Guest comment: Will the new railway really be open to open access?

When somebody says: ‘It goes without saying’, they are prefacing something they think very much needs saying. In the same way, when somebody in a position of authority writes that their expectations are not legally binding, they very much anticipate the recipient will treat them as such.

Thus, Office of Rail and Road Chair Declan Collier probably went and consulted his legal team after receiving Transport Secretary Heidi Alexander’s January 6 letter, setting out her (non-formal, non-legal standing) expectations around the government’s vision for open access (RAIL 1027).

This, it was said, was to help ORR in its future regulation of open access, providing an unsolicited ready regulation reckoner for Collier and his team.

The message was as subtle as the brick it was tied to, in keeping with the broader government initiative to cut regulatory red tape in service of economic growth.

That brick had no doubt been lobbed in response to the slew of open access proposals ORR has approved (or is about to) since publication of the last government’s Rail Reform Bill in February 2024. And if people haven’t been making applications for open access, they have been buying up open access rights that have already been approved.

FirstGroup thought it necessary to issue a report on the enduring importance of open access. Worried perhaps about the impact of the letter on ORR’s regulation of pending access applications (some of which are theirs), the report stressed the importance of regulatory independence.

That’s because Alexander said, when deciding whether to grant an open access application, that she wanted ORR to give “primacy” to the open access impacts on the taxpayer. She also emphasised that she respected ORR’s existing statutory duties.

I can’t personally make those two things add up. While ORR does indeed have to have regard to the impacts on the taxpayer and railway service performance when considering an open access application, it must first balance those considerations with other things, such as promoting competition and protecting railway users’ interests.

When weighing up an open access application, therefore, ORR might ultimately end up putting taxpayer interests before competition, but must not start out from that position.

Yet the letter suggests that might well become the starting point.

The change in government has not changed the imperative to create Great British Railways, but the legislation by which it is created might well change from what we were offered by the last government because of the new public sector imperative.

The old government’s draft Rail Reform Bill for creating GBR (published in February 2024) intended to establish the legal framework for GBR, but by doing so it also effectively established the legal framework for every non-GBR rail business, including open access ones. The new draft Rail Reform Bill we are promised will be no different in that respect.

The February draft already gave rise to some concerns for those situations where track and train will continue to remain apart.

The current Railways Act and the 2016 access management regulations, which between them prescribe how rail services are delivered and access is granted to the network, had to be stretched and pulled in the February draft Rail Reform Bill to accommodate the new integrated objective. This was because the law had been predicated on the basis of track and train remaining apart and a level playing field in service of competition.

But in February, instead of regulated entities having to have regard to what the regulator says (which is sort of what regulation is), the draft bill placed a new statutory duty on ORR to take into account GBR’s access and use policies when performing its functions, reflecting the fact that the behemoth would be the railways’ new guiding mind.

It was said this change was limited, that it would somehow widen - not limit - ORR’s duty to promote competition, and would not compromise ORR’s independence.

Bold claims for policies yet to be written. Policies that could be rewritten after they are written. Policies that could ebb and flow with government sensibilities about competition with its own services and regulatory independence to facilitate just that, and so decide tomorrow that fairness and non-discrimination mean something different from today.

Giving evidence to the Transport Select Committee in April, on the amendment in the previous bill, ORR CEO John Larkinson was raging in a way only a regulator can: “My understanding of the intent of the change is to try to tilt the balance a little bit to make it harder to approve open access… almost to give ORR a bit more pause for thought on approving open access…” Strong words.

But balance tilting is right. A small weight (about the weight of a thumb, I’d say) would be placed on ORR’s scales.

Further changes to the 2016 regulations were also needed to actually allow track and train to be brought together.

You cannot retain the safeguards around independence of essential functions (infrastructure charging and capacity allocation) to ensure non-discrimination, independent access decisions, and conflict of interest avoidance in an integrated world, since the very objective with GBR is to create a singular directive body across both train planning and system operation, where integration dependency, partiality, and interest alignment is the very point. Those safeguards will likely continue to be absent in any updated Rail Reform bill.

That’s all well and good where everything is integrated - where you and all your colleagues are charged with meeting the same policy objective or commercial imperative. You don’t need regulation then, just effective internal relationships.

But for those who cannot just walk across a GBR corridor in the new world, the GBR licence is meant to afford them some protection.

