Private Operators and Open-Access Rail in the UK
AndyBTravels discusses the advantages and disadvantages of the British approach to private operators and open-access rail.
As with most things related to the railways, there are complexities, nuances, and some downright bizarre aspects. The same applies when we look at private rail operators, as each country in Europe treats them in its own way.
In this article, we take an in-depth look at the situation in the UK regarding private train operators and open-access rail, while a forthcoming follow-up article will examine the situation on the European continent.
The UK model
As I’ve already explained in my article on the current state of the British railway network, the UK model has been based on a franchise system, where companies bid to run certain services. Simply put, private companies bid for the right to run trains on specific parts of the network.
For example, Avanti West Coast operates services on the West Coast Main Line as a distinct company, just as Chiltern Railways and ScotRail do on their respective parts of the network. Yet there are further complexities, as ScotRail and Transport for Wales (TfW) are now run directly by their devolved governments.
Positives and negatives
The idea behind franchising was for private companies to be innovative, introduce change, and develop the network. When it first began, there were indeed a few innovations. However, being the UK, the lowest bids were most often chosen rather than those likely to deliver the highest service quality, as far as I know. So it has not always succeeded in bringing quality and innovation.
In the end, the Department for Transport and its masters at the Treasury – the bean counters – remain fully in charge. Some companies promised to return a dividend to the Treasury, while others, such as Northern, were subsidised due to the structure of the network.
On the whole, I think privatisation has performed reasonably well, and there are certainly a few positives. Passenger numbers have increased significantly, and service frequencies have risen as well. Train fares have fallen in some cases, but at the same time, the UK still has some of the most expensive fares in Europe, largely due to our labyrinthine fare system.
Renationalisation
There is currently a move towards renationalising rail services in the UK – something I am not sure would have been possible while our country was still an EU member.
It is now somewhat becoming a political football. Some private operators handed back the keys when they could not make a profit, with the government stepping in as the operator of last resort.
In effect, the privatised railways ended up being run by the government!
Open-access operators
On top of this, we have the introduction of what are known in the UK as open-access operators. These are fully private companies that must be profitable, operating entirely on a commercial basis. They have introduced some of the most innovative services.
A prime example is Hull Trains, which operates services from Hull to London Kings Cross. Previously, there was only one daily connection run by the national operators, but Hull Trains now runs five or six trains a day on this route. Prices have fallen, and quality has improved, making it a clear example of a private operator entering on an open-access basis and delivering positive results.
Grand Central is another good example, and only after they began operating did the national operators start running services to previously underserved destinations.
Revenue abstraction
Yet one thing in the UK that always raises its ugly head is something called revenue abstraction. This happens when the government is concerned about losing money to private operators.
Any money paid for a railway ticket ultimately goes to the Treasury in the UK. The government views open-access operators as a challenge to this system. Any revenue that goes to these operators goes to a private company rather than the Treasury, which is what they call revenue abstraction.
Private rail operators must submit an application to the Office of Rail and Road (ORR) if they wish to launch new routes under the open-access rail model. A recent creative proposal is Grand Central’s plan to run trains from Newcastle to Brighton, bypassing London. Yet many such applications – like Hull Trains’ proposed new service between London King’s Cross and Sheffield – are rejected by the ORR, often out of concern that money will be lost from the public purse.
Basically, new open-access routes in the UK must generate significant extra revenue by connecting places that are not already well linked for them being approved, rather than primarily diverting passengers from existing services.
Bigger picture
Yet it is important to keep the bigger picture in mind, as not everything is as simple as it appears.
Keep in mind that large parts of the UK railway network are heavily saturated, such as the West Coast Main Line out of London Euston, which is one of the busiest mixed-traffic lines in Europe. It carries freight, short-distance commuter services, medium-distance commuter services, and long-distance trains. In many cases, there is simply no capacity to accommodate the requests of open-access operators.
To get the maximum advantages from private operators and open-access rail, it is important to address both capacity and to reform the complex British fare system.
When we examine the situation in mainland Europe – which we will do in the follow-up to this article – it is clear that private operators can bring enormous benefits for passengers when the circumstances are right!
Really interesting breakdown. What stands out to me is that the UK has never actually embraced real privatisation in rail, only franchising under government control. Operators are essentially tenants of the Treasury, not genuine owners with long-term responsibility. That’s why “innovation” is limited and why open-access operators, when allowed, often deliver more value: they face real risk and reward.
The obsession with “revenue abstraction” shows the same problem. The state still treats the system as its own cash register, rather than letting property rights and market discipline drive efficiency. Until operators can truly own assets and be accountable for them, we’ll keep getting a halfway model that looks private but behaves public.
One way for open-access operators to convince the DfT is to contribute funding to the infrastructure upgrades needed to increase capacity, based on their profits from the operation.