Rail 593: Troubled times for the open access operators

Poor old Grand Central has been in the wars. The open access operator running between Sunderland and London has had nothing but trouble since launching its service last December and has only been able to run a full service on a few days since its creation because of various difficulties with its rolling stock. Indeed, it started badly, too, as that launch date was itself the third attempt to begin operating and clearly its parent company, Fraser Eagle, must be haemorrhaging money.

Its latest problem was a fire on a power car on May 15 at York which not only wrecked its sole working unit, but also severely disrupted other train services. Indeed, some of the franchised operators are beginning to be concerned about Grand Central’s perennial problems disrupting their service. Objecting to Grand Central’s application for a fourth path, a First Capital Connect executive, John Beer wrote to the Office for Rail Regulation saying he was ‘very concerned’ that Grand Central ‘does not possess suitable or adequate resources

to fulfil its current timetable commitments’. He cited two examples of Grand Central trains breaking down between London and Peterborough causing delays to his services.

The Wrexham – London service, although apparently having more robust rolling stock also hit problems on its launch day, April 28, when a locomotive failure caused delays. Both these operators, like Hull Trains, the other open access provider, give a direct service to London from towns that once boasted such a link but lost it under British Rail. On the face of it, they provide useful infilling and by offering a direct connection, attract people on to the railway who might not otherwise make their journey by train.

We are likely to see more applications for open access operation. Both the growth and the difficulties of the open access operators raise fundamental questions about the running of the railway. Grand Central is currently giving the impression of being a pretty ramshackle outfit whose directors have clearly had too many black cats cross their paths. It is probably more bad luck than poor management which has created its difficulties, but the company is going to face an uphill struggle to obtain any credibility with its target market.

However, it may well be that the regulator is already regretting his controversial decision to allow the company access onto the railway. Remember, Grand Central’s application for train paths was opposed strongly by GNER and, indeed, the arrival of the upstart was cited by the company as one of the reasons for its demise. That was nonsense, of course, but GNER did have a point when it argued that allowing in a rival operator on to the tracks would not necessarily be beneficial for passengers.

Part of me wants to see these initiatives succeed. I like Grand Central because it has a sensible pricing policy, a reasonably low standard fare available on all trains, it promises refunds if people cannot get a seat (unlikely given its present travails) and there is the nice innovation of Scrabble boards laminated into their table tops. As for the Wrexham service, how could one not have a soft spot for a company with the evocative and quaint sounding name of the Wrexham, Shropshire and Marylebone Railway Company (even if, actually, it is owned by the massive Deutsche Bahn)? I like, too, these companies use of refurbished old rolling stock which so often offers much better leg room for a six footer like me than the cramped Pendolinos.

But in reality, these open access operators are pretty much an irrelevance to the overall running of the railway. Even with the five train services between Wrexham and London on weekdays, there are still fewer 30 such open access services per day, compared with 19,000 run by conventional franchisees. It would be nice to think that, say, Grand Central and Hull are keeping National Express, which most passengers reckon is not as good as its predecessor, on its toes. Unfortunately, four trains a day from middle sized town on the Humber or Teesside is hardly going to do that, especially given that the regulatory rules prevent a full scale battle.

Indeed, the very structure that created these services, mitigates against them. Because they are upstart newcomers, they get given lousy train paths, which have to be fitted in between the franchised services. Some of the Wrexham trains into London, for example, are scheduled to run behind slow stopping services which makes the final section into London painfully slow.

Moreover, these services cannot stop at various places where the existing franchise has managed to ward off competition. So Grand Central is allowed to call at York, but not at Peterborough while Hull Trains is allowed to stop at Stevenage and Doncaster. The poor Wrexham service has to use a slow route to London avoiding Birmingham New Street but taking in Coventry and Leamington without being allowed to stop. (Oddly, the trains would be allowed to stop at Birmingham International but this is not in the company’s timetable.) These restrictions are, of course, to protect the interests of the incumbent franchisees but, and this is the crucial point, by no means offers the best possible service to passengers. In other words, the commercial interests of the individual private companies – not, note, necessarily of the railway taken as a whole – are deemed more important than the needs of passengers. This is a classic example of the railway being tailored to commercial rather than social needs.

