Transport Secretary's open access letter 'suggests making it harder for new applications'

The Transport Secretary’s stance on open access ‘suggests the bar for new applications is being made harder to clear’.

That’s the view of Andy Bagnall, Chief Executive of Rail Partners after Heidi Alexander wrote to Office of Rail and Road’s (ORR) Chair, Declan Collier, expressing her concerns about the impact open access has on taxpayers and the rail network.

In her letter, Alexander said a balance between their benefits against potential revenue abstraction and taxpayers paying for shortfalls in network costs needed to be struck.

She told Collier: “While Open Access operators pay variable access charges to Network Rail to cover the direct costs incurred running their trains on the network, unlike government-contracted operators they do not fully cover the costs of fixed track access charges towards long-term maintenance of the network and central support costs.”

Responding, Bagnall said the last 18 months had “been a breakthrough period for open access operators” and described the Prime Minister’s December visit to Hitachi’s Newton Aycliffe factory in support of FirstGroup’s Class 80x order for its Lumo services as “a very positive sign”.

But he added that “it remains unclear whether the new government is a champion of open access operators, or it is simply tolerating them as part of the system that is too costly to nationalise”.

“If the Government doesn’t make a positive choice to grow the sector through adequate safeguards and a fairly-adjudicated application process, it will effectively be creating the conditions for existing operators to wither on the vine.

“The Secretary of State’s letter to the ORR this week is a worrying signal in this regard as it suggests that the bar for new open access applications is being made harder to clear. ‘Open access operators are at a crossroads. There is momentum across Europe in favour of this model. But passengers will only benefit if government chooses the right direction.”

Several open access applications are currently with ORR, from operators such as FirstGroup, Virgin, Grand Union and SLC/Alstom. Those behind the proposals believe they do meet the criteria set out by the Transport Secretary.

Martijn Gilbert, Managing Director for Open Access at First Rail, welcomed Alexander ‘recognising the benefits open access brings’, adding: “We are confident that our First Rail applications will have beneficial effects on the routes where they will be introduced.”

FirstGroup has applied for open access routes from London King’s Cross-Sheffield, Edinburgh Waverley-Glasgow Central, London Euston-Rochdale and London Paddington-Paignton.

Virgin wants to run from Euston to destinations including Birmingham New Street, Preston and Glasgow. Phil Whittingham, the firm’s Project Lead, said: “Virgin believes the case for open access is strong – where healthy competition exists on long distance routes, significant growth has been delivered by offering choice, additional capacity and value for money which benefits customers and taxpayers alike. 

“Virgin wants genuine open access operators to be supported to inject new life into the lines which need it most."

Ian Yeowart, Grand Union’s Managing Director, said the letter was nothing new, and modelling that predicts revenue abstraction was not evidence it actually does.

“I don’t quite see what the problem is,” he told RAIL, adding that some people within the Department for Transport support open access too.

SLC and Alstom have applied to start services between Wrexham and Euston under the Wrexham, Shropshire and Midlands Railway banner.

SLC’s Managing Director, Ian Walters, said: “Our robust proposal aligns with the Transport Secretary’s expectations on open access operations.”