Conflict of interest fears raised in DfT's latest open access letter to regulator

The Department for Transport has said existing open access applications could extract more than £229 million of revenue from train operators, and flagged conflict of interest concerns in its latest letter to the rail regulator.

The letter to the Office of Rail and Road (ORR) is the latest, and probably the strongest sent by the DfT with regards to open access in recent months.

Written by Richard Goodman, Director-General for Rail Reform & Strategy, the letter said there were concerns over a potential conflict of interest when owning groups are running contracted operations and open access services on the same routes.

FirstGroup owns part of Avanti West Coast and Great Western Railway both of which will soon face Lumo competition.

Calling on ORR to identify instances where the risks could be “particularly acute” and consider whether the risks are appropriate, Goodman wrote: “We are already seeing a number of applications that, if approved, would put an open access operator in direct competition with contracted services operated by the same owning group.

“We are concerned that such applications risk poorer overall experience for passengers and further reduced value for taxpayers and would potentially be contrary to ORR’s duty to consider the interests – and specifically value for money – for users and providers or railway services.”

One example is FirstGroup's Euston-Stirling Lumo service which will run alongside Avanti West Coast trains from 2026. FirstGroup owns 70% of the latter. It also owns Great Western Railway, and is due to start Lumo services between Paddington and Carmarthen from December 2027, though GWR may be in DFT Operator Ltd control by then.

A spokesman denied any conflict of interest, telling RAIL: "FirstGroup’s open access business cases are developed independently of the team at our two national rail contracts – there is no crossover.”

While a lot of Goodman’s letter repeated DfT concerns over revenue abstraction and network performance, it said the Department’s analysis “suggests that the sum of annual abstraction of each of the currently live open access application would be up to £229m (24/25 prices), not accounting for the revenue impacts resulting from those services interacting”.

Goodman said the DfT “remains clear” that open access “must deliver benefits without undue cost to taxpayers or existing passengers”, as Transport Secretary Heidi Alexander said in January.

“Now more than ever – given the constrained financial environment and ongoing work to ensure that GBR is able to deliver the best possible service to passengers in the future – it is crucial that the ORR makes full and appropriately balanced assessments of applications to operate new Open Access services against its statutory duties.”

Earlier this year the DfT objected to eight out of nine open access applications, only supporting the Wrexham, Shropshire and Midlands Railway (WSMR) plan for a service between North Wales and London Euston.

Goodman also said: “We therefore believe it is critical that the ORR immediately takes steps to fully understand and consider the cumulative scale and impacts of abstraction when it assesses open access applications.

He went on: “The Secretary of State considers that this analysis should be undertaken in respect of all live applications as well as existing services in order for the ORR to fully discharge its duty to consider impacts to the Secretary of State’s funds.”

ORR is expected to soon return decisions on three applications relating to the West Coast Main Line: WSMR, Virgin’s plan for services between Euston, Birmingham, Liverpool and Preston/Rochdale, and FirstGroup’s Euston-Rochdale Lumo service. A new Lumo service between London and Stirling is due to start next year.

A spokesman told RAIL: “Our access decisions will explain how we have considered views from all stakeholders, including the DfT (the most recent of which is the letter received on June 20).”

On the East Coast Main Line, there are more applications submitted for new routes to Sheffield (FirstGroup under its Hull Trains banner) and Cleethorpes (Grand Central), while Grand Central has also proposed a Newcastle-Brighton service via Birmingham and Reading.

FirstGroup also wants to extend some of its Lumo services from Edinburgh to Glasgow Queen Street, while all three ECML open access operators also want to add services on their current routes.

FirstGroup has also applied for new Lumo routes out of London Paddington to Paignton and Hereford, while its Carmarthen service is set to start in December 2027.

Go-op also has approval to start services between Swindon and Taunton if it can get trains running in 2026.

Elsewhere, Alliance Rail has applied to run between Marchwood, Southampton Central and London Waterloo, while SLC Rail has proposed two cross-country routes; Liverpool-Cardiff via Hereford and Nottingham-Bristol via East West Rail.

Responding to the claims, FirstGroup said: "Open access operators deliver trains to under-served routes, offering passengers choice at competitive fares. Passenger surveys routinely report very high satisfaction levels, and these operators are giving customers new travel options and driving demand, paying their own way without public subsidy," adding that Lumo will soon be paying more per mile in fixed track access charges than LNER services.