Also, their tickets are not interchangeable. I have been to York several times recently but used National Express because my schedule did not happen to fit into Grand Central’s limited service. Here, incidentally, there is a good opportunity for National Express to exploit its stronger position: instead of punitively making advanced ticket holders pay full fare if they get the wrong train, the company could say that they will allow people to use trains departing within an hour or two for the return leg, trumping any offer of flexibility that Grand Central could make. Now, that would a genuine benefit of competition but probably pigs could fly….

It is, of course, the regulator who decides where these trains can stop and whether they are allowed any paths. That means, in effect, that commercial decisions which used to be made by experienced railway operators working for British Rail are now made in the remote Holborn offices of the Office for Rail Regulation. It is another example of the way that the privatised railway is constrained by the legal structures governing it. Open access is, really, a misnomer. It should be called access controlled by the regulator, a rather more honest description.

And remember, these handful of services came at a terrible cost. The whole privatised structure created by the Tories and cemented into place by New Labour was designed precisely to accommodate these open access companies. Just remember all the palaver and cost that went into creating this structure and all the enduring hassle, merely to allow a few entrepreneurs to play at trains.

The trouble is that this is the way the industry is moving across Europe, with open access being entrenched in European legislation. Trying to reverse recreate a more rational way of running the industry appears to be an almost insurmountable task, although if there are too many Grand Central type mishaps, then the regulator may decide to raise the barrier for entry to any new players. And all that would achieve is entrenching the status quo of the monopoly franchise operators. As the old advice to lost travellers goes, it would be better if we were not starting from here.

The real benefit of high speed

When I ridiculed the report by WS Atkins which argued that a new North South High Speed line would be worth precisely £32bn in net benefits (Rail 589), the consultants bravely came back to me and wrote a letter defending their figures.

The gist of their argument was that the consultants had used a tried and tested model that had been applied elsewhere and that my criticisms were ill-founded . However, I wrote to them asking for further detail and their response was enlightening. They said that the figures are based on government forecasts but ‘this update work represent a “central case” forecast – i.e. statistically the most likely scenario’. In other words, all sorts of other scenarios would be quite possible and, as we know, forecasting anything beyond even 3-4 years is a very inexact science. Atkins admits that while ‘the source of benefits varies by option….it is mainly driven by shorter journey times. Those benefits accrue to a mixture of business and leisure users, including those switching from road, air or existing rail services. As for any transport investment appraisal, the aggregation of time savings is an essential component of the business case.’

Atkins said that my estimate of £200 per journey being needed to pay for the infrastructure was four times too large. I said that if the line had a £40bn construction cost and carried 20m passengers a year, each passenger would have to pay £200 to provide a return of 10 per cent to investors each year. Atkins says that there would be 60 million trips on a network costing £31bn to build, therefore requiring only £50 per journey – now we can quibble over these figures but it is still a substantial additional cost that would have to be met by the passenger or large government subsidy.

Most crucially, the very methodology that underpins this sort of work, with the major benefits coming from millions of tiny time savings by thousands of people, has been undermined fatally by recent research by Professor David Metz, the Department for Transport’s chief scientist between 1992 and 1997. In an academic journal, Transport Reviews, he says that the idea of time savings being worth money to users is wrongheaded because there is no evidence that people use the time savings to reduce the amount of time they travel. Rather, they simply make longer journeys as demonstrated by the fact that the amount of time people spend travelling, 385 hours per year, has changed little in 30 years, despite the construction of all those motorways and other pieces of transport infrastructure. Metz, frankly, blows a whole the size of small planet in the methodology used by Atkins.

Finally, Atkins says that it agrees with the Eddington report’s scepticism about a high speed line! However, the reply to my article says: ‘Our work shows that, once capacity has been squeezed out of the existing network, a variety of HSR options still represent value for money and support long term sustainable economic growth objectives.’ That, frankly, is a pretty lukewarm endorsement for high speed lines, given all the publicity which Atkins tried to stimulate with its ‘research’.