers if they want to keep their business,” Rail Partners said.

The government announced the establishment of the Great British Railways (GRB) in May 2021, a public body to reform Britain’s rail.

GRB will absorb Network Rail and will oversee train services.

In his February address, Transport Secretary George Bradshaw said that GRB will be responsible for track and train, as well as revenue and cost.

“Which means finally treating the railway as the whole system it should be rather than a web of disparate interests that it’s become. Passengers won’t longer face the excuse-making and blame-shifting of years past,” Mr. Bradshaw said.

The private sector is meant to “reinvigorate” the industry in partnership with GRB, he added.

The start date for GRB has been set for autumn 2024, as the government keeps working on its vision.

Competition Potential

While Britain debates its rail industry future, Europe has been utilizing the potential of increased competition, Rail Partners suggested, adding that competition exists in France, Germany, Italy and Spain.

“They have done this by allowing new operators to compete both ‘for the market’ through bidding for contracts and ‘on rail’ through direct competition on the same routes through open access competition,” the report said.

In countries where operators compete on the same routes, findings showed increased service levels, larger number of passengers and reduction of fares.

For the open access model to be successful, the access mechanism needs to be “fair, transparent and stable,“ while the regulator is properly equipped to overlook the process, the paper said.

Rail Partners chief executive Andy Bagnall said that with the right reform in Britain, the railway can grow as an industry and reduce costs for the taxpayers.

Currently, one of the few rail lines in Britain that allow competition is East Coast, running between London King’s Cross station and Edinburgh.

Open access operators Grand Central, Hull Trains and Lumo compete with London North Eastern Railway.