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Roads to Nowhere

Is more competition key to value on the railways?

Andrew Allen's picture

We all want better value from the railways – but is the Government’s plan to increase competition really the best way of achieving it? 

The Competition and Markets Authority (CMA) has published its final report on the rail industry. In the short term, it calls for more open access operators to be allowed on the rail network, but goes much further in calling for direct on-track competition through a redrawing of the franchise map and overlapping or multi-operator franchises - probably starting with intercity routes.

The CMA, which replaced the Competition Commission and the Office of Fair Trading in 2014, believe there isn't enough competition in the rail sector. They want to move from competition for the market (winning a franchise) to competition within the market (giving people choice in which train they catch). In this way, so the thinking goes, there will be more innovation and downward pressure on costs to passengers.

The most straightforward of the recommendations to implement would be to allow more open access operators. Existing open access operators like Hull Trains and Grand Central tend to be popular with passengers but less so with other train companies. The Office for Rail and Rail (ORR) has already said it will work with the CMA to make this happen. By definition, train operators only bid to run services where they think profits can be made, cherry picking the most attractive parts of the network much to the chagrin of franchise holders who have spent a lot of time and money winning the right to run services. .

There are also big question about how much the CMA's findings will match the reality of our railways. It's all very well calling for increased competition in a sector where new entrants can easily carve out a niche - but at peak times large parts of the network are full. Trying to create choice and spare capacity in this environment would make no sense at all and would waste some of the billions being spent on upgrading and enhancing the network.

The CMA's report is divorced from reality in other ways, too. With franchises running to different timescales, proposals to re-draw their boundaries are impractical, requiring years of delays. It is also unclear how its recommendations would mesh with other planned reforms. The Shaw Review will be published alongside the Budget later this month and will seeks to forge much closer relationships between train operations and track management through more devolution and in some cases potentially combining the two. It is difficult to see how anything the CMA favours could combine with such an approach.

The bottom line in this debate is how we get most out of the railways and the billions that are being invested. For passengers, that means affordable, reliable services which get them where they want to go. For the Government, it should be a rail network that supports the economy and makes transport more sustainable. The best way to achieve both these aims is not by creating competition within rail but by increasing competitiveness between rail and other transport modes - creating a level playing field between transport options and making the train the natural choice for more of our journeys.

Image courtesy of Flood G via Flickr.

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