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| Competition regulator backs scrapping of rail franchises | Competition regulator backs scrapping of rail franchises |
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| Britain’s rail system should be overhauled to allow rival train firms to run services on the same routes, eventually scrapping franchises for major intercity lines, according to the competition authorities. | Britain’s rail system should be overhauled to allow rival train firms to run services on the same routes, eventually scrapping franchises for major intercity lines, according to the competition authorities. |
| The Competition and Markets Authority (CMA) said that more direct competition could see lower fares, greater efficiency and more effective use of capacity, in a report published on Tuesday. | The Competition and Markets Authority (CMA) said that more direct competition could see lower fares, greater efficiency and more effective use of capacity, in a report published on Tuesday. |
| The call comes ahead of the publication of Nicola Shaw’s review into the future structure and financing of Network Rail, the government body responsible for the UK’s rail infrastructure, a report commissioned by the Treasury which is expected alongside the budget next week. | The call comes ahead of the publication of Nicola Shaw’s review into the future structure and financing of Network Rail, the government body responsible for the UK’s rail infrastructure, a report commissioned by the Treasury which is expected alongside the budget next week. |
| The CMA said that the current system, where rival firms compete for long-term franchises for particular routes, could be improved by increasing the number of “open access” services – the kind of additional passenger trains offered by Grand Central and First Hull Trains on the east coast line, for example – or by splitting franchises. | |
| But the CMA urged that in the long term rail should move towards a system of multiple licensed operators instead of franchises. While such an idea was considered and rejected on operational grounds when railways were privatised in 1994, the CMA’s report says the potential for such competition exists on the three major intercity routes: the east and west coast mainlines, and the Great Western route, which serve 90 million passenger journeys annually. | |
| The chief executive of the CMA, Alex Chisholm, said: “We’ve found that there is strong evidence, both here and abroad, of the benefits that the introduction of competition on mainline intercity routes can bring. Where competing operators have been given the opportunity, the need to attract passengers who have a choice can mean lower fares, new routes and destinations, more innovations and flexible ticketing. | The chief executive of the CMA, Alex Chisholm, said: “We’ve found that there is strong evidence, both here and abroad, of the benefits that the introduction of competition on mainline intercity routes can bring. Where competing operators have been given the opportunity, the need to attract passengers who have a choice can mean lower fares, new routes and destinations, more innovations and flexible ticketing. |
| “In a more competitive environment companies will push to be more efficient and for there to be better use of existing capacity – so there are benefits for both the network and the taxpayer who helps subsidise the railways.” | “In a more competitive environment companies will push to be more efficient and for there to be better use of existing capacity – so there are benefits for both the network and the taxpayer who helps subsidise the railways.” |
| Chisholm admitted there were legitimate concerns that open access could reduce the income paid to government from franchise operators, but said the system could be reformed to make competing operators contribute more. That could mean higher track access charges and a levy to help fund unprofitable services in rural areas. | Chisholm admitted there were legitimate concerns that open access could reduce the income paid to government from franchise operators, but said the system could be reformed to make competing operators contribute more. That could mean higher track access charges and a levy to help fund unprofitable services in rural areas. |
| He added: “There’s a real chance here to extend these benefits across a wider area and the timing is undoubtedly right to push for change. We hope all those involved with the future of the rail network will look at our report carefully and seize the opportunity.” | He added: “There’s a real chance here to extend these benefits across a wider area and the timing is undoubtedly right to push for change. We hope all those involved with the future of the rail network will look at our report carefully and seize the opportunity.” |
| The CMA is an independent, non-ministerial government department, and has sent its recommendations to the Department for Transport. | The CMA is an independent, non-ministerial government department, and has sent its recommendations to the Department for Transport. |