The privatised train companies made a mistake by taking a hardline in relation to Labour’s plans to bring back operations into the government fold. Rail Partners, set up by a consortium of various private rail interests took a particularly aggressive line towards the plan, with its boss, Andy Bagnall, even going to Labour party conference to argue the case that the policy should be reversed.
There was never any chance of that and Bagnall will soon need to find himself a new job as the organisation is being sent to that scrapyard in the sky to join Connex, Sea Containers and numerous other failed rail companies. FirstGroup, a bit cannier than some of the others, has seen the way the wind is blowing with the demise of franchising and have put their eggs in the Open Access basket. Indeed, quite a lot of eggs, some £500 million worth. In December, FirstGroup announced it was buying 14 five carriage trains from Hitachi to use both on its existing open access services and on a new one between Paddington and Carmarthen.
FirstGroup and other potential open access players were been spurred on by Labour’s manifesto which, while making explicit the renationalisation of operations, was encouraging about the maintenance, and indeed the expansion, of open access services. Indeed, the Labour’s transport plans, published in April 2024 commended existing operators and explained: ‘Open Access has an important within the rail system… [and has] a proven track record in driving competition and better passenger outcomes’.
Given what the company perceived as the favourable climate for Open Access set out in this document, FirstGroup has been rather taken aback (‘miffed’ as one senior manager put it) that the new transport secretary, Heidi Alexander has poured an iceberg full of cold water on the open access concept. In an unprompted letter sent in early January to the regulator, the Office of Rail and Road, her welcome for open access is lukewarm and she puts great stress on the need to be aware of the downsides. She wrote ‘We need to be mindful of the impacts of Open Access such as the level of revenue they can abstract from contracted services and the associated implications for passengers and taxpayers. I am also aware of the additional pressures new services can create on already constrained network capacity and their impact on the value secured from public investment in infrastructure’. This highlights two clear objections which have long been obvious – that more open access will result in less income for the new nationalised Great British Railways and that cramming on more trains in the spare paths available will put pressure on the performance of the network, something that the government is determined to improve.
Now this does not mean the rules have changed. Or at least yet! But it does raise doubts about Labour’s enthusiasm for open access. And apart from changes to the regulator’s role, which Labour could well introduce, such as removing its focus on ‘increasing competition’, there are other ways of making life difficult for open access operators, such as removing the hidden subsidies which enable them to operate. It was notable that Alexander stressed that only one open access operator contributed to fixed cost on the network, which was clearly a hint that this may change in the future.
This is the difference between being in opposition and in government. It was all too easy for Louise Haigh to extol the virtues of open access when in opposition, but in power ministers have learnt that there is a fundamental contradiction between having the best possible timetable and allowing a free for all on the railways. Jonathan Tyler, an expert on timetabling has long argued that open access is incompatible with efficiency. He says: ‘open access is incompatible with the government’s vision of integrated public transport, including a publicly owned railway managed by a single directing mind’.In particular, he questions whether the ability of ORR to allow open access operations without regard for the availability of capacity on the railway will lead to inefficiencies. Having more open access operators would, he suggests, add to the already far too complicated ticketing system on the railways.
FirstGroup therefore are left in a bit of a quandary. In one of several ironies in this story, FirstGroup’s GWR originally opposed the application by Grand Union Trains to run five daily services between Paddington and Carmarthen. Despite GWR’s objections, the Office of Road and Rail agreed to the introduction of these services. In a letter explaining this decision in December 2022, Stephanie Tobyn, the ORR’s Director of Strategy, Policy and Reform stressed: ‘ORR is supportive in principle of open access, by which we mean passenger services provided outside of a public service contract. This reflects our duty to promote competition for the benefit of rail users and our recognition that competition can make a significant contribution to innovation in terms of the routes served, ticketing practices and service quality improvements…’
However, we are now in a very different situation. First, GWR, behaving rather like a Victorian railway company wishing to snuff out a smaller rival, bought the rights to the Welsh open access operation from Grand Union which obviously rather undermined Ms Tobyn’s point about how the
new services would provide competition. However, GWR is due to be folded into the Department for Transport’s operations along with other franchises.. The current contract does not end until the summer of 2028 but the Department announced recently that all the franchises would be taken in by October 2027. So FirstGroup will become the open access rival to the operations that will be run by the state-owned Great British Railways.
Where this leaves FirstGroup is unclear. It is buying the Hitachi trains through Angel Trains, the rolling stock company, which will bear the long term risk of ownership, but FirstGroup will be responsible for ensuring leasing costs for several years. On the plus side, these are five car bimode trains which will be flexible and useable on other parts of the network but nevertheless if the Carmarthen services never materialise, First Group, which has said it would like to triple its income from open access operations, could be left with considerable losses.
Lynch demobbed
So it is farewell Mick Lynch, who has decided to leave his job as RMT union boss at the relatively young age of 63. Clearly, having watched the fate of his two predecessors – Bob Crow died in office and Mick Cash left after fierce internal rows – Lynch has decided to depart on his own terms. His brilliant media performances will be greatly missed. He had the knack – which sadly many Labour ministers to not have – of being able to turn the tables on questioners and turn what might be seen as radical policies into totally reasonable arguments.
Union news features little in the media these days unlike in the 1980s when every newspaper had a clutch of ‘industrial correspondents’ whose main task was covering management-worker conflicts. The RMT however is one of the few unions with sufficient industrial muscle able to stop the production process and therefore has had considerable success in raising members’ pay and conditions.
Under his leadership, the RMT has been successful in maintaining the number of members and in fighting its corner for them. Although the union is not affiliated to Labour, Lynch maintained good links with the party even though at times, privately, ministers were deeply unhappy with their reluctance to negotiate. The current dispute over additional payments for guards to work on rest days on Avanti which are scheduled to continue right into May is bound to test that relationship but Lynch has been powerless to stop the more militant members of his union from proceeding with the action. Indeed, having a radical executive which basically can override the general secretary has been a consistent feature during the recent history of the union and that situation is likely to continue under new leadership. Therefore even if a moderate is elected, he or she may find themselves beholden to a radical executive committee.
And here’s a quick five predictions for 2025
- HS2 will continue to cost upwards of £5bn annually and no firm date for either the start of services or the completion of Euston will be announced this year.
- South West Trains, which was the first franchise to start operating in 1996 – I was on the inaugural train – will be the first to be taken back permanently in house under the new legislation
- The transport ministerial team led by Heidi Alexander will still all be in place, as will Keir Starmer and Rachel Reeves
- An announcement on rail fares will say that they will go up by less than the rate of inflation in 2026
- The second railways act which will create Great British Railways will become law in the autumn
And for the two readers who follow QPR, we will finish 12th in May