DfT accused of "strong-arm tactics" in battle over future of open access

The Department for Transport has been accused of "strong-arm tactics" as the government and open access operators remain at odds over the future of the sector.

While the DfT has said it will support open access plans that “identify and exploit opportunities GBR [Great British Railways] is not willing or equipped to take on”, it maintains that many “take revenue from government-contracted services”.

On June 20, the Department’s Director-General for Rail Reform & Strategy, Richard Goodman, wrote to the Office of Rail and Road (ORR) to warn that annual revenue abstraction from current live open access applications would be up to £229 million.

He also raised concerns about a potential conflict of interest when both contracted and open access services run on the same route.

“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 of railway services,” Goodman wrote.

One open access company is said to be “incensed” about the letter.

A source told RAIL: “The ORR is not daft. It is not going to agree to something that takes away large amounts of revenue from the (contracted) train operators.

“Some applications will fail. ORR does not need strong-arm tactics from DfT muddying the waters.”

FirstGroup wrote back on June 28, saying the DfT letter “does not appear to be consistent with the added value and contribution to the economy and local businesses (such as rolling stock manufacturing at Newton Aycliffe) which the DfT has previously publicly recognised and welcomed”.

The DfT had also asked ORR to “fully understand and consider the cumulative scale and impacts of abstraction” of all open access applications and existing services, to “consider impacts to the Secretary of State’s funds”.

Responding last week, ORR Chief Executive, John Larkinson, said that changing the way the regulator analyses open access applications now would delay decisions for all track access requests relating to the East Coast Main Line.

But FirstGroup said DfT's suggestion was “incorrect both legally and operationally”, arguing that “the correct legal test is based around the services proposed in each case, not around some general global assessment of DfT finances”.

Steve Montgomery, Managing Director at First Rail, wrote: “The applications have been validly made under the law as it stands and the rights currently granted to existing operations, and they must be considered on that basis.”

The DfT pointed to ORR’s open access guidance, which mentions the consideration of “funds available to the Secretary of State in relation to railways and to protect the interests of users of railway services”.

Montgomery also said FirstGroup was “extremely disappointed” by the conflict of interest suggestion, saying it had informed the DfT in March 2024 about its approach “to making applications over routes where we currently operate DfT services”, and had since responded to requests to explain mitigations in place.

Next year, FirstGroup will run Lumo services between London Euston and Stirling alongside Avanti West Coast trains. It owns 70% of the latter.

There are concerns of Great British Railways trying to “price open access off in 2029” with increased charges. Lumo is currently the only open access operator that pays an Infrastructure Cost Charge.

DfT has suggested open access “super normal profits” are helped by lower charges and being able to “offer reduced fares and provide journeys only between the most profitable locations”.

When asked if more charges could be heading the way of open access operators in the rail reform bill, a government source said: “Not as it stands, no.”

However, DfT promises a “level playing field”, with GBR likely to take charge of track access decisions.

The DfT has also said open access has led to congestion on profitable routes, suggesting they have impacted the delivery of a “robust timetable” on the East Coast Main Line because of “shorter trains with less frequent stopping patterns, resulting in inefficient use of scarce capacity and adding complexity into timetable development”.

A source told RAIL: “The irony is, if you are going to do a new timetable for the ECML, the people who started out as on the margins (open access) are the first ones on the graph as they have got rights.”

A DfT source highlighted Doncaster, saying that LNER’s additional London-Newcastle service from December cannot call at the station.

They said that opener access operator Grand Central’s plans to join and split services for Bradford and Cleethorpes are “unworkable under the current timetable”, claiming they risk “significant and regular delays” and that the platforms that can accommodate ten-car trains are “currently occupied by other services”.

Network Rail also plans to declare Doncaster Marshgate Junction to Leeds Copley Hill West Junction congested infrastructure.

FirstGroup has dismissed suggestions that the presence of open access services on the ECML has led to a performance issue.

Montgomery said the DfT letter was “openly hostile to open access”, and reading it inferred “that benefits to rail passengers should be provided through GBR only”.

DfT maintained there will be opportunities for open access, pointing out its support for the Wrexham, Shropshire & Midlands Railway application.