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High-ranking Whitehall officials in the UK have put in rare interventions to pressure independent regulators in the railway sector to limit approval of new “open access” train operations, saying there are too many taxpayers.
This move could affect the efforts of FirstGroup, Richard Branson’s Virgin Group, Arriva and Trainmaker Alstom.
Open Access Operators are privately operated railroad companies that operate services on the national railway network without government contracts or public subsidies.
To get approval to operate a new route, you must demonstrate to the network rail owners that there is space in the network for their services. It also requires approval from the independent regulatory authority, the Railway and Roads Agency (ORR).
Richard Goodman, director of the Department of Transport for Railway Reform and Strategy (DFT) wrote last week in ORR, demanding that future applications be difficult to obtain approval.
In a letter posted to its website by ORR, Goodman argued that if the regulator approves all outstanding applications, franchises and public sector train operators will lose as passengers divert into new services.
This costs franchises and public sector businesses with annual revenue of £229 million, he writes.
He went on to request that regulators “enact the changes immediately” in view of such damages in order to “strengthen the assessment method.”
Transport Secretary Heidi Alexander argued that open access services are allowed to continue even after the government controls all operations run by private companies under the franchise. Seven former franchises are already run by the public sector.
The existing open access work is the FirstGroup hull train linking London and Hull. Links Lumo, London and Edinburgh. Ariba’s Grand Central links London to Sunderland and Bradford.
FirstGroup has already secured approval to implement two open access routes between London Paddington and Carmarthen in Wales and Sterling in Scotland, but has not yet launched these services.
In response to a DFT letter sent on Saturday, FirstGroup’s managing director of railway operations Steve Montgomery expressed concern about DFT’s approach, noting that ORR is attempting to make a final decision on the open access operator license application.
DFT declined to comment beyond last week’s letter.
ORR controls FirstGroup requests to launch services between London and Rochdale and between London and Sheffield. Further applications are pending for services between London and Hereford, London and Paignton.
“It is very unusual for stakeholders to try to influence the process at a later stage of consideration,” Montgomery writes.
He added that the letter is “in conflict with the expressed support for DFT’s open access services.”
Montgomery argued that his company’s open access business generated new revenue for the railroad sector rather than taking it from franchise services.
Arriva said the licensing application to directly link Newcastle and Brighton would allow “more people to travel sustainably” using “underutilized capacity.”
Virgin or Alstom did not respond immediately to requests for comment.
ORR said the final decision would explain how it took into account the views of all stakeholders, including DFT.