Much store is placed in the licence. We were told the licence would deliver true accountability. But we were asked to believe that without seeing a draft. And as ORR’s regulation of Network Rail’s licence has proven over the years, regulation by licence can (by its nature) be imperfect.

Licences often describe a set of behaviours that include imprecise qualitative aspects which are not often granular enough to allow for counterparties to challenge the licensed undertaking’s individual actions in the way a contract might. In other words, it is something of a blunt instrument.

Despite the prevailing threat of (and from time to time actual) regulation through its licence, this has failed to engender meaningful change in some of Network Rail’s intransigent behaviours.

Indeed, this outcome was a big driver for creating GBR in the first place. And Network Rail regulation was backstopped by financial penalties for licence breaches, to which GBR would not be subject.

Fining a public body might not be the most efficient use of everyone’s time, but at least it was something. What other incentive is there to engender GBR compliance with its self-written licence? It’s not as if ORR is going to revoke it, and the job given to the ‘Operator of Really Last Resort?

What price then a more energetic, surgical regulation of GBR by ORR, when GBR will be an even bigger, more powerful animal than Network Rail and a direct creature of government - when ORR’s competition claws might have been pulled, and when the Secretary of State can simply change the licence at will?

And then there was clause 8 in the February Rail Reform bill. Clause 8 allowed the Secretary of State to rewrite the law itself on a host of matters concerning the railway, including the operation of (and access to) railway infrastructure.

These sorts of provisions seem to have slipped into lots of draft legislation in recent years - something of an alarming trend. They are often referred to as ‘skeleton clauses’ or ‘Henry VIII powers’, allowing for policy changes after the fact.

And it was rightly seen as such back in May last year. The Delegated Powers and Regulatory Reform Committee criticised clause 8, saying it represented “an exceptional shift in power from Parliament to the executive”, and that the government was asking Parliament “to pass legislation which is so insubstantial that it leaves the real operation of the legislation to be decided by ministers”.

In the context of accessing GBR’s infrastructure, clause 8 wouldn’t just allow the government to move the goalposts, but the pitch as well. Never mind the Secretary of State being able to change the licence at will in service of achieving GBR’s objectives, clause 8 would allow her to rewrite the legislation itself, to change GBR’s objectives in ways we cannot possibly fathom today.

The Department for Transport couldn’t adequately explain to the committee why it needed clause 8 back then. I doubt it will be able to now, should it reappear.

People point to the government continuing to run with the overarching freight growth target as being a guard rail against GBR trampling of freight access rights, at least. While no doubt of significance, the reality is that it probably provides about as much comfort for the long-term planning of freight businesses as our legally binding 2050 net zero commitments provide to renewables businesses.

More practical protection will perhaps be offered by those GBR employees who will be charged with advocating for freight from within. But what has always really mattered to freight and other open access operators is access rights - they are existential.

The existing regulatory environment prescribed an ORR duty to enable operators “to plan the future of their businesses with a reasonable degree of assurance”. In the new regulatory environment, it might become harder to renew existing access rights and so make those plans, and impossible to secure new ones.

The truth is: open access has always been the camel’s nose in the public sector tent. The recent ORR decisions have allowed that nose to protrude into the tent further, when the government’s seeming intention is to push it out. But however far that nose protrudes, co-existence will be a challenge when the GBR tent takes up all but a small corner of the desert camp site.

And that’s really the point. A fully public service railway which brings all of the track together with all of the train would avoid all this, including the need to work the referee and tilt the rules.

But if we aren’t doing that because of the economics, that part of the train which remains in private sector hands needs a fair and non-discriminatory regulatory framework with a referee that’s independent.

I am not sure we got that even with the previous government’s Rail Reform Bill. Now overlay onto that the clear policy objective since to bin franchising and optimise the chances of public sector operation success, the far-from-semantic narrative change of GBR becoming a directing mind instead of a guiding one, and then the Alexander letter, and one can only imagine that the appetite for Tudor times will be even stronger in a new bill.

So, what we might end up with is a lot of unnecessary regulatory architecture to pay mere lip service to the idea of competition for access to our network. That is baking a huge inefficiency and cost into the railway for little value, while reducing passenger choice. It ‘goes without saying’ that that is not in anyone’s interest.