17 May 2022

Changing track: how to rescue the railways and put passengers first

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It is widely accepted that fundamental reform of our railways is needed to deliver both a better service and improve ever-declining passenger trust. The railways are an essential tool as this Government delivers upon its Levelling Up agenda. The reasons to prioritise rail reform are therefore abundant and clear. 

Since the pandemic the way in which we use trains has significantly (and perhaps irreversibly) changed, with more people adopting hybrid working, while others have altered their commuting patterns. Passenger numbers continue to remain much lower than pre-Covid. Commuter journeys are only 45% of their previous levels and most notably the five-day peak hour commute is just 15% of what it used to be. 

However, while some things have changed a lot, many things have not. Pre-pandemic issues surrounding transport policy still persist. In particular, passengers are still taken for granted, whether that be in terms of the price of tickets, the comfort and enjoyment of travelling, or the punctuality of trains.

The Government recognises the challenges and the importance of placing passengers at the heart of policy. The creation of the new Great British Railways is welcome, but it’s important it delivers not just on restoring financial sustainability to our rail system but also addresses the wider problems that have caused people to lose faith in train travel. 

There are plenty of ideas out there for how this can be changed. A new report by Tony Lodge for the Centre for Policy Studies rightly emphasises the often underappreciated (but vitally important) role of competition. Increasing competition does not just deliver cheaper tickets, but also leads to higher standards, and will be the key to saving the railways from sustained decline.

Specifically, the CPS advocates moving away from the current franchising system for long-distance routes to open access rail competition. Open access operators, which have been endorsed by the Competition and Markets Authority (CMA), are (as the report states) ‘train companies that take on the full commercial risk for their services by purchasing individual route slots on the rail network’. Importantly, they don’t receive any subsidy and pay no premium to government. In short, the aim is that train companies identify an opportunity where they can provide a better service than is currently on offer. 

We can already see the success of this model in action. The two main routes from London to Scotland, the West Coast and East Coast Main Lines, provide the perfect case study of how this is tangibly making a difference. Unlike its West Coast equivalent, the ECML has several operators using the track. This means the government-run LNER trains are competing against three other operators. Unsurprisingly, as was evident long before the pandemic, greater choice has resulted in more passengers, lower fares, more revenue, better service and, crucially, happier passengers. For example, an Anytime return ticket from Newark to London (1hr 29 mins) on the ECML costs £166, while a comparable ticket from Derby to London (1hr 31 mins) on the Midland Mainline costs £211.50. 

The fact that on three intercity lines – Great Western, West Coast and Midland Mainline – there is just one operator on each is frankly staggering. It is no surprise that the service is far from optimal and passengers are often disappointed. These operators are monopolies and as a result are provided with no incentive to improve and provide a better service. It is not rocket science to see that in a system which does not encourage competition and investment you have poor results. 

The fact, as the CPS’ report notes, that just 4% of long-distance high-speed services nationally are provided by open access operators is also telling. But it shows how much of an opportunity there is to radically improve the rail system in the UK with a clear shift in policy focus. 

Often with new policies it can be hard to make the case, as we can’t ever be certain that they will work. However, in this instance, we just need to compare and contrast. We can already see the results and see what we need to do. We just need to actually go on and do it. That means speaking up for competition, and showing how we can all share in its success.

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Gerard B Lyons is a Business Researcher at the Centre for Policy Studies.

Columns are the author's own opinion and do not necessarily reflect the views of CapX.